Rising costs have become a significant concern for Americans across the country. The US Bureau of Labor Statistics reported in August 2022 that the Consumer Price Index (CPI) for urban consumers rose by 8.3 percent over the last 12 months. So now more than ever it’s important to be money savvy in your everyday consumption and a handy way to do so is by using customer loyalty programs when you shop.
Whilst it has been reported that 80% of American adults belong to some type of loyalty program totalling to 3.8 billion memberships, many are not actually benefiting from them. It was found in 2022 that US consumers belonged to on average 16.6 loyalty programs but only actively used a little less than half of them. Furthermore, according to the Colloquy Loyalty Census over $16 billion worth of reward points and miles are unredeemed by consumers.
With costly times ahead, it is definitely a good idea for consumers to reassess the importance of customer loyalty programs since there are many benefits to actively using them. Building up loyalty points can often lead to perks and can help you to save some extra cash at the same time. This guide will delve further into the details of customer loyalty programs, providing examples and discussing why you should consider getting involved in them.
What Is A Customer Loyalty Program?
A customer loyalty program is a marketing strategy deployed by companies to retain existing customers by recognizing and rewarding them for purchasing from their brand. Typically companies will give out points or perks in an attempt to build a network of regular customers. In turn, this benefits the consumers as they will receive the rewards, coupons, free products or discounts that are on offer. They may also be granted early access to new products that are about to be released.
What Are Different Forms of Customer Loyalty Programs?
Customer loyalty programs come in many different forms. Examples include little punch cards which places like coffee or sandwich shops use where typically they will offer the 10th sandwich or coffee for free. Other programs can be found in the form of credit cards, online accounts or on smartphone apps.
Point programs are a popular option which many airlines use. Examples include the American Airlines’ AAdvantage, British Airways’ Executive Club and the Virgin Atlantic Flying Club with benefits that tend to accumulate the more a passenger flies.
There are also paid loyalty programs whereby customers have to pay for a membership in order to benefit from it. A well known example is Amazon Prime which involves a monthly or yearly subscription in exchange for perks such as discounted prices, free shipping and access to its streaming app.
A further form of customer loyalty options is cashback programs. This involves spending a certain amount to get a set amount back either in the form of money or coupons. Many credit card companies also offer cashback programs to try encourage their cardholders to use their cards more often. Typically members will be rewarded around a 1% cashback providing that a certain amount is spent.
What Type of Places Offer Customer Loyalty Programs?
Places that offer customer loyalty programs include supermarkets, airlines, barbers, hairdressers, drugstores and apparel shops. Well known companies that offer loyalty schemes include Uber Rewards, Sephora Beauty Insider, Starbucks Rewards and Nike Membership. The more a customer spends, the more perks and benefits they will usually receive.
What Are The Benefits Of Customer Loyalty Programs?
The most obvious advantage of customer loyalty programs is that the consumer can benefit financially. Having the opportunity to gain rewards, discounts and freebies for purchasing products that they would have bought regardless is certainly beneficial.
For example, if you sign up for an American Express Card you are rewarded with Avios points every time you spend which can then be used towards many great perks such as flights, hotels and car hire. So if you need to make an important trip overseas, instead of having to lay out money and dip into your savings, you could use your points that you would have earned from everyday purchases.
What Are The Disadvantages of Customer Loyalty Programs?
The only risk with customer loyalty programs is being enticed to spend more money than you need to in order to reach a potential discount or perk. For instance, a consumer may justify purchasing a hot drink everyday since they know they would be getting a free one after they have spent a certain amount. In this case however it may have been wiser to just make a coffee at home.
Consumers must therefore make a conscious effort not to purchase items for the sake of the potential future benefits involved, but only because they were going to buy the product regardless of a reward. In this way, they will be able to financially benefit from a loyalty program.
What Are Alternatives To Customer Loyalty Programs?
Alongside getting involved in customer loyalty programs, there are many other ways you can save money and be financially savvy. For instance, you could look at ways to save money on your energy bills by following a few simple techniques such as washing your clothes at a lower temperature or taking a shower instead of a bath. You could also look to reduce your food bills significantly by purchasing unbranded products, buying in bulk and undertaking meal prep.
Other ways to save cash include canceling any unnecessary subscriptions that you may have and selling unwanted items that you no longer need. Likewise, you could consider ways to save money on your petrol through quick and easy strategies such as emptying your boot or turning off unnecessary equipment whilst you are driving.
There are many advantages to joining customer loyalty programs including the perks, discounts and free products that can come from them. If you are making regular purchases, then you certainly have nothing to lose by joining them. After all, who doesn’t love receiving something for nothing?