Customer Relationship Management
Push loyalty schemes aim to push the customer towards a particular retailer by allowing spending at other retailers to accrue benefits provided by the target retailer. In this scheme, retailer works together with a bank to provide access to many retailers through the use of a common payment scheme. Push retailer tend to focus on providing well-regarded or desirable products and services, in order to attract and retain a wide group of profitable customers. Pull loyalty schemes aim to pull the customer towards the retailer by offering benefits.
For instance, by purchasing petrol, customers can claim gifts from a catalogue provided by a third party. Pull retailers tend to focus on ensuring accessibility and then increasing customer transaction by offering incentives provided by a third party. Purchase loyalty scheme aim to encourage the customer to purchase in general, with many retailers and third parties involved. For instance, with the use of general credit cards, customers can claim gifts from a catalogue. Purchase retailers are interested in increasing transactions through the financial services provider, rather than creating loyalty to a retail store.
Purge loyalty schemes represent the antithesis of the other types of loyalty card schemes, which is to purge your loyalty card scheme if it exists at all. Purge retailers tend to focus on offering lowest price to all customers and view loyalty schemes as an unnecessary cost. Parker and Worthington (2000) argue that customer loyalty to a reward scheme is likely to be affected by relative attitude, social factors and situational factors. First, customer loyalty is likely to be affected by the satisfaction that a customer feels towards the degree of return that they are receiving.
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Second, their loyalty behaviour could be affected by what is available from other schemes and third, their behaviour may be influenced by other consumers, the media and social norms. O’Malley (1998) discusses the extent to which too many schemes has created customers who have come to expect a reward as part of the normal shopping experience and place a low value on rewards. Loyalty schemes aim to foster customer relationship by awarding discounts or prizes to people for continued patronage.
In most programs, customers accumulate points (or their equivalent) which are then redeemed for cash, discount or prizes. The advantages of frequent shopper programs for retailers are the loyalty (customers amass points only by shopping at a specific firm or firms), the increased shopping and the competitive edge for a retailer similar to others (Berman and Evans, 2004). Vargas (2008) cites the following as the common frequent shopper programs being adopted by retailers so as to ensure an efficient management of customer relationship.
The first example are punch cards which are perceived to be the most simple of all frequent shopper programs. With these cards, the consumer could present them at the time of purchase and receives either a punch or a stamp. Upon completion of the card, the customer could present it and redeem a free item or a discount. It is highly effective in terms of encouraging customers to patronize a business and continue buying from them to fill in the missing spaces in order to obtain their free item or reward. At the same time, this is often perceived to be the loyalty scheme with the lowest privacy risk.
Loyalty schemes also take form in savings card which are very common amongst grocers. The card is generally used to obtain the buying habits of the customers but allows them to receive special discounts on certain merchandise in exchange. As a result, these cards are often perceived as the loyalty scheme with the highest privacy risk because of its tendency to capture the personal data of the owner. Rebate cards are also very common. Unlike the savings card, this type of program does not have a high privacy risk as it only tracks how much one customer spends on each visit.
They also offer “points” that the consumer could accumulate as he or she continues to purchase from a particular store and could receive a store gift once his or her points meet the specified number. Lastly, loyalty schemes could also take the form of online profiles wherein the online retailers could keep a file of their customer’s personal data. The data often includes simple log-in information or the storage of credit card data at times. Based on the collection of this information, the retailers are able to track the purchasing activities of customers.