What are the positive and negative effects of loyalty programs for companies?

I'll start out with the bad news. A well-planned, thought-out loyalty strategy costs money. It takes an investment of time and money to make sure you design the program and get it right from the start. Rewards also cost money, but that's why you should involve your finance team in the planning, to make sure you've got a budget right.

Once you've gotten past planning point, the good news is loyalty programs are designed to make you more money.

The positive effects are many: You can encourage repeat business from your existing customers, you can attract new customers (72% of shoppers would prefer to buy from a retailer that has a loyalty program over one without), and you can find out more about your customers and their shopping habits. And if you're paying attention to how your customers react to the program, and keeping the program and rewards fresh, you'll get great returns on that initial investment, which is great news for the company.

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