Customer Loyalty Schemes in the Retail Sector

Loyalty programs (or programs) are explicit efforts by retailers to attract long-term customer interests. Loyalty programs are designed for a variety of reasons: to reward loyal customers, to generate stronger information on customer behavior, to influence consumer behavior, and to defend against competitive programs. The purpose of this note is to describe the objectives of these programs, including their origin and development; highlight the main aspects of its implementation; and propose approaches to maximize their impact. While this advisory focuses on retail sales in the US and UK, most of the content applies to other economies.

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