MRKT 310A - W3 DISCUSSION 3

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University of Maryland Global Campus (UMGC) *

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310

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Information Systems

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Dec 6, 2023

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docx

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Uploaded by JudgeFlowerZebra19

TOPIC 3: Loyalty Schemes Many businesses promote their loyalty programs to retain their most valuable customer and maximize the customer lifetime value (CLV). In simple words, a loyalty program is a customer retention strategy that recognizes and rewards customers who do business with a company repeatedly. It is evident that loyalty program is a marketing strategy designed to encourage customers to continue to shop or use the offering of a business associated with the program (UMGC, n.d.). A loyalty program typically involves the operator of a particular program set up an account for a customer of a business associated with the scheme, and then issue to the customer a loyalty card such as rewards card, points card, advantage card, club card, or some other name. These may be a plastic or paper card, visually like a credit card, that identifies the cardholder as a participant in the program. Cards may have a barcode or magstripe to allow for scanning more easily, although some are chip cards or proximity cards. Until today, loyal schemes are still truly relevant. Customers want to be recognized for the loyalty that they give to a brand, to a retailer. Personally, as a consumer I believe that having a loyalty program with the brand helps us to stay loyal. For instance, I love the credit card redemption reward program from Capital One. Capital One Quick Silver offers several benefits for the customers including no annual fee, having a better cash reward rate, earn unlimited cash back and get access to valuable benefits of certain items from the selected stores (Capital One, n.d.). The cash earned is redeemable paying off the balance or into different bank accounts. The program is very beneficial to me since I am able to benefit from discounts for certain purchases, the cash back reward and the simple features that the card offers. Loyalty programs benefit marketers/businesses as much as they benefit customers. Capital One can expect the following benefits from their reward program:

--Boosting revenue: the loyalty program does not help the firm in the short run but also in the long run such as boosting CLV (customer lifetime value) (UMGC, n.d.). --Improving customer retention and referrals: loyalty program rewards repeat customers with exclusive offers and personalized treatment, such as cash back offered and discount rate for selected stores, which drive customer retention. Loyal customers often tell their friends and family about the program's special offers, which brings in new referrals (UMGC, n.d.). --Using the customer's feedback or voice: rather than develop many innovative marketing campaigns, marketers or firms can rely on their rewards program members to drive more business (Yudi et al., 2023). Firms can ask customers to review the company or program on different platforms. Successful loyalty programs often delight customers so much that they feel compelled to share their experiences on social media, which can bring in new business and loyalty members. For instance, an email/ text message is sent to you asking for feedback once you has called Capital One customer service or used their online service. Although some managers and researchers believe that customer loyalty created through loyalty programs leads to higher firm profits, others have found that loyalty programs do not always have a positive effect on firm profits (Murthi et al., 2011). The reward program might attack risky customers and won't be able to pay off their debts. In addition to that, some customers might believe that the reward on the credit card puts them at risk since they might face late payment fees and be unbale to pay off their debts. References Capital One (n.d.). QuicksilverOne from Capital One. https://www.capitalone.com/credit-cards/quicksilverone/

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