Loyalty Program

AAA

DEFINITION of 'Loyalty Program'

A rewards program offered by a company to customers who frequently make purchases. A loyalty program may give a customer advanced access to new products, special sales coupons or free merchandise. Customers typically register their personal information with the company and are given a unique identifier, such as a numerical ID or membership card, and use that identifier when making a purchase.

INVESTOPEDIA EXPLAINS 'Loyalty Program'

Loyalty programs provide two key functions: they give a customers rewards for brand loyalty and they provide the issuing company with a wealth of consumer information. While companies can evaluate anonymous purchases, the use of a loyalty program gives additional information about the type of products that may be purchased together, and whether certain coupons are more effective than others.

RELATED TERMS
  1. Data Warehousing

    The electronic storage of a large amount of information by a ...
  2. Brand Management

    A function of marketing that uses techniques to increase the ...
  3. Brand Loyalty

    When consumers become committed to your brand and make repeat ...
  4. Longitudinal Data

    The process of collecting sample observations from a larger population ...
  5. Brand Equity

    The value premium that a company realizes from a product with ...
  6. Data Mining

    A process used by companies to turn raw data into useful information. ...
RELATED FAQS
  1. Are there significant seasonal patterns in the electronics sector?

    There is strong seasonality in the electronics sector, with sales of nearly all kinds of electronics – computers, digital ... Read Full Answer >>
  2. How do companies calculate the estimated duration of a new project?

    Different kinds of companies use different techniques to estimate project duration. For internal projects, estimation requires ... Read Full Answer >>
  3. Who are Whole Foods' (WFM) main competitors?

    Whole Foods' (WFM) main competitors are Sprouts (SFM) and Trader Joe's. However, Whole Foods strategy — convincing people ... Read Full Answer >>
  4. What are the biggest stadium naming rights deals of all time?

    The top three stadium naming rights deals of all time were all for stadiums hosting New York City teams. The largest was ... Read Full Answer >>
  5. What is the difference between marginal benefit and marginal revenue?

    Marginal benefit measures the consumer's benefit of consuming an additional unit of a good or service, while marginal revenue ... Read Full Answer >>
  6. How can I use marginal benefit analysis to help my business strategy?

    It is possible for a company to use marginal benefit analysis in decision making by understanding how that decision changes ... Read Full Answer >>
Related Articles
  1. Budgeting

    Drawbacks Of Travel Reward Programs

    These nearly universal loyalty programs can have handy perks, but they're not a free ride.
  2. Entrepreneurship

    Reality Check: Why Startups Fail

    New ventures have only a 50% chance of making it through the first five years. Find out why.
  3. Active Trading

    Data Mining For Investors

    Being an informed investor is extremely important, but where and how do you get the data for your research?
  4. Entrepreneurship

    10 Breakout Ideas For Small Businesses

    If your business has hit a wall, we've got the answer to break through and increase sales and earnings.
  5. Entrepreneurship

    9 Tips For Growing A Successful Business

    Give your business what it needs to thrive and it will reward you for years to come.
  6. Savings

    20 Ways To Pay Less At Costco

    There are plenty of little-known Costco shopping hacks that can save you big bucks at the register, and help you avoid the notorious spending hangover.
  7. Stock Analysis

    Costco, Target or Walmart: Which is the Best Bet?

    These three retailers have all been long-term winners. It that likely to continue? If so, which is the best bet?
  8. Economics

    What's Involved in Customer Service?

    Customer service is the part of a business tasked with enhancing customer satisfaction.
  9. Stock Analysis

    Is There Any Upside Left in Costco?

    Costco's stock has performed exceptionally well over the past five years, but does it need a breather?
  10. Markets

    Should You Buy or Sell These Troubled Retailers?

    Retail is in trouble, but the companies that survive could reward investors down the road.

You May Also Like

Hot Definitions
  1. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  2. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  3. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  4. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  5. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
  6. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
Trading Center