In the Customer Loyalty model, customers are retained and loyalty is achieved by providing value over and above the basic products or services (e.g. through incentive-based programmes). The objective is to establish a relationship with customers and cultivate their loyalty through special offers or discounts. Customers become voluntarily entangled with the company in this way, which discourages them from opting for competitors' products and services, thereby protecting the company's revenue. Nowadays, the primary method of retaining customer loyalty is through a card-based loyalty program. The card keeps track of the customer's purchases and calculates the associated rewards. These bonuses can be in the form of tangible goods or rebates on future purchases. Discounted goods offered to loyal customers are intended to entice them to return frequently to the store. While loyalty programs make overt appeals to rational purchasing decisions, they also leverage psychological effects. Customers are frequently motivated by a 'bargain hunting' instinct, which is frequently more important than an offer of financial rewards for loyalty program enrollment. At the end of the day, this can mean that customers make purchasing decisions based excessively on the rewards they can earn through a loyalty program - even if they receive only 1% of their money back on average. By offering such a loyalty program, a business can profit from sales that it would not have been able to make otherwise. Fulfilling rewards can be a new source of revenue, as they are typically only redeemable with the issuing company or a limited number of partner companies. Additionally, these rewards serve as an incentive for customers to make additional purchases, as they typically cover only a portion of the cost of new products or services.

When and how to apply Customer Loyality:

This pattern is effective in a wide variety of situations. Indeed, Customer Loyalty has become a necessity; customer-centric cultures are critical to a company's long-term success. If you place the customer at the center of your business and implement loyalty programs, you will be able to communicate with your customers. These types of initiatives strengthen your customers loyalty and association with your brand. With most industries being extremely competitive, winning and retaining customers is both an art and a science that everyone should strive to master. Well-known examples of companies that use this pattern are Visa and Harley Davidson.