Benefits of Incorporating Loyalty Programs in Your Business

Posted by Shivangi Bansal on Nov. 15, 2018, 5:30 p.m.


A loyalty program is a traditional concept which includes frequency programs, points programs, and cash back or rebate programs. It was relatively easier in the past to retain customers through a loyalty program due to product differentiation but due to excessive competition today there are many similar products in the market and it has become a whole lot difficult.

In such an environment loyalty programs have become more important as it is such an essential commodity for a business now. Let’s look into all the benefits that a company gets through loyalty programs.

1. Customer Retention

Loyalty Programs have a positive impact on Customers. It makes customers feel valued which drives them to stay connected with the brand. Customers are rewarded for their repeat purchase which is a great strategy as the business will get more profit by motivating the customers through those offers and extra points.

This, in turn, helps in customer retention as the customer will be motivated to make more purchases to utilize their offers or to earn more points.

2. Customer Data and Trends

When a customer signs up for Customer Loyalty Program with their details the company’s database starts recording the necessary information about them. This data lets you understand the customer’s behaviour, buying habits, and preferences which can help to determine the pricing, the inventory and the promotional strategy for the brand.

This can also help you determine the profitable customers so that you can provide them with more rewards to retain them.

3. Reducing Unprofitable Customers

A well-designed loyalty program also helps you distinguish your profitable customers from the unprofitable customers. It makes you aware of the customers that only buy discounted products and don’t invest in the high-end market on a regular basis. These customers can cost more than they help you generate money.

The companies can provide better deals and offer to the profitable customers by using the loyalty program to retain those customers that generate more profits.

4. Better Customer Communication

Loyalty programs help to build brand awareness and increase customer loyalty by providing them with regular information about the brand. It is essential to continuously update them with the new products/services, events, promotions, reward programs and special offers. 

The more your customers will stay updated with your business, the more invested they would be in what’s happening and keep coming back for your products/services. These customers also turn into promoters and tell their family and friends about your brand as well.

5. Brand Differentiation

Whenever a customer is looking for products/ services they compare prices and brands to get their best out of their buck. When they are part of your customer loyalty programs and are updated with the offers and discounts they tend to choose your brand over any other. This differs you from other brands as due to Customer Loyalty Program you have an added advantage.