The basic principle is that by 'recognising' and acknowledging best customers they in turn will continue to reward you with their business thus a two-way loyalty bond is created and strengthened.

Recognition programmes needs to be innovative and motivating enough for customers to want to sign up to and most importantly submit identifying and demographic information about themselves, thereby enabling companies to identify and communicate with them. Companies gather information for their recognition programmes in a multitude of ways; online, direct research, application forms for loyalty cards, or customer surveys. A common tactic used to gather information is when a company provides an incentive in exchange for information. This may come in the form of automatic entry into a competition to win desirable consumer goods or an amount of money when they have submitted an enquiry form or customer survey.

The basic assumption of recognition program (recognition programme) marketing is the fundamental marketing tenet that keeping existing customers is far less costly than acquiring new ones. Reichheld and Sasser claimed that a 5% improvement in customer retention can cause an increase in profitability between 25% and 85% (in terms of net present value) depending upon the industry. Improved customer loyalty, supported by recognition programs (or recognition programmes) delivers greater customer profitability.

For most companies, in the drive to meet corporate objectives, increasing the loyalty of customers and other stakeholders through loyalty marketing initiatives such as recognition programs (or recognition programmes) is now thought to be a strategic imperative.