It can be fairly argued that there are two types of people in this world — those who love to exercise their purchasing power (“I’ll take one in every color!”), and all the rest, who are “Just looking, thanks.” The rapidly growing field of behavioral economics is built around the psychology of what influences people’s buying decisions, in particular the factors that successfully persuade the more tentative shoppers among us to part with our hard-earned money.
One of the most successful psychological strategies to date is commonly known as the retail loyalty program. The concept of sellers encouraging continued patronage by their customers has been around for ages, going back to the days when a farmer would give his best customers an apple or extra tomato when they made their purchases to encourage them to come back to that stand or market. The current scenario typically involves a “points” system, in which a retailer offers customers an opportunity to amass points earned from current purchases and then redeem them on future purchases at their store. This method allows retailers to gather and analyze valuable data on customer purchases, patterns and preferences, leveraging their loyalty programs to continually encourage customer loyalty and grow market share.
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