Loyalty program

Loyalty programs are structured marketing strategies designed to encourage customers to continue to shop at or use the services of businesses associated with each program. Many such programs exist covering most types of business, each one having varying features and rewards schemes.

In marketing generally and in retailing more specifically, a loyalty card, rewards card, points card, advantage card, or club card is a plastic or paper card, visually similar to a credit card, debit card, or digital card that identifies the card holder as a member in a loyalty program. Loyalty cards relate to the loyalty business model. In the United Kingdom such a card is typically called a "loyalty card", in Canada a "rewards card" or a "points card", and in the United States either a "discount card", a "club card" or a "rewards card". Cards typically have a barcode or magstripe that can be easily scanned, some are chip cards or proximity cards. Small keyring cards (also known as keytags) which serve as key fobs are often used for convenience in carrying and ease of access.

Loyalty business model

The loyalty business model is a business model used in strategic management in which company resources are employed so as to increase the loyalty of customers and other stakeholders in the expectation that corporate objectives will be met or surpassed. A typical example of this type of model is: quality of product or service leads to customer satisfaction, which leads to customer loyalty, which leads to profitability.

The service quality model

A model by Kaj Storbacka, Tore Strandvik, and Christian Grönroos (1994), the service quality model, is more detailed than the basic loyalty business model but arrives at the same conclusion. In it, customer satisfaction is first based on a recent experience of the product or service. This assessment depends on prior expectations of overall quality compared to the actual performance received. If the recent experience exceeds prior expectations, customer satisfaction is likely to be high. Customer satisfaction can also be high even with mediocre performance quality if the customer's expectations are low, or if the performance provides value (that is, it is priced low to reflect the mediocre quality). Likewise, a customer can be dissatisfied with the service encounter and still perceive the overall quality to be good. This occurs when a quality service is priced very high and the transaction provides little value.