How Loyalty Marketing Was Born In The 20th Century

The earliest efforts to win customer’s support was the S&H/Sperry and Hutchinson Green Stamp Program in 1896. Encouraging loyalty, customers received tiny stamps when purchases are made from participating merchants, onto pages of booklets called alternative currency and redeemed this for products on accumulated stamps attaining a certain value. The green stamps program was the largest consumer product purchaser by the 1960s.

Loyalty Marketing: the Birth of an Advertising Revolution

Another popular loyalty program that heralded the birth of loyalty marketing was General Mills’ Betty Crocker program for accumulating points. It was redeemable for kitchenware from catalogues. The customer collected points from General Mills cereal baked goods and additional products.

Thus, earliest customer loyalty programs were “green stamp” programs where customers collected stamps from retailers. The stamps reached their peak during the period post WWII but soon ran out of steam by the 80s. Regional companies like Eagle Stamp, King Korn, Plaid, Gold Bell, Triple S and Top Value were redeemable for a set value at the retailer. This marks the first time retailers had loyalty initiatives to get the customer back into the store.

Early Loyalty Marketing Programs

During the 1940s and 50s, other industries ran loyalty programs including premiums such as drinking glasses, car washes, free maps as well as cigarette package coupons and saving stamps at gas stations.  The difference between these and early customer retention programs was computerizing which allowed immediate contact with customers and affiliate as well as co-market programs. The airline industry’s loyalty marketing initiatives were next on the line.

Airlines And Loyalty Programs

Enhanced competition following the Airline Deregulation Act of 1978 encouraged airline marketing professionals to come up with ways for rewarding repeat clients and driving brand loyalty. American Airlines was the first to hop on to the loyalty-marketing bandwagon. American Airlines offered a special loyalty fare expanded to offer free tickets in first class, upgrades for companions or coach tickets discounted. United Airlines took less than a week to launch its Mileage Plus initiative. Other airlines followed in ensuing months and years.

Loyalty Programs and Points

Loyalty programs are not focused on points. Loyalty is now destination created data centric marketing communications leading to measurable changes in customer behaviour that are associated with sustainability. Loyalty programs have evolved beyond airlines expanding into verticals of direct marketing in B2C and B2B companies. Mass marketers have currently adopted the loyalty-marketing  perspective. Industry wide brands have recognized the proven value in cultivating a loyal customer.

Retention Over Acquisition: Why It Costs Less To Retain More Customers

Most marketers holds that loyalty program participants are the most profitable and best customers. Customer loyalty program investments are at the very heart of the marketing mix. A shift has been seen away from mass acquisition to niche, specialized retention. Companies know the expense of engaging, attracting and converting customers as against understanding, rewarding and retaining current customers. The transition from acquisition to retention benefits consumers as loyalty focuses on engagement maximization and ensuring customer allegiance.

Loyalty: A Business Imperative

In today’s competitive markets, Pathwwway Internet Gaming recommended loyalty initiatives and marketing has become central to the lexicon of marketers. Loyalty, advocacy and engagement are closely interrelated to cultivate a base of devoted customers to drive success. Brands reach out to customers in new ways creating engagement. The advent of social media, check in services, targeted communications and mobile proximity to transaction based credit card and online statements or deals of the day contribute to a changing loyalty landscape.

Consumers now look for surprise and delight and the “Wow” experience that creates engagement in a channel they are most likely to partake. Companies are engaging and listening to their customers in ways that channels before could not tap. From soft program benefits to hard discounts, stamps and spoons have changed to points interactive communications and status through increment loyalty programs. Loyalty programs became more tailored and engaging as history progressed and technologies advanced. Rewards became more relevant and empowering to the customers.

Loyalty: An Evolving Concept

So, the late 1900s marks the birth of loyalty-marketing initiatives. It saw the creation of the most famed and well known loyalty program ever created. 1981 was the year American Airlines started the frequent flier program. It is the first full scale loyalty initiative of the modern era. Once the beacon of customer loyalty, it now boasts over 50 million members. Later parts of the 20th century saw the emergence of loyalty aggregators. Programs such as these provide points regardless of retailers. Some popular programs that gained credence and currency in the 1990s were card based retail loyalty initiatives. These programs are still well known today.

American Airlines, for example, started with a database of 150 thousand individual from its reservation system and found a way to use it with A-advantage program for customer retention.  The benefits of these programs were measured in terms of customer retention/ return rates, increase in spending per visit, better customer habit tracking, personalisation, increased contact and ancillary revenues. What the customer’s perception  of value is and does it exceed the company’s costs, breakage rates, alternate promotions and more came into play gradually as concepts in marketing and loyalty initiatives.

The Role of Technology

Credit card loyalty programs also gradually emerged. This was credited to the Discover card introduced in the mid 1970s. This company was the first to offer cash rebates to customers once a certain minimum level of USD 1000 was spent. After Discover gained market share, Visa, Diner’s Club and MasterCard responded with loyalty programs in the early 80s.

Loyalty programs have become a part of a wave of software and management known as customer relationship management. With the emergence of e-commerce and the advent of payment infrastructure, it is possible for reward or loyalty programs to be started for a store or site. A loyalty program is no longer for big players in the retail space. Technology has changed the way loyalty market campaigns are carried out. With the emergence of non monetary rewards, Pathwwway Internet Gaming suggests that loyalty programs now strike a deeper chord with the customer. Social media loyalty programs have caught on as more and more people are joining the conversation. Customer referrals are rewarded to drive new customers to the store and establish more links with existing customers.