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Loyalty Programs Battle for Members at Restaurants, Hotel Chains and Airlines/Compete with Online Travel Agencies, Business and Industry Trends Analysis

Consumers are inundated with loyalty member programs.  Retailers are attempting to create competitive advantage with loyalty points.  Drug store chains like Walgreen’s and CVS reward you every time you make a purchase. Walgreen’s points are immediately available to convert into cash towards your purchase. Restaurant chains hope to create repeat business with loyalty programs as well. Giant, Houston-based Landry’s, Inc. pushes its program very aggressively.  Customers pay to join the program, but then get generous points with each bill, and can redeem the points for cash on future restaurant bills. Elsewhere, Starbucks is one of the most aggressive and innovative companies in the loyalty program scene, even though their typical purchase is relatively low compared to that of restaurants.  Starbucks is worth watching from time to time, just to see how it has evolved its program. However, a nagging question is:  how many programs, of how many different types, are consumers willing to join and keep track of?  The most compelling loyalty programs definitely have to do with travel.  Travel industry firms compete very fiercely to attract and keep loyalty members.  Consumers love them.  They can build up points towards free travel to dream destinations.  Business travelers can, in some cases, use them to build up some personal benefits from company-paid travel. Credit card companies have created intensely profitable partnerships with airline and hotel chains to offer points, convertible to travel, with every amount charged to a credit card.  The airlines and hotels pay the credit card companies vast sums for these points.  An excellent example is Citibank’s long-lived AAdvantage cards offered in conjunction with American Airlines.

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