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What Is a Loyalty Program?

If you own and operate a retail store, implementing a loyalty program is your best shot at retaining customers. What does a customer loyalty program do? Shoppers who enroll are typically given a membership card, or another unique identifier, which they use when making a purchase. Membership enables them access to special deals, discounts, and points that they can later apply towards future purchases. The more the customer shops at your store, the more they will save if they are members of your loyalty program, and this incentivizes them to return often and shop frequently.

Loyalty programs are a way to attract and retain customers. When customer loyalty is fostered, companies benefit from increased revenue, and that’s the real meaning behind a loyalty program. The membership platform itself tracks the shoppers’ purchases, collecting critical data that the retail store can then use to tailor personalized deals. Having access to shopping trend analytics such as these can, in turn, influence successful promotional efforts that lead to even more sales.

Existing customers spend 67% more than new customers, according to Doug Nolan of FasTrax, a software company that develops inbound marketing, sales, and customer service products. All of that increased spending can really positively impact your balance sheet and keep your revenue healthy. It’s not about selling services and products. It’s all about customer experience and putting the customer first and the brand second, because sales and marketing won’t grow your business faster than customer loyalty can.

In the long run, customer loyalty programs end up paying for themselves, which is why the most successful industry giants have implemented them. Starbucks enhances the day-to-day life of its loyal customers by offering exclusive music playlists to high-spending members and they recently added a new earned-points system where loyal customers can redeem accumulated points for freebies in as few as three visits. Nearly every airline in the airline industry has a loyalty program for frequent fliers, and big-box retail stores like Costco have retained loyal shoppers that shop there almost exclusively because their deals are too good to pass up.

But this doesn’t mean your business has to be huge before it implements a loyalty program. In fact, a solid loyalty program built on a strong digital platform is the most streamlined and effective way for your retail store to become huge. The right loyalty program benefits all involved.

“When rewards programs are integrated into the customer’s everyday routine, they can cultivate true brand loyalty. Companies are doing this by eliminating punch cards for unique mobile experiences that connect a customer to the brand’s product or service.” James Chen, Investopedia

Brand loyalty is important, and by that, we mean your retail store’s brand. Just as your shoppers are loyal to product brands, if you choose the right loyalty solution to launch your rewards program, your customers will soon regard your store as their new favorite brand. But James Chen of Investopia knows what he’s talking about. Punch-cards are a relic of the past, so don’t even think about wasting your efforts on those antiquated buy-ten-get-one-free promotions. Even plastic swipe cards are passé.
Nowadays, the mobile app is where it’s at and if you’d like to know why—and how to get started with your own digital-based loyalty platform—Tune in next Tuesday for our next article about the purpose of a loyalty program and how a loyalty program app is way better than a loyalty program card.

This article was written by Loyal-n-Save, an omni-channel customer loyalty solution for retailers looking to increase customer retention and new customer acquisition.


  • What Is A Loyalty Program

Posted on Apr 14, 2020


Danielle Dixon

Danielle is a content writer at Loyal-n-Save. She specializes in writing about implementing loyalty solutions proven to help a company grow.

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