A loyalty card program is briefly defined as a rewards’ plan intended to provide customers, using different systems and ideas, with exclusive offers as part of building effective long-term relationships with them. In Lebanon, the Lebanese market is no short of competing loyalty programs since in so many industries, especially retail, competition is fierce. As proof of the Lebanese market’s interest in loyalty programs, ABC has won the “Best Loyalty Programme of the Year 2014 – Retail” for its “ABC Department Store Loyalty Program”, granted by “The Loyalty Awards”.
Loyalty card programs are vital to any retail business looking for expansion and growth. Obviously, it helps in building customer loyalty by encouraging repeated sales and therefore reaching customer retention. Besides, it helps the company gather important data about customer purchases: demographic information, best customers, purchasing habits and patterns, changes in consumer behavior, etc. It is used as a mean for the company to differentiate itself from competitors. As a result, sales are boosted and revenues are increased. According to a study by the global business-consulting firm, Baines and Company, “A 5% increase in customer retention can increase a company’s profitability by 75%.”
However, not every loyalty card program can be successful. There are different factors that have to be considered. For instance, rewards by themselves cannot guarantee retention; they have to be tailored to customers’ needs and carefully studied, using data collected from repeat sales. It also has to attract new customers to the store. Therefore, it has to build trust by rewarding most profitable customers yet determine less profitable ones who only buy at discounts and offers. Moreover, the program has to be easily understood and used, exciting and motivating. All successful loyalty programs worldwide are clear, consistent and maintained.
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