What Are Customer Loyalty Programs & How Do They Work?

With so many competitors in the market, businesses have to stand out from the crowd to keep their customers’ attention before the next brand snaps it up.

Excellent customer service isn’t enough to keep customers coming back these days. To be truly outstanding, retailers need to go the extra mile by rewarding those who frequent their stores.

How do you keep customers faithful in a world chock full of choice? Many retailers turn to loyalty programs to win lasting customer devotion and inspire strong brand advocacy.

Happy customer prepares to make a purchase on her phone after discovering a store offers account credits for purchases.

What Is A Loyalty Program?

Loyalty programs are a customer-centric marketing strategy designed to encourage repeat business. Loyalty programs typically offer rewards, discounts, points, cashback, or other special incentives to returning customers.

Essentially, the more a customer shops, the more rewards they receive, and the more incentive they have to come back and continue doing frequent business.

Woman convinces her friend to shop with an online retailer that offers loyalty rewards.

Why Loyalty Programs Work

Rewards programs like these are a long term marketing effort that helps with both customer retention efforts and word of mouth marketing.

By offering perks and rewards, shoppers feel appreciated for their business. In return, happy customers continue to do business with you and recommend you to others.

With 72% of adults belonging to at least one loyalty program, loyalty and rewards systems are proven to be more relevant and engaging than ever before. In fact, 77% of people say they’re more likely to continue their relationship with brands if it has a loyalty program!

The Takeaway

Loyalty reward statistics are revealing just how essential these services are for brands. If you’re ready to increase customer lifetime value and implement one of the most effective customer retention strategies, it’s time to think about using one.

Savvy shoppers are always looking to maximize their savings. By offering a loyalty program, they can– by continually shopping with you!

Want to learn more? Read Why Loyalty Programs Are Key to Building Brand Devotion.


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