Answer :

The Acceptable Behavior of the Promoting Loyalty Scheme Programmes to Customers policy should be based on honesty, keeping promises, and adhering to the Platinum Rule by treating customers the way they want to be treated.

Firstly, any loyalty scheme should adhere to the principles of honesty, ensuring that all communications, promotions, and reward structures are transparent and truthful. Additionally, organizations should honor their commitments, consistently keeping promises made to customers as part of the loyalty program. This commitment fosters trust and strengthens customer relationships.

Following the Platinum Rule, which suggests treating customers the way they want to be treated, loyalty programs should be designed with a deep understanding of customer preferences and expectations. This personalized approach enhances customer satisfaction and loyalty.

Historically, loyalty schemes have evolved from the trading stamps of tobacco companies and General Mills' box tops to modern day rewards programs, such as those offered by airlines, credit card companies, and retail chains. Successful programs provide economic benefits to customers without necessitating control or ownership over the firm, yet still contribute to increased customer retention and loyalty.

Using management by objectives (MBO), a company interested in increasing customer loyalty should set measurable goals at both the departmental and individual levels that contribute towards this organization-wide objective. For example, customer service departments might aim to improve response times, while sales teams might strive for higher customer satisfaction ratings. This strategy, combined with customer-focused services leading to loyalty, highlights the importance of aligning individual behaviors and actions with the company's broader goal of enhancing loyalty.

However, companies must be wary of the folly of rewarding A while hoping for B, which addresses the misalignment of rewards with desired outcomes. If a company promotes fast shipping at the expense of quality, this can lead to a culture that devalues the very quality it seeks to uphold. Strategic and thoughtful rewards that align with the overarching goal of customer loyalty are essential to avoid such pitfalls.

Loyalty cards and programs that reduce transition costs serve as an incentive for customers to remain with a company. These programs are strategic measures put in place to maintain a stable customer base by offering rewards that provide just enough value to discourage customers from switching to competitors.

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