Loyalty programs are designed to reward customer experiences when they patronize your business or store. But are these rewards programs really worth it? Although they are free to join, they cost the customer more money once the decide to change their buying behaviour because of the reward.
As good as this program may look, studies have shown that it has a little effect on customer loyalty and retention. Although businesses engage in this reward program to change consumer behaviour, Byron Sharp, professor of marketing science from UniSA, noted that such programs don't change people's buying behaviour because they will end up buying such product anyway, reward or no reward. So consumers are not really buying because of the reward but for other factors.
Consumers choose where to buy based on a few dominant factors like store location, parking, product range, familiarity with layout, adjacent stores and pricing, while loyalty programs have the least influence on consumer choice.
Money cannot buy loyalty, and even when it does, it is only for a short time. Consumers want to maximize pleasure, and no amount of loyalty programs will do that. True loyalty from your customers is a function of your relationship with them and their needs.
Loyalty means mutual commitment -- a willingness to give up alternatives. Loyalty is given when customers expect to realize compelling benefits from their choices - Marketing Magazine, 2013