Skip to main content

We all are a part of some loyalty program. Everybody uses some or the other form of the loyalty program, from small grocery shops to huge retail houses and online stores. It helps them retain their regular customers and reduce acquisition costs. But what does the history and evolution of these loyalty programs look like? Let’s find out.

The early beginning of these programs was around the late 18th century, when it all started with “premium” marketing. The Americans used to hand out copper tokens to their customers. They redeemed those tokens for products in the future. This helped them retain their customers. The strategy was practiced throughout the 19th century. Thus, making it a popular customer retention technique and paving the way for today’s loyalty programs.

Through observations and cost analysis of their books, the retailers learned that copper tokens were an expensive way to retain their customers. They started looking for an alternative solution. That’s when the less costly stamps replaced the coins.

The first retail loyalty program (stamp-based) was the “Green shield stamps.” They provided stamps for making purchases from selected stores. The customers could use those stamps to redeem for catalog products. We can see how the loyalty programs started to shape into what they look like today.

The stamps were leading until the early 1900s. After this period, many retail stores came up with their strategies to drive up customer engagement. “Boxtops” was one of the original programs. They directly printed coupons on the product’s packages. The customers could redeem those coupons later.

Betty Crocker introduced these coupons in 1929, sowing the seeds for the loyalty programs today. Then came the “frequent fliers” programs. Considered to be the first-fully scaled loyalty program, the American Airlines’ frequent flier program revolutionised the world. They set an example on customer retention and loyalty strategies.

The world of these premium programs kept transforming into the memberships we have today. Points, scores, cashback, rewards, offers, discounts, and more! Loyalty programs provide you with opportunities to earn rewards. They cater to people’s excitement ,provide them with premium privileges. Positive financial returns, building steady revenue streams, and foster connections with their best customers are some other perks of these programs.

People like to discover new things, try new products, be part of something “exclusive. And loyalty programs give them a chance to do it all. These programs provide the customers with enough compelling reasons to become a member.

Satisfied customers can thus become loyal to the business and turn into the brand’s advocates. They increase engagement and sales and help gain new customers through referrals or get word of mouth going.

If the customers are loyal to your business, they will spend more time and money purchasing from your brand. A dedicated customer indicates a robust and cultivated trust with the brand. By opting to come back to your brand repeatedly, the benefits they get exceed the potential gains from the competitors.

Developing and nurturing loyal customers is relatively inexpensive compared to creating new customers. Thus, turning your existing customers into brand advocates ultimately reduces the costs of acquiring new customers.

Monitoring and analyzing the time duration a customer takes to do business with the brand also helps bring modifications to encourage customer loyalty. Referral traffic helps the brand assess the engagement on your website through sources other than search engines (social media etc.).

Customers are always searching for exclusive and fair deals from these loyalty programs to enhance their experience. The companies focus on building trust and engaging the customers through rewards. These programs incentivize its prevailing customers. Thus, encouraging them to maintain a long-lasting relationship.

The customers earn rewards like cash back, flat rate discounts, points to redeem in the future, and exclusive benefits like early access to new launches and sales.