History

The objective of loyalty programs has not changed in more than a century since they were first introduced as The S&H Green Stamp program in 1896 [17]. This was one of the earliest efforts to win the hearts, minds, and wallets of customers. To encourage loyalty, consumers received tiny stamps when they made purchases from participating merchants, which glued them to the pages of booklets where they could redeem them for products when the accumulated stamps attained a certain value. At one point in history, this program was so popular that S&H Green Stamps issued three times as many stamps as the U.S. Post Office. 

 Increased competition following the 1978 Airline Deregulation Act encouraged airline marketers to create ways to reward repeat customers and drive brand loyalty. The first idea at American Airlines (a special “loyalty fare”) was expanded to offer free first class tickets, first class upgrades for companions, or discounted coach tickets. Over the years, loyalty programs have evolved well beyond airlines, expanding into both the business-to-business (B2B) and business-to-consumer (B2C) marketplaces. Today, even mass marketers have adopted the loyalty concept because the industry has recognized that there is proven value in cultivating a loyal customer. The underlying belief is that a small percentage of customers generate most of the company’s sales; organizations call this as the 80/20 rule, as 80% of revenue typically comes from only 20% of customers [18].