Loyalty program may evolve for consumer customization
May 29, 2013

Loyalty and gift card programs allow companies to connect with frequent guests by offering them special discounts and sales. Consumers continue to look for new ways to receive loyalty points and deals, driving the initiatives to become more complicated.

According to The Associated Press, loyalty programs may one day get a boost of customer personalization to the point where a product's price changes to fit the consumer. Companies may want to consider examining customer preferences and ways in which their program may become more flexible to ensure the business is providing the best possible experience.

Same product, different prices
The AP reported that increased competition is changing how small- and medium-sized enterprises utilize loyalty programs. Instead of the traditional strategy of providing more affordable prices for customers with a loyalty card, grocery stores and retailers are beginning to keep track of consumers' purchasing history to customize deals.

While this is boosting sales, many SMEs project personalization may go as far as companies creating different prices for the same product according to consumers' previous transactions.

Steve Burd, CEO of Safeway, said in a statement earlier this year that more sophisticated loyalty programs may be on the horizon.

"There's going to come a point where our shelf pricing is pretty irrelevant because we can be so personalized in what we offer people," Burd said.

The AP suggested that one of the main reasons for this trend is increasing customer retention, as the average consumer may shop at five different supermarkets. Many customers decided to sign up for many loyalty programs during the recession to find the best deal.

Understand consumer preferences 
Loyalty programs are set to customize prices to offer customers who buy a certain product a lower price on the item. LoyLogic, a company that helps consumers redeem their loyalty points, recently released the "2013 Frequent Traveler Survey." The survey asked consumers what they look for when opting into a loyalty program. Sixty percent said they prefer to have more flexibility with their rewards. Customer purchasing behavior was found to significantly change when loyalty programs offered certain deals on products.

Companies employing loyalty programs may begin to see changes on the horizon. As more consumers frequent many stores, competition will arise and SMEs may be required to charge different prices for the same product. 

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