Building Customer Loyalty

6. Added-value Schemes

A successful loyalty scheme pays for itself by encouraging more frequent purchases. The most common loyalty schemes are based on offering rewards to loyal customers.

6.1 A cumulative (or 'retrospective') discount gives customers money back whenever they reach specified spending targets.

• Retail businesses can offer loyalty cards which work this way.
• Your accounting system may need to be able to track the purchasing activity of each customer and flag up the discounts as they are earned.If customers have to ask for the discount, you may achieve less loyalty as a result.

6.2 Some schemes offer customers a discount off their next purchase. For example, you may issue discount coupons. If they are only valid for a limited time, you also encourage prompt action.

• Be aware that discounts may cheapen your product in the eyes of the customer. For this reason, businesses often prefer to make offers such as '20 per cent more for the same price'.

6.3 Some schemes offer the customer rewards.