Where Reward and Loyalty Programs Began
Most reward and loyalty systems were initially launched by airlines, hotels and their additional services. Presently, hotels, restaurants, coffee shops and various stores provide services as customer rewards to persuade these customers to use their services again. In 1980, American Airline announced that it would reward passengers based on the total distance traveled. Their rewarding method was very simple; Whenever the total distance traveled by a passenger reached 10 thousand (in miles), a free ticket from New York to Chicago would be given to the passenger.
As simple as that, this company made their customers proud of the services provided by this airline and not by other companies. Therefore, many customers were attracted to this company. Whatever is attractive to the customers will be conveyed to others through word-ofmouth advertising and it will create a wave that persuades others to use your products and subscribe to your services or see your brand as the best.
Currently, in the US market which holds and dominates over one-fourth of the world’s economy, customer reward programs are so promoted that most people are using it. This fact shows how appealing reward system is when it has involved a large part of the market. Even the small portion of the market which lacks a reward program is indirectly involved with this system.
The research indicates that a part of what people buy is not necessarily their immediate needs. People make many purchases only because of the points they will receive when they make such purchases. For example, a customer is in a situation where making a purchase will give him/her enough points to get rewarded. So, the customer makes the purchase and these purchases will continue for as long as the customer keep getting rewarded. Inadvertently, these purchases collectively increase the sales volume of a company.