Introduction Last updated: 04 March 2025

What Are the Benefits of a Customer Loyalty Program

Once you've created your product or service and started generating revenue from your customers, you should consider building a customer loyalty program. No matter what your industry or business vertical, you can find a way to reward customers for their loyalty (and their hard-earned money) with additional, exclusive benefits.

You might already be a member of a few customer loyalty programs — for example, a frequent flier mile program, or a customer referral bonus program — but you might not know how to start one for your own organization.

In the increasingly competitive and crowded business space, customer loyalty programs could be what differentiates you from your competitors — and what keeps your customers around.

Members of customer loyalty programs are 75% more likely to make another purchase after receiving an incentive, but that's not the only reason to start a program.

1. Better Customer Retention

Customer loyalty programs help you keep customers engaged with your business which indicates how likely they are to stick around, and how much they're going to spend.

In this day and age, customers are making purchase decisions based on more than just the best price — they're making buying decisions based on shared values, engagement, and the emotional connections with a brand. Customer loyalty programs are a great way to engage customers beyond just the point of purchase, to interface on shared values, and to provide even more value to customers — making them happier and more likely to keep purchasing from you.

2. More Customer Referrals

If your customers enjoy the benefits of your customer loyalty program, they'll tell their friends and family about it — the single most trusted form of advertising. Referrals result in new customers that are free to acquire, and which can generate even more revenue for your business — because customers referred by loyalty members have a 26% higher retention rate.

3. Cost-Efficacy

It's more cost-effective for your business to retain happy customers than it is to consistently churn and acquire new ones. Acquiring a new customer is 5-25X more expensive than retaining a current one.

Customer Loyalty Programs for Small Business

1. Opt-in Email
2. Free Trials
3. Partner Programs
4. Referral Programs
5. Points Systems
6. Stamp Card
7. Member Discounts

1. Opt-in Email

Opt-in email ask for customer's email address for communication with your brand. Once the customer opts in, your company can send them offers or promotions via email.

Emails are cheap to compose and distribute. You can also use email automation tools to deliver mass amounts of emails.

2. Free Trials

Free trials are typically thought of as incentives used to convert potential leads, but they can also be utilized in rewards programs as well. For example, let's ssay you have a new product or service that's about to be launched. You can release a free-trial to members of your loyalty program. This not only acts as a reward for customer loyalty but it also works as a marketing tactic that primes your customers for a future sales call. Furthermore, you can ask for feedback of new product or service to further improvement.

3. Partner Programs

One way to add value is to look externally to businesses that you could potentially partner with. By combining your resources, you can create an offer that benefits both you, your partner, and your shared customers. You can look for local, non-competitive businesses that you can partner with to add more to your offer.

4. Referral Programs

You can incentivize loyal customers to become advocates by offering them an attractive reward for customer referrals. Research shows that 70% of consumers are more likely to recommend your brand if it has a good program. That means your offer is good enough, customers will be happy to take the time to network your business to friends and family.

5. Points Systems

Tracking points is a method of tracking customer loyalty. The two keys to making these programs successful are a worthwhile incentive and a reasonable timeline to earn the incentive.

Assigning a point value per dollar is a smart way to find this balance, but you' ll need to make sure it's fair. If it takes 100 points to earn a free product that usually costs $20, a $20:100 point ratio must be feasible for your profit margin and encourage customers to repeated spend.

6. Stamp Card

Stamp cards are one of the most commonly used rewards programs for B2C companies. Customers receive a stamp chop after every purchase they make. Once a customer reaches a certain number of holes, they receive a special perk or reward. The benefit of this system is that the business can encourage that the customer visit them a certain number of times before issuing a reward.

7. Member Discounts

Member discounts come with an added bonus to the traditional customer loyalty programs. These types of programs allow you to give back to the customer while also collecting data that can help you personalize their buying experience.