“ Loyalty is a positive belief, generated over the course of multiple interactions, in the value that a company and its products and/or services provide, which leads to continued interactions and purchases over time.” Loyalty can be defined as a customer’s sustained commitment to a company as demonstrated by repeat purchases, increased wallet share, and positive word-of-mouth referrals. Research indicates that when a company can command such loyalty, the benefits include, but go considerably beyond, incremental revenue. Loyal customers go out of the way to use company’s services. With increased usage come increased revenues. It is an accepted fact that word of mouth is the strongest form of endorsement for a company’s product, service or brand. In an HBR study, Frederick Reichheld and W. Earl Sasser identified numerous bottom-line benefits of customer retention.1 They found that loyal customers purchase more, they will pay higher prices, they are easier to service, and they help expand the customer base by giving positive referrals. They established that a mere 5% increase in customer retention increases an organization’s profitability by 25 percent. Acquiring a new customer can cost as much as 5 times of keeping an existing one. Having said this, loyalty programs can be expensive to develop and maintain. The program cost varies from sector to sector. Airlines and Hotels, have a very high fixed cost and run low on variables cost. Unsold inventory and distress inventory offers exciting avenue to reward customers. The cost to fly an additional person who purchased his or her ticket with points is trivial. On the other hand every point that a retailer awards has to be paid for the company by cash. Other associated costs for loyalty are attributed to system those system costs. System costs involve the cost of technical infrastructure, the software cost and the integration costs. While many firms have been successful in implementing loyalty programs, not all the loyalty