1. A loyalty program (LP) can increase sales and gross profits in both the short and long term, but the effects will depend on the industry, market, and design. When it comes to LP design, the earning mechanism is the most important driver. Direct and immediate rewards have the most positive effects when new programs are introduced.

2. Only 10% of loyalty programs include fee-based membership. Fees can make customers more engaged in the program and stimulate sales but might lead fewer customers to join. Thus, it might be beneficial to tailor fee-based programs to certain customer groups. A complex combination of rewards makes consumers more likely to join a fee-based program.

3. When revisiting LPs, it is useful to define the goal of the LP for different customers. This enables retailers to adopt the LP design to relationship stages rather than applying a one-size-fits-all approach. As retail business and consumer demand is changing, there is room to focus on other types of behaviors than loyalty and add earning mechanisms and rewards to other relevant outcomes such as health, sustainability, or special interests.

2022-02-16