The Impact Of Loyalty Programs
1- Subject matter
This study focuses on a new retail loyalty program and more specifically a points-based loyalty program. This loyalty program replaces those in which immediate price reductions were offered and requires the accumulation of points.
The objective is to analyze the impact of such a program on the different variables associated with the consumer’s buying behavior and on the sales of the points of sale.
2- Research questions
A points-based loyalty program is both an innovation in the concept of a loyalty program and a promotional strategy that differs from the traditional price reduction system. The authors seek to determine the impact of such a program on variables such as the number of visits to the point of sale, the amount of money spent on each purchase, the rate of conversion into a member of the loyalty program and the turnover.
In addition, they analyzed the behavior of members and non-members of the old program with respect to the new program.
3- Conclusions of the article
First of all, consumers are much more sensitive to this new type of loyalty program, even for the same value of cash points. This is due to the fact that consumers perceive better with this system the value brought by this program and the gains they can get from it (it can also be an overestimation of the value of points in some cases).
As far as the effect of this new program on sales is concerned, we can see that this is a key element and it allows for an increase in sales (this last point, however, requires more in-depth studies).
4- Managerial implications
The results provide real information to manufacturers and retailers to improve their promotional strategies. Unlike price reductions, the new form of program not only increases loyalty to the company, but also creates better conditions for collaboration between manufacturers and retailers for mutual benefit. Of course, this collaboration requires good communication about the benefits that can be realized for both parties and it helps to strengthen alliances between manufacturers and retailers.
In addition, for such a loyalty program to be effective, it must offer consumers an adequate and sufficiently important level of promotion so as not to have the opposite effect by not meeting consumers’ expectations and thus leading to a drop in sales.
5- Limitations
Reactivity to increased promotions represents both an opportunity and a threat. Indeed, on the one hand, it means for retailers an increase in sales if promotions are well used or, on the other hand, a decrease in sales if the same level of promotions is used.
The study conducted by the authors is not sufficient to fully understand the relationships and effects of such a loyalty program, it should be complemented with other analyses that take into account other variables such as consumer categories, or to see the effects over the long term, if the store is physical or virtual, etc.
How Money Matters for Schools
Clanity believes that the future of the community is dependent on the younger generation, and that giving educational resources is critical for scientific and economic growth. Clanity’s objective is to support low-income schools and high-impact organizations so that the next generation is well prepared to take on the world’s innovation responsibilities.
This will be accomplished by enlisting schools to join our community in order to promote businesses through community involvement activities in exchange for prizes. A corporate partner can create a task for engagers to fulfill as an example of community involvement.
This duty could include things like sharing social media postings, engaging with the brand on social media, and providing user-generated content for the company, among other things.
To access the functionality of producing these tasks, the business partner will pay Clanity tokens. Certain tokens will be used to compensate users or engagers who successfully perform these tasks. This provides businesses with advertising opportunities and users with revenue (in this case, schools).
In addition, Clanity would expand their philanthropic to provide grants to schools based on needs. To summarize: a successful loyalty strategy requires the implementation of a loyalty program but also (and perhaps more importantly) a real customer knowledge strategy.
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