What is the function of customer loyalty programs?

Customer loyalty programs are designed to reward frequent customers with benefits, which is why this answer is correct. These programs incentivize customers to continue shopping with a particular brand or business by offering various rewards, such as discounts, exclusive offers, points towards future purchases, or even special access to events. This not only enhances customer satisfaction and promotes a sense of belonging but also encourages repeat business, which is vital for long-term profitability for companies.

Furthermore, the other choices do not accurately reflect the primary goal of loyalty programs. Penalizing infrequent customers contradicts the essence of loyalty programs, which aim to build relationships rather than create negative experiences. Increasing product prices is counterproductive to encouraging loyalty, as customers are more likely to remain loyal when they perceive good value. Limiting the availability of new products does not align with the purpose of fostering customer engagement, as introducing new offerings is often a strategy used to attract and retain customers by keeping their interest alive.