Customer Loyalty Programs: Are They Really Worth the Hype For Your Business?


Are loyalty programs worth the effort, or a complete waste of money, effort, and time? There are so many competitors out there; business owners have to work hard and get creative to keep customers coming back.

As a business owner, you know how important customer retention is. Customer loyalty programs are used to encourage return business and give loyalty rewards such as discounts and other exclusive promotions. Learn how they can be the magic tool for your business.

Customer Loyalty Programs

We all have those random punch cards in our wallets and have entered our name, e-mail, or phone number at least a few of our favorite local stores. It feels good to support local businesses and feels even better to have rewards kicked back to you for being a loyal customer.

Loyalty programs are a way to acknowledge and give back to your customers. People appreciate being seen, and rewarded. No matter what the incentive is, belonging to a loyalty program at our favorite store helps us feel like we are a part of the community.

When Customer Loyalty Programs Don’t Work

Do these programs really work? Success on the first attempt happens all the time with loyalty programs, but it is not uncommon for a program to fail, or fall short. Loyalty programs do have plenty of pros, and of course, there are a few cons:

  • Loyalty programs can be expensive to run
  • You may need to try several programs before finding the right one
  • Inconsistent results
  • Limited data
  • Too much work

It is up to you to choose the right program, or try several until you find the right one. And, keep at it! Loyalty programs do work, but they do not work all by themselves.

Why Discounts May Not Be the Answer

Fellow business owners who have tried running loyalty programs are a great source of tips and advice. Many of them will warn against giving discounts as a reward for customers.

Though it is a great incentive to keep customers coming back, giving discounts could be hurting your business more than it is helping. So, the big question is how do you reward your customers without going bankrupt?

Loyalty Program Ideas

What types of loyalty programs have you tried or considered trying? There are so many to choose from that it can be hard to narrow the possibilities down. The advantage this gives to business owners is that they can alter programs to suit their customers and the nature of their business.

Points systems can be used based on customer’s frequency in your store, amounts spent, or given for purchasing certain items. Reaching a certain amount of points can be exchanged for rewards or small discounts. The more points they acquire, the bigger the reward.

Offering levels to your loyalty programs will help entice customers to shoot for the top tier rather than having one general reward there can be an exclusive level for VIP members. You can label the levels bronze, silver, and gold. Or come up with a more fitting theme for your store.

Exclusive rewards such as a first look at new merchandise are a chance to buy before everyone else, and that gives customers a VIP feeling. When your most loyal customers (aka most frequent shoppers, or biggest spenders) receive their reward, ask them to post about it on social media to promote the store. You may not even have to ask.

Rather than giving a direct discount or reward, you could offer a chance at a reward for loyal customers. If they reach a certain point in your program, they could be entered into a drawing for a prize or a discount. This gives them basically the same incentive to spend but saves you from over-giving.

Honor your loyal customers by naming the drink of the week after them, or by putting their name in gold letters. This is a loyalty reward that won’t cost you a penny but still makes them feel appreciated. Use your social media platforms to give them praise, as well!

Hybrid programs may work the best because it is a creative combo that you can design to tailor to your needs, your store’s need, and your customer’s needs.

Keeping up With the Customers

Don’t just hand out a loyalty program card and never act upon it. You must choose an active program on your end, and with constant contact with your customers.

Loyalty programs require you to obtain contact information for your customers who want to become part of the program. When a customer gives you their e-mail address, or phone number, or even physical address, they also agree to be contacted with exclusive promotions and offers.

Keep your eyes open to loyal customers, as well as new ones coming in the door. If you are hyperfocused on how to keep your customers loyal, you could be missing something else such as how to attract new customers. Step back, and find a balance.

The Numbers Don’t Lie

Curious as to how many businesses are using (and thriving) loyalty programs? Here are some statistics on loyalty programs from Forbes.

  • More than 90% of businesses use loyalty programs
  • Over 50% of shoppers will join a loyalty program
  • Over 80% of users will redeem rewards from loyalty programs
  • Less than 8% of customers say rewards are not important
  • Over 50% of customers say the rewards are why they join
  • Over 40% of customers say that they are satisfied with the program

You Are Not Alone

Business owners often feel like they are doing everything themselves, and can easily feel overwhelmed. Learning how (and when) to delegate tasks is a balance and takes practice. Did you know that there are professionals that can help you find the right loyalty program for your business?

Once you realize that you don’t have to do everything yourself, tasks no longer feel like a burden. How to create a rewards program is something that we can learn from professionals, as well as our fellow business owners.

Rewards For Everyone

Customer loyalty programs should be as much a reward for you, as it is for your customers. Find the right program for you, keep at it, and everyone will benefit from it.

Did you enjoy these insider tips on loyalty programs for your business? Stay tuned for more business topics (and other great content!)


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