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An overview of Loyalty Programs



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Companies are adopting customer Loyalty programs as an important part of improving their businesses and enhancing customer engagement. Many businesses ranging from hotels to pharmacies are organizing a lot of loyalty programs. Today, businesses across all industries realize the importance of Customer Loyalty and have started investing in it. But, small-scale businessmen feel that Customer Loyalty Programs need a lot of monetary and time investment and they may not result in expected Return on Investment (ROI). 

Loyalty programs can be of two types: Organized and unorganized.

  • Organized Loyalty Programs are focused programs that are implemented with the help of certain tools and platforms that capture customer data, manage the rewards and provide us with valuable insights. 
  • Unorganized Loyalty Programs are programs that are carried out without the help of any tools and hence may not provide optimal results.

The examples for Organized Loyalty Programs include:

  • Membership cards offered by certain pharmacies and member-exclusive discounts and benefits. 
  • An e-commerce site offering a plus membership promising no delivery charges and quick support services to its plus members.

The examples for Unorganized Loyalty Programs are:

  • A tea shop preparing special tea to its frequent customers and offering free home delivery to its frequent customers. 
  • A street vendor offering extra goodies such as carrots or curry leaves to his frequent customers at no extra cost.

There are many other such loyalty programs that companies adopt to increase customer retention and engagement. By the above examples, it is evident that Loyalty programs always do not need a lot of time and investment, but can yield good results and Return On Investment (ROI) in the long run. With Organized Loyalty Programs, one can plan ahead on how much investment and time is needed. Also, the Organized Loyalty Programs can easily be automated using various tools and the data insights can be easily obtained. But, the Unorganized Loyalty Programs are quite different and they have a few downsides:

  • Biased actions are one of the biggest threats to the Unorganized Loyalty Programs. Business owners may sometimes forget to look after a few loyal customers due to the absence of a defined strategy, which in turn may lead to discrepancies between different customers. 
  • There is very little or almost no scope for automation. 
  • No insights are obtained and therefore no data-driven decisions can be made.

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