|Published:||July 27, 2011|
The customer rewards cards that clutter wallets and clog key chains of many a shopper may soon be no more, as retailers move from physical to digital (read: mobile apps) forms of loyalty program member identification. It’s a smart decision. Unfortunately, it’s one of the only smart decisions retailers are making when it comes to customer loyalty schemes.
“Loyalty schemes are not being used to their best advantage”
“Most retailers are at a very basic level in how they use loyalty programs, and many customers see loyalty programs as punitive,” says Harvard Business School senior lecturer José Alvarez. “Loyalty schemes are not being used to their best advantage.”
Fortunately, there’s hope. Retailers that do rewards programs right can see “incredible loyalty,” says Alvarez.
In the case note Customer Loyalty Schemes in the Retail Sector, Alvarez and coauthor Aldo Sesia, a research associate at HBS, discuss how loyalty schemes evolved, what they look like today, why so many retailers aren’t using them effectively, and how they can be improved to win customer business in an uncertain marketplace.