Background Note | HBS Case Collection | March 2011

Customer Loyalty Schemes in the Retail Sector

by Jose B. Alvarez and Aldo Sesia

Abstract

Customer loyalty schemes (or programs) are explicit efforts by retailers to gain long-term patronage from customers. Loyalty schemes are developed for a variety of reasons: to reward loyal customers, to generate more robust information about customer behavior, to influence consumer behavior, and as a defensive measure to combat a competing scheme. The purpose of this note is to describe the objectives of these schemes, including their origin and evolution; to highlight key aspects of their implementation; and to suggest approaches to maximize their impact. While this note focuses on the U.S. and U.K. retail sectors, most of its content is applicable to other economies.

Keywords: Customer Relationship Management; Consumer Behavior; Business Strategy; Retail Industry; United Kingdom; United States;

Citation:

Alvarez, Jose B., and Aldo Sesia. "Customer Loyalty Schemes in the Retail Sector." Harvard Business School Background Note 511-077, March 2011.