What is a Loyalty Program?

Loyalty programs offer rewards, discounts, coupon codes, and other special incentives to customers as a way to encourage repeat business. Companies can offer points or benefits to customers in return for their loyalty, and customers can redeem those points for discounts, free products, rewards, or insider perks.

Benefits of Loyalty Programs

👍 Increase Customer Loyalty and Retention

Loyalty programs encourage customers to keep shopping with you. Rewards for repeat purchases can make customers more loyal, increasing the chance they’ll stick with your business in the long run.

👍 Drive Repeat Business

Loyalty programs offer incentives for customers to keep coming back and making more purchases. This leads to more repeat business, which can boost your revenue.

👍 Collect Valuable Customer Data

When customers join a loyalty program, they typically provide information about their preferences and shopping habits. This data can give you valuable insights into how to improve your offerings and marketing strategies.

👍 Boost Customer Engagement and Satisfaction

Rewards and incentives make customers feel valued. This can increase customer satisfaction, and satisfied customers are more likely to engage with your brand and keep shopping with you.

👍 Increase Brand Awareness

Loyal customers often talk about their favorite businesses to their friends and family. This increases brand awareness and can bring in new customers through referrals.

👍 Personalize the Shopping Experience

With the data you collect from your loyalty program, you can personalize the shopping experience. This could mean offering tailored discounts or recommending products based on a customer’s past purchases.

👍 Opportunities for Cross-Selling and Upselling

Loyalty programs allow you to offer special deals on related or higher-priced items. This gives you the opportunity to cross-sell or upsell, increasing the average order value.

👍 Drive Additional Revenue

Exclusive promotions and discounts for loyalty program members can encourage more spending. This can drive additional revenue, making your business more profitable.

Examples of the Most Innovative Loyalty Programs

Store	Loyalty Program Details
Amazon	Amazon’s loyalty program offers a wide range of benefits to customers, including free two-day shipping, access to streaming video and music, and exclusive deals and discounts. See more about Amazon Prime.
Chick-fil-A One	Chick-fil-A’s loyalty program offers rewards and perks based on customers’ spending at the fast food chain. This includes free food and drinks, as well as personalized offers and discounts. See more about Chick-fil-A One loyalty program.
Sephora	Sephora’s customer loyalty program offers rewards and perks based on customers’ spending at the beauty retailer. This includes free samples, birthday gifts, and access to exclusive events and sales. See more about Sephora Beauty Insider program.
Starbucks	This popular coffee chain offers a loyalty program that allows customers to earn rewards and perks based on their spending at Starbucks. This includes free drinks and food, as well as personalized offers and discounts. See more about Starbucks Rewards program.
Target	Target’s loyalty program offers personalized rewards and offers based on customers’ shopping habits and preferences. This includes personalized coupons, early access to sales and promotions, and the ability to earn rewards on purchases. See more about Target Circle Rewards program.

FAQs

What Is the Purpose of Loyalty Programs?

Loyalty programs aim to motivate repeat purchases and build trust between the customer and the business. Retailers and other businesses sponsor the agenda, and they are designed to encourage store/brand loyalty (hence the name). Typically, the more often a customer patronizes the merchant—and the more they spend—the greater their rewards.

How Do Customers Respond to Loyalty Programs?

According to a recent poll conducted by Yotpo, a significant number of people are willing to go the extra mile for brands they love. Nearly 68% of respondents said they would join a customer loyalty program for a brand they like, and 56% said they would be willing to spend more with that brand even if cheaper options were available. The study also found that people want more than just free shipping and discounts from loyalty programs; they also want early access to sales and new products.