What Is a Retail CLP?

A customer loyalty program, or CPL, encourages a customer to make multiple purchases at the same store by offering a discount or a reward after the customer those purchases. The customer loyalty program encourages a customer who likes a product to become a repeat customer, and it may also allow the retailer to collect additional demographic information about the customer.

Loyalty Card

A CLP program may involve a card that the cashier gives to the customer. A burrito restaurant can give a punch card to a customer that states if she buys 10 burritos, she gets the 11th burrito for free, and the cashier can punch a hole in the card using a hole punch with a special pattern each time the customer orders a burrito. The burrito store could also give the customer a card with an electronic strip on the back, so it is easier for the store to track the number of times she orders burritos.

Information Collection

A customer rewards program can convince a retail shopper to provide information, such as his phone number, his home address and email address. The retail merchant can use this information to tell the customer when he is eligible to receive the reward, and it may also send messages to the customer to tell him about other discounts and sales. This is convenient for the merchant because it can send an advertisement only to a customer who intends to make future purchases from the merchant.

Product-based Reward

A reward that features the retailer's product can have superior psychological effects in comparison with offering the customer a cash discount. If an airline offers a traveler a free trip to Bermuda after she takes enough flights, as an alternative to giving her $500 cash back, the traveler is thinking about her upcoming trip to Bermuda, instead of thinking about how she can use the $500 in cash to pay her water bill, according to the Wharton School of Business.

Time Perception

A customer loyalty program can shift the customer's time focus, according to the Journal of Marketing Research. A customer who is hungry and wants to eat a burrito now may decide to select the closest burrito store if a reward program isn't available. If one burrito store offers a reward program and another store doesn't, the customer may decide that he is willing to drive a few more miles so that he can get a free burrito next month.

References

• Wharton School of Business; The Lowdown on Customer Loyalty Programs: Which are the Most Effective and Why; September 2006
• Towson University; University Store Launches New Customer Loyalty Program; April 2011
• "Journal of Marketing Research"; The Influence of Loyalty Programs and Short-Term Promotions on Customer Retention; Michael Lewis; August 2004