Loyalty programs – also referred to as ‘rewards programs’ – encourage consumers to return to stores (or websites) where they purchase by providing certain incentives such as price discounts, advance notices of product releases, free merchandise, or games. Consumers usually become ‘members’ of a loyalty program by means of a purchase and providing some additional information to create a membership account. The typical loyalty program has a mechanism for the member to convert purchases (or other accepted transactions) into ‘points’ that are stored in an account, to be used later. Think of frequent flyer miles as one of the most widely recognized and mimicked loyalty program.
The reason that loyalty programs have become an interesting CSR topic is because more and more companies sponsoring loyalty programs are offering the option for a member to convert points into a charitable donation. The loyalty industry is estimated at $48 billion annually, which means that converting rewards ‘points’ into charitable donations could have a significant impact on society.