6 Reasons Why Loyalty Program Is Important for Your Business

Nidhi Raghuvanshi

Senior Writer

Importance of Customer Loyalty Programs

Customer loyalty programs – You might have heard this term, especially if you are well-versed in the marketing policies of e-commerce websites. We all know that acquiring new customers costs much more than retaining existing ones.

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Hence, you must ensure that you do not lose your current buyers and take all measures to keep them coming back to you. And this is when a loyalty program comes in, so as to promote a seamless and enjoyable consumer experience.

However, the evolving contemporary market does not support a traditional loyalty program is not enough. In any scenario, if your buyer faces a bad experience, they are likely to abandon your company even if they have been a loyal shopper for several years. Customized customer loyalty programs take into account social factors and behavioral trends in order to increase ROI and customer retention.

Some of these actions include giving away rewards for referrals and distributing points for user-generated content. All these measures not only ensure an effective, personalized experience but also compel your shoppers to stick to your brand. And yes, we do know that so much in-depth planning and loyalty program software involve investment in resources. So is the effort worth it? Let’s find out.

Top 6 Benefits of Customer Loyalty Programs

Below, we have listed some of the major benefits of investing in a loyalty program:

1. Jump in revenues

As already mentioned, it is always easier to retain existing customers than to acquire new ones. Customer retention strategies are 25% less expensive than policies designed to attract new shoppers.

Your current consumers already trust your brand and have made purchases from your organization in the past. So, there’s a huge possibility of getting them to spend more on your products and services. With the application of the correct customer loyalty program, you can multiply your profits. In fact, increasing retention by a mere percentage of 5 can increase sales from 25% to a whopping 95%. 

2. Actionable data

The modern generation of young and millennial customers prefer a personalized experience. Now, when you launch a loyalty program, you generally begin by asking buyers to fill out a form that includes all their personal information.

With the help of these profiles, you can customize the user experience. This helps you to curate targeted marketing campaigns in the future, thereby, creating a trustworthy bond, which can, in turn, help you in your referral program. Additionally, based on their profiles, you can pick preferred products and present them to your buyers. Since these items are based on their behavioral patterns and buying history, they are more likely to make a purchase.

3. Enjoyable consumer experience

Customized customer loyalty programs promote the feeling among buyers that they are appreciated by your company. They feel as if they are being rewarded for shopping from your site and hence, they shall develop an emotional connection, which may cause them to pardon small mistakes. You can also go a step ahead and promote a special loyalty program where you surprise buyers with points and gifts.

4. Increased engagement and communication

Data collected from a loyalty program gives you valuable insights through detailed analytics and comprehensive reports. Some of these metrics include program engagement, repeat customer rate, and buying frequency. Moreover, Customer loyalty programs offer you the option of improving your communication with customers.

For instance, when there’s a case such as a product recall, you can correlate purchase dates and then send a personalized email. A loyalty program can also be used to inform customers about promotional sales, and special events, and advertise new arrivals.

5. Acquiring new customers

A properly executed loyalty program, which is exclusively curated for existing buyers can also attract new customers. For instance, when you give sign-up points or offer discounts for creating an account, you go a step ahead in attracting new customers.

You can add these names to your email list and then send out communications about a loyalty program. Since most buyers love to try out rewards, this is a simple yet effective way to increase your shopper base. Additionally, there’s a high chance of loyal customers recommending your brand to their acquaintances. 

6. Constant evolution

You should make sure that your loyalty program doesn’t stay stagnant, or else it becomes monotonous. You should constantly try to improvise your loyalty program by introducing emerging trends such as referral marketing as well as visual commerce. For example, if you wish to promote a new product by featuring user photos, you should approach your existing buyers. 

How do You Create the Perfect Customer Loyalty Program?

Yes, we have already established that customer loyalty programs are vital for the growth of your organization. But in order to create the perfect policy, you need to start with a comprehensive action plan. Now, how do you do that?

Once you launch a loyalty program, measure its performance. Use the data gathered from your offers and use this information to improve the whole business operation, which is not just limited to the loyalty program. Again, customer loyalty programs do need to be consistent, but you should evolve with the market dynamics. Use repeated testing and customization to incorporate novel and different benefits. This will help to keep buyers excited and they shall keep on coming back for more. After all, who does not want a good experience at a reasonable price? 

With the right analytical tools, you will also understand which offers do not make much of an impact. So, you can replace these obsolete ideas with fresh offers. Once you have the basic business model ready, you can always change it as per demand and changing needs. You should always strive toward increasing value for your customers while staying within the stated budget.


A comprehensive loyalty program that incorporates emerging marketing trends is the ideal way to promote your brand among existing buyers, who shall help you acquire new customers. After all, we trust references from trusted sources rather than relying on advertisements.

Customer loyalty programs do require a lot of planning but investing in the right one with secure your business success in the long term. And as per Pareto’s Principle, “80% of your sales come from only 20% of your customers.” Hence, returning customers from the major chunk of buyers who ensure that your venture stays profitable in the future.

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