While many marketers have implemented loyalty programs, few have fully understood the complex nuances and challenges involved. Indeed, there are several widespread misconceptions about the design and implementation of such programs. Following is a list of some of these misconceptions as well as suggestions for avoiding them.

A good loyalty program can virtually run by itself. Once you've set it in motion, you can sit back and enjoy the ongoing incremental revenue stream. In reality, we've found that programs should be continually modified based on consumer needs, wants and expectations. For example, to this day, a leading retailer has been continuing a "deferred- gratification" program established decades ago in which customers get a payment based on a percentage of their year-to-date purchases. Of course, both the world and consumers have changed since this program was launched. Not surprisingly, research showed that a majority of their customers desired to have rebates they could immediately apply to full-price and sale purchases, rather than getting a yearly payment. Research also revealed that a majority of their customers desired free shipping for online orders.

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