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7 Reasons You Should Implement A Customer Loyalty Program


Well! Like any other relationship, trust and loyalty are important to take that to the long term. The same rule applies here to take your customers a long ride with your brand. In that way, loyalty programs can play a vital role in making your customers feel special and valued. 

You can be in the hotel industry, eCommerce store, or any business field Customers are your business asset, and loyal customers are the lifeblood of your business. Customer loyalty is not based on them liking your product or service; it is a huge part of your business. How?

Without any disagreement, your loyal customers can take your business and brand to the next level through their references. Also, the loyalty program you implement in your business can stimulate their purchase behavior, increase your sales, and boost revenue. 
It is said that 53% of Americans participate in loyalty programs because of ease of use – Loyalty marketing statistics.  In this article, let’s learn more about the benefits of loyalty programs, how to create them, and reasons to implement them in your business.

Benefits of Loyalty Programs

Customer loyalty programs benefit the business as they are one major reason for customer retention. According to the survey conducted by Yotpo in 2022, 69% of the global respondents became loyal customers through loyalty programs. 

The customer loyalty program uniquely leverages your customer data – past purchases, purchase frequency, product preferences, abandoned carts, and more. With this, you can create a personalized experience for your customers. 

As a business, you can reap the benefits of implementing customer loyalty programs like,

  • Reduce customer acquisition costs
  • Drive revenue to your business
  • Improve the retention and churn rate 
  • Turn your customers into Brand advocates
  • Increase the purchase frequency and the order value

Though there are many benefits, customer loyalty programs can vary from one brand to another however, that comes under a strategic marketing approach a brand can follow to increase the customer lifetime value and boost the revenue. You can even opt-in for gamification in your loyalty program that triggers your customer’s engagement. 

Many famous brands have bridged gamification into their loyalty programs and are seeing a good return on their business. You can also be one among them; get to know how by reading the 10 VIP programs examples

How to Create a Successful Loyalty Program

Undoubtedly, the cost that is spent to acquire new customers is likely higher than customer retention. Here are some interesting facts

  • 20% of the customers are typically responsible for 80% of the company’s revenue
  • Keeping your existing customers is five times less expensive than acquiring a new one
  • It is easier to persuade existing customers than the new one

Though a loyalty program is a powerful marketing strategy a brand can implement, you still have to analyze if it will be a useful tactic for your business growth. 

For instance, if you are spending $175,000 for your marketing effort to acquire new customers and increase your brand awareness but, compared to it, you spend only $17,500 in your tiered programs, then as a business owner or marketer, you know which is a good fit for your business. 

However, creating a successful customer loyalty program is important because you can do something like that. What should be considered? Let me tell you.

  • Get to know your customers better. 
  • Align your business goals and prepare the incentivized program
  • Plan your budget for the loyalty program 
  • Decide which customers to target and how to encourage them to get inside this program.
  • Plan how to motivate your customers to level up in this program.

But, implementing loyalty programs for businesses is a never-ending process. You can’t just implement it and leave; you must upgrade and tweak the portfolio according to your business growth, customer preferences, and market change. 

Why do you have to implement a customer loyalty program in your business? Let me give you seven valid reasons. Scroll down to learn more.

7 Reasons to Implement a Loyalty Program

The best loyalty program has the power to transform your customer-centric business. The loyalty program is a powerful marketing strategy that every business should implement. 

Here are the seven reasons why you should implement a loyalty program:

1. Increase Customer Retention

Ultimately, the goal of every brand is to turn their one-time customers into loyal customers and loyal customers into loyal fans of their brand. One way to make this happen is by implementing a well-crafted loyalty program. Encouraging your customers to make purchases, sign up, and refer their friends to your brand with rewards like coupons, cashback, discounts, and points can positively impact and make them do more. 

The customer loyalty program retains your customers and attracts new customers.

Bed Bath & Beyond is a great example of a brand that has introduced a successful loyalty program. Their program offers customers a 5% discount on every purchase, double points for product reviews, a price match guarantee, free returns, and more!


2. Boost Sales and Revenue

A good brand encourages customers to stick with them, make more purchases, and also be loyal to their brand. Indeed! Loyal customers are the ones who are ready to make more purchases and also refer your brand to their network of friends and family, which helps you see an increase in sales and revenue. 

It is said that according to Yotpo, 52% of American consumers join the loyalty program of the brand they make frequent purchases from. 

Kohl’s is a great example to show you, and it is a great money-saving shopper for customers who are looking for a good deal. The brand gives points for every dollar the customer spends in-store, online, and app to drive repeat purchases and urgency to their offers. 


3. Building relationships and Increasing Engagement

Engagement is the big buzzword among brands today when it is used for loyalty, which means that customers who are loyal and into the tired programs would like to make more engagement, such as repeated purchases, activity on social media, attracting new customers, and more! 

As a brand, connecting with customers at their emotional level makes them come back, which will boost your revenue.

DSW brand has designed a loyalty program that connects its customers emotionally. The brand is operated on point, an incentivized program that offers free shipping for every purchase, gives points when a customer donates a new pair of shoes to needy people, and also additional points for providing birthday info, store pick up, and more!

4. Drive Traffic to the Site

Another main purpose of implementing a customer loyalty program is to make your customers feel that they are rewarded more for their activities. This method is one effective way to drive traffic to your website and make your existing customers bring new ones. This works especially well when you tie up a tired program with the referral scheme

5. Create Strong Brand Advocates 

Brand advocates are your brand’s strong and positive influencers – spreading the word, influencing the people, and sending their circle your way. When your loyal customers become your brand advocates, they tend to babble about your brand in their circle, and your brand becomes the focal point.

It is said that 50% of Americans prefer word-of-mouth marketing over all other forms of marketing – Entrepreneurs. 

Consider the Lego Insider; the brand not only offers points and discounts for the purchases they make but also exclusive sets and monthly promotion offers only for “VIPs.”


6. Better Customer Insights 

Customer data is indeed a priceless resource for a brand. A good customer loyalty program helps the brand collect valuable information from the consumers’ buying behavior and preferences. 

These data help the brand to understand their customer’s expectations, fulfill their needs, and stand ahead of the competition. The loyalty program helps you to collect zero-to-first-party data like

  • In-app purchases
  • Website visits
  • Product preferences
  • Purchase frequency 
  • Email and SMS reactions
  • Transaction patterns and POS behavior (redeemed discount, frequency, etc.)

This customer insight helps you tailor your product or service, loyalty program, and email and SMS campaigns

7. Improve Business Practice on the Whole

Apart from that, as a brand, you have to focus more on improving your business by having proper communication with your customers. By asking them about the satisfaction level of your product or service, purchase, and payment experience can help you understand the gap where you have to improve and strengthen your relationship with your customers. 

Eventually, those filled gaps help you increase your customer satisfaction level, which turns them into brand advocates and referrals. 

Ready to Implement Your Customer Loyalty Program? 

Introducing a customer loyalty program into your business can have a significant positive impact on its success. Doing so can create an exceptional brand experience, establish a strong bond with your customers, and foster their loyalty towards your brand. 

TargetBay offers two products, BayEngage and BayRewards, which can greatly assist you in managing your loyalty program and communicating with your customers through their preferred channels in a timely manner. 

Moreover, combining customer loyalty programs with marketing automation can be highly beneficial as it allows you to send personalized messages to your customers regarding their tiered upgrades, points earned, exclusive offers, and more, thereby increasing their attachment to your brand. 

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Stalia S

Stalia.S, a Content Marketer behind TargetBay's content, explores the dynamic world of eCommerce. She's your go-to expert, passionate about crafting compelling content on email/SMS marketing, customer loyalty, and customer/product reviews. Beyond the digital realm, catch her on adventures, relishing diverse flavors and hitting the drawing board with her comrades.

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