What are customer loyalty programs?

A customer loyalty program is a system where a business offers rewards to its customers who make frequent purchases. From a business perspective, it’s a tactic used to encourage customers to repeatedly buy from your business.
There are lots of different types of customer loyalty programs, like refer-a-friend programs that offer customers a discount if their friend signs up or makes a purchase, reward points programs, and programs that provide free perks. We’ll dive into these (and others) later in this post.

The benefits of having a customer loyalty program

A customer loyalty program helps you build stronger relationships with your customers by rewarding them for buying your products or services. There are several important benefits of having a customer loyalty program:
• Improving customer retention.
• Encouraging repeat business.
• Increasing customer lifetime value.
• Building stronger relationships with your customers.
• Increasing customer satisfaction.
• Providing a differentiator with your competitors.
• Boosting revenue.

SCANNO found that members of customer loyalty programs typically spend, on average, 12% to 18% more than other customers.
For a small business — especially if you’re in an increasingly competitive space — a customer loyalty program that rewards returning customers could be what differentiates you from your (bigger) competitors.

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