In the Loyalty marketing business model the approach of doing marketing is based on strategic management. In this model the focus of company is on growing as well as retaining any existing customers by various means like providing attractive offers and incentives. The common propositions used are those of Branding, product marketing and loyalty marketing. The customer’s decision about the re-purchase of a branded item is based on the value for money he/she gets through the deal, which is governed by these marketing disciplines.

The customer loyalty marketing has been around for a lot of time, but the recent approaches and its expansion to encompass complex marketing methodologies had helped in making its presence more noticeable in the organizations dealing in consumer marketing sector.

The loyalty programs have had far reaching impact on the minds of consumers and due to the techniques used, the way in which customers interact with the companies has changed to a great extent. In addition to this they have also changed the consumers spending on product and services. The convenience of the loyalty programs has become so irresistible that many consumers in Europe and United States of America have begun to take the rewards and offerings, which they receive by for example, becoming a “card carrying” member of a hotel, rental program or airline in a very casual and accustomed kind of way.

In recent years, the race to attract high end consumers has now taken the rewards and points incentive to the next level. In fact these additional perks have become more useful to the consumers than the product itself.

In the loyalty business model the employees are trained to achieve a specific paradigm. The paradigm being that the product or service quality brings home customer satisfaction and customer satisfaction is the key to customer loyalty and hence forth is the key ingredient for achieving maximum profitability. Loyalty marketing is nothing but an extension of this effort from the end of employees that utilizes the advertizing by word-of-mouth of those with great past experiences with such business ventures to attract new customers and achieving maximum profitability from the venture.

The basic premise used here is that the recent experience becomes the basis of customer’s satisfaction criteria. It also depends on the prior expectations of the customer with quality of product overall in comparison to what quality or performance he/she actually got. Customer Satisfaction will be high if the most recent experience is above the level of expectation of the customer. So it’s also possible that even when mediocre quality is received by customer, his/her satisfaction remain good because of the expectations being lower than the achieved level. Similarly the chances are that, a customer can be dissatisfied even when the overall quality of the service is good. This typically occurs when a quality service is priced too high and the transaction adds a very little value.