What Are the Measurable Benefits of Loyalty Programs?

When discussing the benefits of loyalty programs, it’s important to understand the differences from (and similarities to) frequent buyer programs.

Frequent Buyer Programs

Lots of businesses have basic points programs that reward customers for making lots of Benefits of Loyalty Programspurchases. Grocery stores fall into this category, as do gas rewards and the like. Customers are treated in a fairly universal fashion across the board. But this doesn’t incent them always to choose you. There’s no preference created for a brand.

However, these programs are notoriously easy to start. With very little effort, you can kick off a points-based system that delivers set rewards at specific amounts of money spent making this one of the greatest benefits of loyalty programs. Nice, simple, and easy-peasy.

Loyalty Programs

Loyalty programs kick things up a notch. They segment and treat customers differently, focusing on unique segments and driving their behavior by using a variety of tools. This can include special bonuses reserved for individual clients, early access to concert tickets, and more. These endless possibilities are some more great benefits of loyalty programs.

However, the goal with these programs is right in the name: loyalty. The focus is on ensuring customers continue to choose your business, even when they have other options. To accomplish this, you can’t have a garden variety program. You have to set yourself apart from the crowd.

Business Benefits of Loyalty Programs Delivered by Both Program Styles

Oh, my, the data, possibly one of the best benefits of loyalty programs! In both scenarios, customers are providing you with a literal goldmine of data and information. Let’s list it out:

• Name
• Address
• Phone
• Email
• Birthday
• Friends and associates contact information (referral bonus, anyone?)
• Purchase data

The first bits of biographical and contact information can serve a variety of purposes. It’s an easy means to promote offers and up the personalization factor of your communications. Plus, who doesn’t love a little freebie on their birthday? It’s a great chance to remind customers about your brand.

Taking things a step further, you can leverage the name/address/birthday basics provided to find out more about your customers. There are hundreds of companies who specialize in a number of unique data gathering and profiling techniques. Wondering about your customer’s estimated household income? Or whether or not they are likely to have children? All of this information is easy to obtain from data services with a few bits of identifying customer information.

Benefits of Loyalty Programs:  Referrals & Purchase Data

These two inputs get an entire section! There’s so much value to be had from both of these, but either one can do wonders for your business.


What’s better than a customer who loves your brand saying, “Hey, I know someone just like me who’s going to love you, too!” Nothing. Referrals are some of the most valuable customers a business can get because they are also some of the cheapest to acquire.

Purchase Data

This is a treasure trove of information and ideal for stores that carry a variety of products. Target is famous for being able to predict a customer’s needs and wants…often before they know themselves. And they do this by tracking individual purchases, and then extrapolating the information.

For example, if you just purchased pre-natal vitamins, chances are good you’re pregnant. And what types of things do you need when you’re pregnant? Well, early on you’re likely thinking about health and diet. Perhaps you will be reading some baby books. Eventually, you’ll start thinking about baby furniture and clothes and diapers and a myriad of other items needed for a newborn. And Target not only sells them all, but they can also give you specific offers to entice you to buy from them. Genius!

And now we get into what sets loyalty apart…

Loyalty Is about Using the Information You Have to Do More

A good loyalty program identifies your most valuable customers and encourages measurable improvements for all of the following:

Improve customer retention and reduce churn
• Act as an acquisition channel for new customers
• Improve the lifetime value of each customer
• Win back or re-energize dormant customers
• Build relationships and create advocacy
• Allow for pricing discrimination and avoid “discount” syndrome
• Testing desirability of products, services and price points amongst your base
• Reduce advertising costs
• And more…

The bottom line is a loyalty program should be so much more than just points. When it’s done right, it can drive significant business impacts in a variety of areas and return the dollars invested many-fold.

Get Your Customer Recognition Program Up and Running in No Time

If you’ve been wondering how to drive greater customer loyalty and increase the performance of your existing base, look no further. We have years of experience creating some of the best returns in the industry. Just visit us online to contact Loyaltyworks, or give us a call at 800.844.5000, and let us tell you more about all the great benefits of loyalty programs.