Brands are always fighting for customer loyalty—it’s a highly competitive environment. Some seven out of 10 US consumers consider loyalty programs a leading factor in sticking with a brand. 

While customer loyalty programs can be effective, they’re nothing new. Most fall into one of four categories: points, tiers, social media, and paid programs. That’s why some retailers are looking to shake things up and find innovative new ways to build rewards programs and inspire customer loyalty.

Ahead, you’ll learn how loyalty programs work, their benefits, and examples to inspire your own.

What is a loyalty program?

Loyalty programs reward a company’s repeat customers with discounts, free offers, and other incentives to encourage customers to come back.

How do customer loyalty programs work?

With a loyalty program, companies can offer points or benefits to customers. In return, customers redeem points for discounts, free products, rewards, or insider perks. The goal is to motivate repeat purchases and build trust between customer and business.

People will go the distance for brands they love, but they require perks in return. Some 60% of US shoppers wanted discounts in return for joining a loyalty program. The same poll found that respondents expect to earn points and rewards, and about 33% want exclusive or early access to products. 

Running a customer loyalty program means you’ll need to give away something, be it discounts, sales, early access, etc. But the payoff for having rewards programs are huge:

  • More customer referrals. If you have a great loyalty rewards program, people may tell their friends and family about it. More referrals equals more loyal customers.
  • Higher customer retention. If people find value in your customer loyalty program, they’ll likely stick around longer.
  • More sales. Want a higher average order value? A 2022 survey found that 79% of US consumers said loyalty…

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