Want customers to keep coming back? Give them a reason!
Loyalty programs can be exceptionally effective in markets that are approaching commoditization. A true commodity is fungible; the product is interchangeable between vendors without any discernible difference. Older markets with established leaders often approach this economic state over time (think orange juice and toilet paper). Customers may switch between sellers on a whim due to convenience or small price differences. A loyalty program gives them a reason to come back and buy from the same business again.
Give customers discounts and rewards for shopping with you, and they’ll go out of their way to avoid competitors. Frequent Flyer Miles are perhaps the most well-known of all loyalty programs and have been very successful for major airlines.