The Benefits of Customer Loyalty Programs

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Loyalty programs can amplify results at every stage of the customer journey from customer acquisition to brand advocacy.

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Loyalty programs can amplify results at every stage of the customer journey from customer acquisition to brand advocacy.

If you’re a typical consumer in the 21st century, it’s very likely you have interacted with and enjoyed the perks of a brand’s loyalty program. As digital marketers, we get pretty excited about them too! When it comes to lifecycle marketing and implementing an effective customer retention strategy, loyalty programs are a surefire tool for success, if executed correctly.  

If you’ve read our blog post about The Five Phases of the Customer Journey, you probably know that here at BuzzShift, we tend to obsess over how customers interact with brands at each phase of the customer journey. While loyalty programs can do wonders for your customer retention metrics, the beauty is that they can be used to fuel your brand’s performance at every stage of the customer journey. In this blog, we’ll walk through a few reasons why a loyalty program can positively impact your brand. (Plus, there may or may not be some free lifecycle marketing strategy tips sprinkled in. You’re welcome.) 

Benefit #1 – Increased Customer Acquisition  

Although we normally associate loyalty programs with the loyalty stage of the customer journey, they can be an extremely effective tool in attracting new customers and incentivizing them to complete that first transaction or conversion with your brand. When developing a loyalty program, you can set up your own “rules” or activities for customers to follow in order to earn rewards or points. If we are focused on acquiring new customers, we would recommend setting up a rule within your loyalty program that offers the customer/program member an enticing number of points just for making their first purchase. This incentivizes the customer to make that first purchase and already has them thinking about cashing in their rewards on future purchases before that first transaction has been made. 

Benefit #2 – Increased Customer Retention and Lifetime Value 

Before we explain benefit #2, let’s do a quick definition session to make sure we’re on the same page. Customer retention refers to the rate in which your brand is able to keep existing customers and earn additional value from them over the span of their relationship with your brand. The opposite of customer retention is the customer churn rate, which is essentially the rate at which customers stop doing business with your brand, no longer yielding any additional value after their previous purchases. When we’re quantifying customer retention, we often look at customer lifetime value which is a measure of the total revenue your brand earns from an individual customer over the span of their relationship with your brand. Thanks for staying with us, back to the good stuff. 

Loyalty programs provide multiple touchpoints and opportunities for a customer to engage with your brand. When setting up a loyalty program, you can create rules that reward loyalty program members for things like following or sharing on social media, product reviews, email newsletter signups, and of course, placing new orders. Typically the more omnichannel touchpoints a brand has with a customer, the more likely they are to retain that customer. Also, when you incentivize existing customers to make frequent repeat transactions, their lifetime value increases.  

Benefit #3 – Introducing New Products or Collections to Customers  

Utilizing your loyalty program to help support new product launches is often a forgotten tactic. Depending on the loyalty program platform, you can turn on and off custom rules that reward customers for purchasing a new product or purchasing a product from a new collection. This is an easy and impactful way to drum up excitement around new products and incentivize customers to try new products. You can also create custom rewards and allow customers to cash in their rewards or points for new product samples or trial-size products.  

Benefit #4 – Give Customers a Personalized Experience 

Beyond providing a standard loyalty program that rewards customers for the most common activities (ex. purchases, social engagements/follows, reviews, etc.) you can use your loyalty program to openly express your brand’s personality and deliver a unique and personalized customer experience. One way we’ve seen brands do this is by setting up a custom rule that allows customers to redeem their rewards points for other things besides discounts or free items, such as a donation to a pre-selected charity or organization. Brands can also use analytics garnered from loyalty programs to select a cohort of their most loyal customers, send a personalized thank you note, or feature them on their website or social channels. Nowadays, the sky is the limit when it comes to getting creative with your loyalty program and giving your customers an over-the-top experience.  

Benefit #5 – Turn Loyal Customers into Brand Advocates  

The customer journey is not complete without the final stage: advocacy. Loyalty programs not only reward your customers for being loyal to your brand but can also function as a referral engine. Modern consumers are most likely to purchase from brands they have heard of from their friends and family, so why not incentivize your most loyal customers to be cheerleaders for your brand? Most loyalty programs allow your customers to generate trackable personalized links to share with their network. You are able to control how the referral reward works. Typically, you would reward the referring member with a certain amount of points once their referral makes a transaction with your brand and meets a certain order value minimum. Product reviews are another major aspect of brand advocacy that direct-to-consumer brands should always be prioritizing. Product reviews are incredibly important, especially for newly launched products. You can set up rules within your loyalty program that rewards your customers not only for making purchases but for leaving reviews for those purchases as well.  

Now you know that loyalty programs aren’t implemented with the sole purpose of retaining loyal customers. When implemented correctly, loyalty programs can amplify results at every stage of the customer journey from customer acquisition to brand advocacy. At BuzzShift, we love coming up with unique, creative, on-brand strategies for our clients’ loyalty programs. If you’re ready to take your brand’s lifecycle marketing strategy to the next level, we’d love to talk about how we can build an awesome loyalty program for your brand. Hit us up! 


About BuzzShift

BuzzShift is a digital growth strategy agency with a focus on mid-market, scaling, purpose-driven DTC Brands. By combining the ideologies of branding, performance marketing, and retention agency, we are able to create memorable experiences with measurable results, and build long-term success for our clients with scalable, sustainable growth. Learn more about BuzzShift.

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