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Strategies for Ending a Customer Loyalty Program

Strategies for Ending a Customer Loyalty Program
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  • 0:06 Customers Notice…
  • 1:08 Reasons
  • 2:49 Strategies
  • 3:25 Lesson Summary
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Instructor: Amber Dixon

Amber works with graduate students enrolled in a virtual program and has a Master's of Social Work degree.

Companies sometimes decide to end customer loyalty programs. This lesson discusses some of the reasons companies discontinue customer loyalty programs and how they can do so with respect and sensitivity to customer needs during the transition.

Customers Notice Loyalty Programs

Are you collecting points on your air travel toward a free flight? Or do you have a membership card at a store that gives you discounted prices? Then you are familiar with customer loyalty programs.

Customer loyalty programs are used by airline companies, hotel chains, grocery stores, and retail stores that provide members with reward points and/or discounted prices. Customer loyalty programs are defined as marketing strategies that reward customers for making purchases from a particular store or purchases of a particular brand. Companies create these programs to motivate customers to make more purchases.

Like all marketing strategies, companies sometimes need to adjust or end loyalty programs. When a company needs to end a loyalty program, it helps to have a plan for discontinuation established in advance. It's best to develop a procedure for ending loyalty programs at the same time that the program is being developed.

Let's take a closer look at why companies may decide to end a customer loyalty program and how they can do so with respect and sensitivity to their customers.

Reasons

Why do companies decide to end customer loyalty programs? Reasons may relate to profitability or customer satisfaction.

Companies may experience less profit and decide to end the program because the operation cost of the program exceeds the benefit. The cost of loyalty programs involves computer software systems to collect, store, and analyze data from customer purchases. There is also a cost associated with providing customers with reward cards.

Although it may seem counterintuitive, companies may also decide to end a loyalty program to benefit their customers. For example, companies may decide to discontinue a program because they want each customer to have the lowest price regardless of membership in the loyalty program.

Let's look at an example. Dave is a store manager for a grocery store that offers customers discounted prices when presenting a membership card at the time of purchase for products. Store cashiers began informing Dave that several customers each shift said that they did not have their reward card because it was a hassle to carry.

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