Customer loyalty programs: Building customer relationships

27 Jun 2022 | Business & Strategy

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Hooshang Bakht

Brego Business was started with a mission to make entrepreneurship easy. Our goal is to help business owners grow and scale without having to deal with the day-to-day stress of running a business. We specialize in providing services that help business owners grow their businesses, including search engine marketing (SEM), social media marketing (SMM), LinkedIn marketing, video production, accounts receivable (AR), accounts payable (AP), internal audit, VCFO, and recruitment. We have helped more than 500 brands grow their businesses. We work closely with the clients to understand their unique needs and develop customized strategies that deliver measurable results.

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In a highly competitive marketplace where businesses compete to achieve customer satisfaction, customer loyalty seems to be a significant differentiator and increasingly has become an integral part of modern marketing.

While customer satisfaction refers to fulfilling the needs and meeting your customers’ expectations, customer loyalty is different. In the simplest word, “If Customer Satisfaction Is Rating, Customer Loyalty Is A Label Of Trust.” While customer satisfaction increases brand reputation and popularity, customer loyalty boosts profits, improves sales, and contributes to substantial growth. But how to turn satisfied customers into brand loyalists? Is it that easy to achieve customer loyalty?

Over the years, the marketers have poured millions in advertising and public relations but couldn’t achieve anything beyond leads. While the goal is to get brand loyalists, investing in customer loyalty programs makes sense. In this post, we will talk about customer loyalty programs, what they are, what their benefits are, and also share a few examples of successful customer loyalty programs.

What Is the Customer Loyalty Program?

By definition, a customer loyalty program is a marketing strategy that involves rewarding customers who are frequently engaged with the company/brand. In today’s highly competitive market, where customers quickly switch to another vendor on facing any inconvenience, customer loyalty programs come up as an effective solution. It increases recurring engagement by rewarding the customers and ensures sustainable business growth.Businesses can reward in points or perks and gradually promote customers to a higher level of loyalty based on their purchase. The more the customers purchase, the more perks & benefits they get.


A recent study by Accenture suggests that 76% of customers join customer loyalty programs to save money, and they spend 21% more than other customers outside customer loyalty brands.


Customer loyalty programs are vital in retaining customers. Here is how customer loyalty programs benefit your business.

Get to know what are customer needs in this blog: 10 Sales Questions To Quickly Identify Your Customer’s Needs

Why Are Customer Loyalty Programs Important?

Because they make your customers feel special & recognized, customer loyalty programs lead to higher retention rates, more referrals, and profits. If you ever wonder about the concept of customer loyalty programs, let us tell you that they are all based on rewarding positive behavior. Here we mentioned some benefits of customer loyalty program.

  • Improve Customer Experience

Customer experience is determined based on pre-sale and post-sale processes. While most businesses focus on improving customer experience with a robust business or other high-end technologies, having a customer loyalty program can simplify it. Customer’s expectations of earning rewards and building a reputation will gradually improve customer satisfaction, thereby creating a positive customer experience.

  • Better Customer Engagement

Keeping customers engaged throughout the process is important for brand loyalty and directly impacts brand sustainability. A brand that doesn’t connect with its customers often faces a low retention rate and struggles with developing a brand image. Though social media and other marketing metrics are solely focused on customer engagement, customer loyalty programs do this in a better way.

  • Retain Existing Customers

One of the biggest benefits of Customer Loyalty Programs is that they immediately impact customer retention rate. Loyalty programs are very effective at retaining customers by preventing them from switching to competitors. They increase the company’s additional recurring revenue and make customers happy with perks & benefits. This all together goes beyond a better customer retention rate.

  • Increase Customer Lifetime Value

In a survey conducted by Salesforce, 85% of customers admit that they will stick longer with a brand with customer loyalty programs. In addition, 66% of customers admit that customer loyalty programs positively influenced their spending behavior, and they spend more. Customer loyalty programs are perhaps the most inexpensive to implement, but they can dramatically increase the customer lifetime value. Moreover, if a customer loyalty program is engaging and has amazing rewards, it will boost the revenue.

  • Boost Sales and Revenue

The research conducted by Investopedia suggests that “increased customer retention rate by 7% can increase revenue by up to 90%.” While retaining existing customers will cut the customer acquisition costs, brand loyalists are likely to bring you more customers, in case of a referral program.

There are different types of customer loyalty programs that you implement as per your goals. Below are a few examples of successful customer loyalty programs.

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Examples Of Successful Customer Loyalty Programs

Customer loyalty programs are available in many different forms. While small businesses can use just one program to increase customer retention rate and revenue, leading businesses are running multiple customer loyalty programs to build a solid clientele. We’ve mentioned a few of the top customer loyalty programs so you can choose the best type of customer loyalty programs that better suit your business and customer needs.

Point Program

Perhaps the most common loyalty program in the eCommerce industry, Point-based customer loyalty programs are based on a simple principle: Spend more to get more.

  • Customers make in-store or on-site purchases.
  • They get points based on the size of their purchase.
  • Customers can redeem the points to make either other purchases or unlock special features.

Spend-based Reward Programs

Spend-based loyalty programs are popular among startups and businesses looking to increase sales and revenue. Moreover, they are easy to understand, create and maintain.

  • Customers spend money on your products or services.
  • They get rewards based on how much they spent.
  • The rewards can be used to make purchases with you.

Tiered Programs

It is a type of membership program in which the customers enjoy mixed benefits of all loyalty programs based on their level of recognition.

  • Customers are titled with different levels.
  • They are promoted to higher levels with every purchase.
  • The higher the level, the more rewards they get.

Paid Loyalty Programs

Big organizations and eCommerce companies often leverage this type of program to differentiate satisfied and loyal customers.

  • Existing customers pay a certain amount for prime membership.
  • They get additional perks and benefits than others.
  • Get early access to offerings.

Hybrid Loyalty Program

As mentioned earlier, hybrid customer loyalty programs are often implemented by leading companies. They combine two or more services to provide customers with a whole new experience.

  • It can be a combination of point and cashback programs.
  • The points can be redeemed to unlock other programs or make purchases.
  • The cashback will be directly credited to either company’s wallet or bank account.

Frequently Asked Questions: Customer Loyalty Programs

Are you planning to start a customer loyalty program soon? Gauge through the frequently asked questions about loyalty programs. It will clear your doubts and give your better insight.

What Is The Scope Of Customer Loyalty Programs?

Studies have suggested that loyalty programs engage customers and positively convince them to maintain long-term business relations. Besides increased retention, loyalty programs can boost your brand value.

What Is The Purpose Of Loyalty Programs?

The sole purpose of loyalty programs is to retain existing customers. However, they can attract more new customers and lure them to attractive rewards and bonus points on every purchase.

How Do Customer Loyalty Programs Increase Revenue?

Loyal customers are the most profitable customers, and a loyalty program is an effective business tool that improves customer experience, drives sales, and rocket up revenue.

Final Words

Whether your vision is to make happy clients, generate revenue, or have an unparalleled reputation, having a well-thought-out customer loyalty program can work. It will improve the customer retention rate and chances to drive leads through word-of-mouth referrals.

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