How effective are loyalty programs in creating customer loyalty?

March 14, 2018 Facebook Twitter LinkedIn Google+ Digital Marketing

Customer loyalty is achieved only when you get to have repeated purchase form a single customer, or a customer does make a consistent purchase form your brand. And, before understanding how effective customer loyalty programs are in creating customer loyalty, we do need to understand what exactly customer loyalty programs are.

Customer loyalty programs are often used to gain customer loyalty, or can be called as the ultimate assurance of customer satisfaction to your brand products/services. Certainly, repeated purchase of one product or service from one brand implies a complete customer satisfaction, and so it can give your brand a competitive advantage. Loyalty programs are some programs arranged by the brand specifically for their loyal or repeated customers in form of some special advantage or rewards to make a repeated purchase.

No wonder, achieving customer loyalty is hard, but once achieved you can harvest the rewards and fruits from it for a long period. Also, acquiring a new customer can be really more costly when compared to acquiring an old customer (data says it is 5X more costlier).

Now, we do need to understand how effective truly customer loyalty programs are in achieving loyal customers. With a lot of options and brands to go for, customers do really have the probable chances to switch to another brand, in case they do feel any bad experience in the first or second time. And, even with the technological advancement, understanding the patterns and behavior of buying customer is not achievable, or precise in many cases. Achieving a customers loyalty requires connecting an emotional connection with your customer which can keep them engaged with your brand.

With different types of customer loyalty programs offering discounts, loyalty points, or reward points, or it may provide the customer an exclusive and reserved access during the period of events or sales. In every case, the primary focus is to keep the customer engaged with your brand, and appeal them to make another purchase from your brand.

No, let’s look at some statistics,

  • More than 50% of e-commerce buyers do claim that a loyalty program in the form of loyalty points or reserved access during sale period are appealing to them to stay with the brand
  • More than 70% of customer do prefer to choose brand with customer loyalty programs
  • Loyal customer can anyhow be benefitted up to 12-18% exclusive benefits when compared to new customers


While it is completely clear that these statistics and data do indicate that customer loyalty programs are effective in keeping your customers engaged with your brand and hence achieving customer loyalty.

But again, while providing with all the tangible benefits to the customers in the customer loyalty programs, you should always keep monitoring your competitors and their loyalty programs. Better the loyalty programs offering, more probable that chances would be that customers will switch or stay with that brand.