Business – 3.1 The nature of marketing – Customer relationship marketing (CRM) | e-Consult
3.1 The nature of marketing – Customer relationship marketing (CRM) (1 questions)
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Strategic implications:
- Enhanced customer retention: Loyalty points encourage repeat purchases, increasing lifetime value.
- Rich behavioural data: Tracking redemption patterns provides deeper insight into preferences, enabling more precise segmentation.
- Brand differentiation: A well‑designed programme can create an emotional connection that sets the brand apart from competitors.
Potential drawback:
- Cost inflation: If the reward structure is too generous, the programme may erode profit margins, especially if customers only purchase to earn points.
Mitigation strategy:
- Implement tiered rewards that increase benefits only after a threshold spend, ensuring that higher rewards are linked to higher revenue.
- Regularly analyse redemption rates and adjust point values or expiry dates to maintain a favourable cost‑benefit balance.