How Valuable is Your Consumer Loyalty Program?

Consumer Loyalty Programs


Earn airline miles with every purchase. Buy 10 sandwiches and get one free. Collect “stars” with every Starbucks purchase. The benefits of consumer loyalty programs have been long documented:

  • They allow companies to compete on more than just price.
  • They retain existing customers.
  • They increase the lifetime value of a customer.
  • They build personal relationships between the company and consumer.
  • They reinforce brand messages and create brand advocates.

During a previous financial crisis, American Airline’s AAdvantage program was valued at more than the company. In the age of COVID-19, we’re seeing additional benefits. The airlines’ Frequent Flyer programs, for example, are now also an important source of equity and collateral. As airlines sell their miles to banks, banks can use them as credit card perks for customers. Other airlines are using their miles as collateral for government loans.


Increasing the Value to the Consumer during COVID-19

Because Consumer Loyalty programs are so valuable, companies are making some changes to their programs in the age of COVID-19 to make their programs even more meaningful and valuable to consumers.

New rewards and perks are added to encourage consumers to stay home and stay safe. Reward merchandise that supports a work-from-home environment are added to reward selections.

Many companies allow their loyalty points to be donated to charities and non-profit organizations. In some cases, the company may match points that are donated to non-profits.

In other cases, loyalty program administrators are amending the rules so that consumers don’t lose out during the pandemic. They may offer points for online purchases or other virtual activities that were never a factor before this crisis.


Loyalty Revealed

Just as crises reveal strength and fortitude (or lack thereof) in individuals, a dual public health and economic crisis is a real test of consumer loyalty. During the shut-down, social media platforms were full of messages to “shop local” and order carry-out meals from your favorite restaurants to show support. As people are necessarily cautious with their spending as businesses open back up, deals to entice purchases may have to be significant. On-going consumer loyalty programs are often the path of least resistance when there is a decision to be made about where to shop or dine.

Many believe that COVID-19 has changed the retail marketplace for good. Discounts and free shipping may be the baseline now. Consumer loyalty programs are one way in which to reward the types of activities and purchases that are meaningful to the sponsoring company, while providing a real benefit for the consumer.

To get started designing an effective consumer loyalty program that will provide measurable benefits for your company, contact one of our experts today.





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