NDSU Extension Service - Ramsey County


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Are You a Loyal Customer?

Are You a Loyal Customer?

There is no shortage of retail stores offering customer loyalty programs that claim to save consumers significant amounts of money. As competition heats up in certain industries, more and more companies are expanding their rewards programs or rolling out revamped or completely new perks that customers can earn by shopping or flying frequently.

Do these programs really live up to their claims? The answer depends on the retailer and the amount of effort the consumer is willing to make to save money on future purchases.

Here is a look at whether customer loyalty programs are really worth your participation and how much money you can expect to save.

Customer loyalty programs reward consumers in different ways, including discounts off future purchases and points systems. These programs are used to increase loyalty to a specific store by encouraging customers to shop there more often.

How often you are rewarded by a customer loyalty program varies, depending on the store's policy and how much you participate in the program. Most loyalty programs provide rewards that are "earned" -- your purchases also rack up points or discounts toward future purchases. If you shop often at the store, you may be able to cash in your rewards fairly quickly. But if you shop at the store only once in a while, it may not be worth signing up for its loyalty program.

While many retailers and restaurants offer customer loyalty programs, each one is as unique as the store that offers it. Be sure to read the fine print in the loyalty program contract. This document will explain how you are rewarded, how often you can cash in and whether there are any limitations. Before signing up, make sure you know exactly what the program entails

Whether a customer loyalty program is worth your participation is debatable. If you sign up for a program at a store you shop at frequently, it is likely to be worth your while. For a store you rarely shop at, it is more likely to be a waste of time and effort. Also, don't sign up for a program where you have to spend more to save more. Sign up for a program that allows you to save money on your everyday, essential purchases.

Enroll in customer loyalty programs at stores where you are likely to spend money on things you actually need. Loyalty programs will benefit your bottom line if you are getting discounts on items you already buy, as opposed to frivolous items you would not otherwise purchase.

Of course, loyalty programs were invented to boost sales, not to aid consumers. But smart spenders know they can reap great value if they use loyalty programs to their advantage.

American households typically belong to 18 loyalty programs but participate in fewer than half.   Each program has different rules and benefits, and consumers have only so much time to devote to learning the programs.

A caution: Don't get too carried away with loyalty programs and lose sight of tried-and-true smart tactics, such as comparing prices and judging whether you truly want to make the purchase at all

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