By Todd Cripe, VP of Alliances, Midax, Inc.
What is Loyalty?
Loyalty for our purposes is defined as any application providing a structured marketing effort that rewards and encourages casual customers to become repeat (loyal) customers. Loyalty programs are unique in the retail technology segment because they are purchased by merchants, but are used by both the merchant and the merchant’s customers.
Why Does a Merchant Care About Loyalty?
Merchants care about loyalty programs because they help drive sales volume and because the merchant can potentially lose customers to competitors if they do not offer a loyalty program. Repeat customers represent a disproportionately higher source of revenue to the merchant than casual or first-time customers. Loyalty programs provide merchants the opportunity to incent casual customers to become repeat customers. Loyalty programs therefore appeal to merchants who believe that loyal repeat customers are more important than casual customers. Loyalty solution adoption by both merchants and consumers has significantly increased in 2012 and 2013 for every retail segment with the exception of grocery and c-store, wheradoption and usage rates have remained flat. In some segments such as c-stores, loyalty programs are a de facto pre-requisite of doing business, meaning that if an operator does not offer a loyalty program that rolls prices back at the pump, many prospective customers will drive past the merchant’s store to go to one down the street that does offer a loyalty program.
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