A loyalty program is a marketing strategy that rewards loyal customers and encourages them to keep buying the company’s products or services. It’s an incentivizing scheme that offers redeemable points or other benefits earned with every purchase from the company. This way, brands increase customer retention and drive sales.
The most common loyalty program types are
- points-based with reward bonuses being accrued with every purchase and then redeemed for discounts, cashback, merch, gifts, and other perks;
- subscription-based or paid programs that require paying an upfront fee for getting immediate or ongoing benefits; and
- tiered programs that establish a ranking system with customers getting different perks depending on their status.
In the air travel industry, loyalty or frequent flier programs (FFPs) allow users to receive and accumulate points (or miles) relating to the amount of money spent with an airline or its partners, i.e., travel and non-travel companies that take advantage of FFPs to attract and retain their own customers. These businesses buy points from an airline and grant them to their customers as rewards.