“Loyalty can be defined as customers continuing to believe that one organization’s product/service offer remains their
best option. They take that offer whenever faced with that purchasing decision, and they remain relatively unresponsive to small problems with the offer and to better offers by competing organizations.’’ Thus, loyalty programs can be defined as structured marketing efforts that reward, and therefore encourage, loyal buying behaviour - behaviour which is potentially of benefit to the firm.
Customer loyalty, when measured properly, is an indicator of the strength of the customer relationship with the
organization. As such, customer loyalty is not only a static measure of where the customer is today, but also a dynamic measure of where the customer is expected to be in the future. There are two reasons for a customer to be in a particular loyalty segment: Their underlying preferences for the products/services under consideration Their experiences, perceptions, and beliefs pertaining to the organization’s product/service offering, particularly on those aspects that are critical to their value. For these two reasons it becomes very important that every retail organization offers some or the other loyalty program. A retail establishment or a retail group may issue a loyalty card to a consumer who can then use it as a form of identification when dealing with that retailer. By presenting the card, the purchaser is typically entitled to either a discount on the current purchase, or an allotment of points that can be used for future purchases.