Issues on Consumer Rewards Programs

Business survival largely depends on consumer spending and the business’ ability to keep their customers happy. If customers suddenly lose interest in a product or service, the loss automatically translates to lower sales, which can result in bankruptcy and eventual business closure. Because business owners want to prevent this scenario, many companies offer their customers loyalty programs.

Customer loyalty programs provide rewards for long-time clients through different incentives such as free products and services. In recent years, the said program has come under fire because of several allegations. If you’re planning to apply for the said program, here are some pointers worth noting.

It promotes monopoly

While the reward system might lead people to limit their purchases to certain establishments only, it doesn’t promote monopoly since the consumer still has purchasing power. Businesses promoting the reward program cannot prevent consumers from buying from their competitors because this is against the law. In truth, the program is more of a guarantee for business owners that the consumer would at least consider making repeat purchases from their establishment.

The rewards are unattainable

A consumer rewards program has mechanics in place to help you get the reward you want. The rewards are only unattainable if consumers don’t make major purchases in the establishments that offer the rewards. If it’s really impossible to get the rewards, businesses offering the program may face lawsuits and other legal consequences.

It misleads people

Many businesses offering a consumer rewards program present a complete lineup of what consumers get when they make purchases from participating establishments. These businesses do this so clients know what they have to do to get the rewards they want. The problem is that many clients assume they can get more even if they buy less. This leads many buyers to become disillusioned with the programs. The functional philosophy behind consumer loyalty programs is that the more you buy, the more you get.

Businesses sell your identity

While many establishments adhere to privacy laws, there are some businesses that don’t follow these regulations. This is unfair to businesses who strive to protect the privacy of their loyal customers. The best way to protect yourself is to determine if the customer loyalty program provides a clause for the protection of the consumer’s privacy.