The Economics of Loyalty Programmes
What Loyalty Programmes Are
Loyalty programmes reward repeat customers with points, discounts or perks, aiming to make them keep coming back.
A loyalty programme gives customers something extra for continuing to buy from the same business: points, cashback, free items or special status.
Examples
Airline miles, supermarket points, credit card rewards, coffee shop stamps and app-based memberships.
Why firms do it
Keeping an existing customer costs far less than winning a new one.
Data
Programmes track what people buy, giving firms valuable insight.
A stamp card
Buy nine coffees, get the tenth free.
Thinking loyalty programmes are just discounts
They are also data and retention tools.
Key takeaways
- Loyalty programmes reward repeat buying.
- Retention is cheaper than acquisition.
- They collect customer data.
- Rewards take many forms.
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