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    Customer Loyalty Programs in Retail – Definition, Types, and Benefits

    Customer Loyalty Programs in Retail – Definition, Types, and Benefits

    Tracy Watson


    7 min read

    what is retail loyalty

    Shopping online and in-store is a great experience by itself, but what makes it better is getting rewarded for it. Retailers offer their customers all kinds of rewards for their business in hopes of enticing them to keep coming back. This is one of the main methods retailers are using to turn one-time shoppers into repeat clients. However, not all customer loyalty programs are the same. In this article, we will tell you about the most common types of rewards programs and what are the benefits of each. First, let’s start with a definition. 

    What is a Loyalty Program? 

    A loyalty program is offering your customers some reward for shopping at your store. The more they visit and spend, the better the reward will be. When the customer sees that they are getting something in return for the money they spend, they will be more willing to come back and purchase something again. If we think about the sheer volume of retailers out there and all of the stores, both brick and mortar and online ones as well, a loyalty program is becoming something that helps businesses stand out among a crowded marketplace and bring in customers as well. On that note, let’s take a closer look at the benefits a loyalty program offers. 


    What are the Benefits of Loyalty Programs? 

    The biggest benefit of a customer loyalty program is increased customer retention rates. In essence, you are giving your customers extra motivation to visit your store, specifically. Companies that do give shoppers more value for the money they spend will ultimately win their business. This, in turn, will lead to even more benefits for your company, such as increased revenue. In fact, recent data shows that 65% of a company’s business comes from existing customers, and loyalty programs increase overall revenue by 5-10%

    Also, customer appreciation programs allow you to understand your clients better. All of the data obtained from the reward programs can be very useful for analyzing the preferences of each shopper and providing them with detailed recommendations. By offering such a customized experience, people will be more likely to buy from you since they will understand that you get their needs. On a similar note, store loyalty programs can allow you to reward your most prized customers. You will be able to look at all of the data and identify the people who frequently buy premium and luxury items and the ones who are just looking for things that are on sale. 

    what is retail loyalty

    The Different Types of Retailer Rewards Programs

    • Point programs – This is one of the most straightforward and common of retail customer loyalty programs out there. The more money a customer spends, the more points they earn. These points later translate into some discount, store credit, cash back, or anything else. A good example is a program offered by Sephora. Every dollar you spend earns you a point that can later be redeemed for discounts, gifts, and more. 
    • Game program – Gamifying the loyalty program can be very effective in getting people to shop more and earn rewards. They can compete with friends, which brings in more people as well. One exciting example is Wizzzi augmented reality game, which has 26 unique characters inside a wizard universe. The customer receives an interactive card for purchase if some conditions are met. This card can be used for playing table-games and augmented reality games as well.
    • Cashback program – Some stores offer various cashback benefits. The concept is simple – the more you spend, the more you get. Usually, this will be a percentage of the total sum. This is something offered by Auchan, one of the largest retailers in the world. Auchan also has a mobile app, using which you can buy goods for a special price.
    • Partnered programs – This is when you partner with other stores to offer the same rewards to your customers. The biggest benefit that you get here is that you can use the success and name recognition of other companies and attract some of their clients to shop at your location or website. There are many great examples of successful partnerships such as Valentino and Alibaba, Target and Michael Graves, and many more. 

    Start Retaining More Customers Today 

    All of the data from retail sales points to the importance of customer retention since this is the key to increasing sales and, ultimately, revenue. Having a loyalty program in place will go a long way towards showing your customers how much you value them and giving them additional reasons to shop at your store. Having the right software solutions for retailers will make a big difference in terms of how successful your program will be. You need to make sure that it is fun, interactive, and easy to use. This will help you get a competitive advantage over your competitors and allow you to build more meaningful and long term relationships with your customers. 

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