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How loyalty programs work in retail business

  • Napisane przez  Artykuł sponsorowany
How loyalty programs work in retail business

Loyalty programs (LPs) open up many possibilities as they increase sales, involve consumers in the process of obtaining bonuses, thereby stimulating repeat purchases, and also make it easy to use promotional tools at the lowest cost. The company issues a card with the client’s personal number (plastic or digital) in order to identify the person as a member of the LP. It was not so long ago when people carried lots of plastic cards in their wallets, transforming them into cardholders but everything has changed.

Pay attention to the following solutions

  • The most popular are discount LPs, such as a gas station loyalty program. The customer receives a discount right here, right now at the time of purchase. The size of the cut-rate can be fixed (for example, 5%, regardless of how much fuel the customer put into the tank of the car and how often he/she did it before) or floating and depend on the number of previous purchases or on the amount of the check. These programs are easy for customers to understand, as they can quickly add up the benefit without making serious calculations, and for brands because they have everything they need for a decent management result.
  •  The second type of LP is a bonus. The essence of the bonus program is not to provide a discount at the moment of making a purchase but to accumulate it and give the client the opportunity to receive the assembled concession when making a repeat purchase in the future. Savings are calculated in the form of points, bonuses, etc. and, as a rule, are the equivalent of a discount reserved for the client. It’s better to use a coffee shop loyalty app that not only contains all the advantages of the marketing solution but also brings the retail company to a new level of digitalization in the e-commerce and shop industry. Feel free to contact the M-Loyalty Company which offers secure, reliable, and adjustable software for any retail business. Specialists develop the mobile app according to all the modern rules and increase the platform from time to time for a better result.

Discount services are more beneficial for customers as people receive a direct benefit at the time of purchase and are free to dispose of the advantages at their discretion. The client will be able to use the points only with the next purchase in the same store: for the accumulated points, he/she will receive an explicitly stated discount. It’s easy to see that the customer does not receive benefits from the first purchase but gets them only if the next purchase is made in the same store. The electronic accumulation of bonus points instead of a direct discount is more profitable for the company from an economic point of view: there is no loss in revenue at the time of the first purchase and the client is motivated to make a second purchase.

Bonus LPs have some features that have to be taken into account: serious software is needed to calculate and account for bonus points. The policy for accumulating bonus points must be clear and understandable, otherwise, the client simply will not understand what is required of him and the LP will eventually become an expensive attribute of an enterprise that requires attention and financial costs.

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