Customer Loyalty Programs Keep Shoppers Coming Back

According to research, only twelve to fifteen percent of customers are loyal to any particular business. However, that small group of customers often generates up to seventy percent of sales for their chosen business.

Customer loyalty programs give recognition to customers for their allegiance to the business, and for certain purchasing behaviors. At the same time, a program allows businesses to collect information about customers, to create a more personalized shopping experience.

Rewards Programs

With a rewards program, businesses will gain a competitive edge. Good incentives maintain and sometimes increase customers’ spending, avoiding the tendency for spending to decline over time.

Good incentives enhance sales performance, by rewarding particular purchasing behaviors, and cultivating feelings of attachment and belonging.

Collecting Customer Info

Additionally, companies can collect information about customers, about their shopping patterns, and about their purchasing history.

The buy-ahead discount is one type of rewards program. A buy-ahead discount most often comes in the form of a loyalty rewards program card, which is purchased by customers.


With the loyalty card, customers receive discounts on immediate purchases, as well as on subsequent purchases.

The program is easy to administer and to explain, and customers receive instant gratification for signing up. However, the discount may eat into profit margins, and push away infrequent customers, by implying that prices are inflated.

Earning Points

The points program is another type of incentive program. As customers make purchases, they build up points, when may then be redeemed for other purchases.

For customers, the program is beautifully simple; for businesses, the program allows for substantial information collection. On the other hand, a points program requires more complex administration processes, than other types of rewards.

Offering Rebates

A rebate program also provides incentives to customers for loyal shopping. Companies often tier their rebates toward their most loyal customers, and avoid giving customers the idea that they should save on every purchase.

When businesses give gift cards as rebates, they will bring more business into the building. However, rebates award all kinds of customers, not just the profitable ones.

Also, customers have to delay gratification, because they have to wait for the rebate to come at a a later time.

Surprise Rewards

Some companies utilize surprise rewards. Surprise rewards provide an element of pleasure for a customer, and reward particular spending behaviors.

Also, surprise rewards may be timed to drive customers to the business at particular times of year. However, surprise rewards are not equitable, and surprise reward programs may be complicated to administer.

Inevitably, rewards programs will evolve. Generally speaking, rewards will focus on growing relationships with customers, and on segmenting customers according to behavior.

Segmented Rewards

Segmented incentives may cater to customers based on life stage, interest, or lifestyle. Also, incentives will be more tiered, so that the highest-paying customers receive the most reward.

Before choosing customer loyalty programs, businesses should analyze the advantages and disadvantages of each approach. After the program is rolled out, it must be modified over time, to remain fresh.

By growing sales, and allowing businesses to collect customer information, a rewards program will provide companies with many competitive advantages.