Loyalty Programs Characteristics

I consider three categories of loyalty programs:

• Collect Programs (short-term and long term)
• Membership programs
• Loyalty Programs

In the below chart I have listed all types, with their specific characteristics. These programs are not for nothing: customers must do something to get access to the program. This is called the threshold. Communication is another distinguishing mark. What is mainly communicated? The next characteristic is the goal: what is the business trying to accomplish with the program? Lastly, the reward for the customer differs from program to program.

Type	Threshold	Communi- cation	Goal	Reward	Examples
Collect Program	Doing a (repeated) purchase	About points and presents	Increase consumer spending / customer retention.	Reward is free or for minimal fee. Usually product related.	Sales promotions, Shell pluspoints, Frequent flyer miles: AAdvantage, SkyMiles
Member- ship Program	Enrolling into the program. Conditions under which members are accepted vary.	About products and brand, possibly points and presents	Increase involvement consumers with brand or retailer. Long-term relationship with the customer, and because of this increased spending, higher life-time value.	Information (f.i. a magazine), discounts, special gatherings, credit, better guarantee, etc.	Hilton Hhonors, AA Memberships
Loyalty Program	Minimum number of transactions, minimum amount of spending	About consumer behavior, product, brand, points and presents	Increase mutual involvement between consumer and retailer. Long-term relationship with customer, and because of this increased spending, higher life-time value.	Comple- mentary goods and services, including a magazine, advice and recommendations, discounts, credit, etc.	Air Miles, Amazon

 

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