Customer Loyalty Programs

A smiling women looking at her phone.

Spark Your Creativity With These Ideas for a Customer Loyalty Program That Works

Once your business is up and running, the next area you need to focus on is building your customer base. One easy way to do this is by implementing a customer loyalty program. It’s a great way to reward your existing customers while drawing in potential customers who haven’t purchased anything from you yet.

Successful loyalty programs don’t have to be only for brick-and-mortar businesses or large corporations. In fact, some of the best rewards programs support small e-commerce businesses or are available for both online and in-person shopping. There are as many types of businesses as there are ways to create a rewards program. Take your time to review and select the best program for you and your customers.

5 Ideas for Customer Loyalty Programs

A lot of factors go into implementing and operating successful loyalty programs for your customers. Of course, the most important thing is having ideas for ways to give back to your customers. But you also need to know your business and whether you have the infrastructure and customer base to run a rewards program.

So keep reading to learn some basics about customer loyalty and rewards programs before we dive into the nitty-gritty of getting one set up for your business.customer loyalty written on a chalkboard.

All businesses rely on customer loyalty, whether they run a formal rewards program or not. After all, this core group of repeat customers will spend more and are more likely to recommend your business to others. But how to create a rewards program that your customers will love?

You can start by offering first-time customers a special discount or a free item in exchange for their email or phone number. This will get them in the door. Now, you can target future marketing to them as repeat customers, and you have the groundwork for a great rewards program.

Deciding which rewards model is best for your business is a highly personal choice.

To start, you have to know your customer base. What do they value? What kinds of rewards are worth it to them? Offering swag when your customers prefer discounts will disengage them from your program. And studies show that at least 57% of all members of loyalty programs are inactive.

So, what can you do to make your loyalty program stand out from the rest of the pack?

1. Special Offers Are Key

Special offers are the cornerstone of any successful rewards program. Give your loyal members a special discount on a new or popular product. Run a “Buy Two Get One Free” bonanza to celebrate the anniversary of your opening.

Offer double points during the holiday season. There are endless numbers of ways to incorporate special offers into your loyalty program. Just make sure that they are only available to rewards members.

2. Rewards for Referrals

This kind of program benefits you, your existing customers, and potential customers. First, offer a discount to clients or customers in exchange for their referrals to friends and family. Then, give that same discount to those referred customers. This is a great way to reward those customers who talk your business up, especially because they are getting a bonus without spending money first. They will feel special, and you benefit too when you make a new sale.

3. Rolling in Bonus Points

If your rewards program incorporates points in any way, a bonus point campaign is a must. Bonus points create excitement because customers love seeing their point balance grow. To run a successful bonus points campaign, limit the scope.

Double points for purchases over a certain amount or a specific brand or product type are best. Emphasize that the bonus points are solely for loyalty rewards members – this may help drive loyalty memberships.

4. Prizes, Prizes, Everywhere!

There are so many ways to use prizes to your advantage. Lotto tickets, bingo cards, and prize wheels are only the beginning. Create hype for a specific product by offering a raffle entry with every purchase. Collect customers’ business cards and have a monthly drawing for a small store credit or a free item.

Partner with another local business to encourage shopping on Small Business Saturday. You can offer a little gift such as a free pastry if the customer makes a purchase at your store or a discount with a receipt from your partner store. This is a place where you can use your imagination and networking skills to build a fantastic program.

The prizes don’t have to be limited to loyalty program members. All customers can enjoy these little bonuses.

5. Special Sale Days or Early Access

Loyalty members love feeling special and appreciated. Giving your customers priority to access sales or new merchandise will gain your customers’ appreciation.

Run a pre-holiday event with special shopping hours for loyalty members. Offer limited early access to new or select merchandise, especially when otherwise hard to find or really popular. Put together members-only gift sets or run special discounts every quarter. Your loyal customers will enjoy the special treatment.

More Insights About Customer Loyalty Programs

What Is a Loyalty Program?

Simply put, a loyalty program rewards customers for returning to your business. Remember those punch cards you used to get at the sub shop or video store that scored you a free drink or movie rental? Modern-day loyalty programs are just supercharged punch cards.

The rewards are more significant, and data is linked with your customers’ email addresses or phone numbers. Everything is easy to keep track of. Loyalty programs cost nothing to set up, and the rewards cost is easily covered by the increased sales these programs generate.

How Do You Reward Customer Loyalty?

Even if starting a full-scale, formal customer loyalty program is outside the scope of your business plan, there are still ways to honor your repeat customers. They include:

  • Offering a discount.
  • Offering points redeemable for merchandise or services.
  • Offering a bonus for customer referrals.
  • Providing a discount or other perks on birthdays.
  • Having a “Buy X Get 1 Free” program, using either a swipe card or linking data to a phone number.
  • Branded merchandise or swag. Useful items like pens, water bottles, and tote bags are always popular.

a man taking a coffee from a woman behind a counter.What Are the Five Stages of Customer Loyalty?

The psychology of customer loyalty is surprisingly complex. Not only do you have to take customers and their actions into account, but you also have to look at how you market your business and the best ways to target your customer engagement.

1. Reach

Reach is making initial contact with a possible customer. A lot of this stage has to do with advertising. How do you market your business to achieve the best results? Where can you focus your attention?

This can be helped by having a strong social media presence or effective print and digital advertising. Reaching a customer isn’t even getting them into your business or visiting your website; it is simply getting their attention.

2. Acquisition

In the acquisition stage, you’ve made the first contact. Now you want to get potential customers through your physical or digital door. People will come to you either out of curiosity or need. Make it clear what you offer and how choosing your business over the competition provides benefits for them.

3. Conversion

Conversion is turning contacts and acquisitions into paying customers. Build on the relationship you’ve already established and make the customer feel welcome and valued. Reduced emphasis on sales will make transactions happen organically.

4. Retention

Keeping repeat customers coming through the door is the goal of retention. Reducing customer loss increases profits by a minimum of 25%. Emphasize what your company can offer that exceeds what your competitors do. A good business model should include a plan for driving repeat sales, and this is where you can begin to introduce the idea of a loyalty program.

5. Loyalty

At this point, your repeat customers continue to purchase from you. Not only that, they are the customers who become evangelists for you and your business.

These are the customers who leave you great social media reviews, convince others to try out your products or services, and sing praises to anyone who will listen. They recommend you to others even as they continue to support you themselves. This is where you could offer perks for their referrals.Someone holding up a sign that reads earn points.

What Are the Types of Loyalty Programs?

There are many options to choose from when setting up a loyalty program for your business.

They include, but are not limited to:

1. Point-Based Programs

The most common, popular, and easy-to-manage loyalty programs are point-based programs.

Customers earn points based on every purchase they make and redeem points for discounts, special merchandise, and more. Consumers like points programs because seeing the points rack up often fuels increased purchasing. And you can all but guarantee return sales when customers redeem their points.

2. Tiered Programs

Tiered loyalty programs offer different levels of reward based on how much a customer buys. The more they spend, the higher their loyalty level. The higher the loyalty, the better the rewards.

3. Paid Programs

These are programs that require a monthly, yearly, or one-time payment to join. The customer then gets access to members-only discounts, services, or special extras.

4. Games Programs

Everyone loves games. Give your customers a scratch ticket good for a certain percentage or dollar amount discount. Prize wheels offer instant gratification when they are spun before the purchase. The possibilities are endless.

5. Hybrid Programs

Hybrid programs adopt features of two or more loyalty programs and combine them into a format that works with your business model. For instance, Eat.Sleep.Knit, an Atlanta-area yarn shop, developed a robust rewards program that uses games, points, and tiers to keep customers engaged both online and in-store.

TomboyX, a gender-inclusive online clothing company, uses points and tiers to reward its customers with store credits, free socks, and more. Starbucks also uses points and games for its very successful loyalty program.

Do Loyalty Programs Drive Sales?

The short answer is yes – customer loyalty programs can increase sales. The longer answer is that loyalty programs help retain customers. With every customer who returns to your business, your sales increase in the following ways:

  • Retaining just 5% of your customer base increases sales up to 95%.
  • 15% of loyalty program members can generate up to 70% of your total sales.
  • Repeat customers spend 67% more than first-time shoppers.
  • 57% of customers engage more with brands that they are loyal to.

Companies With Loyalty Programs

The best customer loyalty programs are ones that keep your customers engaged with your business.

Exceptional loyalty programs will get customers talking and should help increase sales by word-of-mouth advertising. Some of the best and most successful loyalty programs out there are:

  • Starbucks
  • Sephora
  • Amazon
  • Barnes and Noble
  • Kroger
  • Safeway
  • Dunkin Donuts
  • Panera

Of course, loyalty programs are also wildly effective for small businesses. In fact, some people may say that these programs are better for independent companies because it is easier to formulate your rewards to fit your customer base.

On the other hand, large businesses have to take a one-size-fits-all approach with their rewards, whereas you can customize yours to better meet your community and its needs.three women looking in a shopping bag.


The main goal behind loyalty programs is to retain customers and drive sales. While they are a perk for your customers, they should not be a drain on your business. You want something easy to set up and maintain and not a burden for your customers, either.

While a loyalty program is a great addition to any business, it should not be your only focus. You still need to develop social media, target advertising and maintain your web page.

Loyalty programs don’t take the place of good business, but they sure do enhance it.