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Loyalty & Rewards

Uncovering the Benefits of Customer Loyalty Programs for Businesses

Discover how customer loyalty programs can benefit your business by increasing retention, driving revenue, and fostering long-term relationships.



Customer loyalty programs are a great way for companies to grow their client base and create incentives for consumers to return. With 75% of consumers favoring companies that offer rewards and knowing that increasing retention by 5% has the potential to boost profits by 95%, it’s hard to find a reason not to implement a rewards program.

Customer rewards graphics

While companies may choose innovative customer loyalty programs, many businesses use one of these common types of loyalty programs.

  • Point-based: Customers earn points that are redeemed for rewards (i.e., discount codes, cash, freebies, gift cards, etc.).
  • Tiered: New customers enter the loyalty program at the lowest tier, and as they continue to return, they move their way into greater loyalty rewards.
  • Paid or VIP: Customers pay a fee to join a loyalty program that lets them bypass a purchase barrier (for example, removes shipping costs) or offers them an exclusive discount with every purchase.
  • Coalition or Partnership: As the name suggests, businesses partner with other relevant businesses to provide collaborative rewards (i.e., sporting goods stores and gyms offering exclusive discounts for the other when a customer purchases). 

What are the Benefits of Implementing a Customer Loyalty Program?

The main goal for customer loyalty programs is to accomplish the three R’s—Retention, Related Sales, and Referrals. To do this, loyalty programs…

1. Collect Valuable Data

The value of data is increasing, and loyalty programs enable you to ethically source first-party data while adhering to general privacy compliance rules.

Customers are more than willing to share their information with companies through customer loyalty programs, provided you incentivize them the right way: You can exchange a currency that is only good for shopping at your business (loyalty points or loyalty cash) for customer permission to connect with them.

ACME rewards page for customer loyalty

Not only does this data make it easy to determine your market standing, but it also helps identify potentially valuable customers and differentiate their value proposition through rewards. Offerings are then tailored to keep these consumers coming back for more!

2. Break Through the Noise

Brands are finding innovative ways and implementing new strategies to break through this digital clutter and build meaningful relationships with their customers through tailored customer loyalty programs.

Wading through digital channels and getting your brand in front of the customer is difficult to do in today’s world. As the industry transforms and more direct-to-consumer brands show up, customers are more likely to try something new, leaving you lost in the crowd.

3. Build an Emotional Relationship

If you want to boost your profits and keep customers coming back for more, it’s time that we tap into their emotions. Studies show people make purchases based on emotion rather than necessity, so why not use this as an opportunity? 

Rewarding consumers through loyalty programs and creating personalized customer experiences lets you reach those deep-seated desires they have by engaging with the right content at just the perfect moment.

85% of consumers say they would be more likely to continue doing business with a brand if an emotional connection was established during their initial engagement as opposed to just having basic information handed off to them in an impartial manner. 

Introducing a thoughtful loyalty program as customers engage with your brand encourages repeat purchases and helps boost profits even further.

4. Boost Engagement

Customer engagement is a key aspect to consider when it comes down to the long-term sustainability of your brand. If you don’t connect with customers, they won’t remember who was responsible for their favorite product or service, and you have a higher chance of being lost in the digital noise.

Collect customer data, brand engagement, customized options and drive social media traffic

Solve this by implementing loyalty programs that ensure complete customer interaction and help strengthen your bond with them through rewards or other incentives offered within those programs.

5. Spread the Word with Brand Loyal Advocates

Building brand affinity is not an easy task, but with consistent engagement and customer loyalty programs, it’s within your power to accomplish. As customers are satisfied with your company’s products or services, they become your most valuable asset because they provide you with the most powerful and cost-effective form of marketing: word-of-mouth.

We’ve also found that customers engaged in a loyalty program are much more likely to refer friends than customers who aren’t, especially when both the customer and their referral are incentivized.

The Patch Loyalty Program turns every customer into an advocate by offering simple links that customers can use to “hook up” friends and get rewarded for it.

When customers are satisfied with their experience, they’re likely going to tell others about it. In fact, over 70% of consumers are willing to recommend a brand if they enjoy their customer loyalty program.

6. Deliver Increased Value 

Ultimately, profitable customers are turned into loyal ones through the delivery of additional value. As your customers continue to purchase or utilize your services, their rewards should increase accordingly. This creates an endless cycle in which your company gets more out than what it puts in.

Improving the lifetime value of a customer through customer loyalty programs gives them an incentive to continue their buyer’s journey with you. It shows them you’re more than just a product or service—there’s something special in the process for them too!

7. Encourage Customer Behaviors

There are many ways to motivate your customers and get them involved in behaviors that will help you grow. One of the most effective is through incentive programs, which offer rewards for completing certain actions or milestones like signing up for newsletters or sharing discount codes with friends/family members.

Behavior motivators help you keep the best and brightest of your audience in line by appealing specifically to their needs, wants, or desires, so they stay happy with what you offer both now and later.

8. Use Predictive Analytics

The key to winning big in the marketing game is utilizing predictive analytics. This tool gives you a better understanding of what behaviors drive your high-value customers and how much they spend on particular items. This information will allow for a more personalized experience with potential customers as well as higher conversion rates from those who already love your brand.

If you know that getting someone to purchase one product will also cause them to buy three adjacent categories, it’s possible to use this knowledge to design specific incentives for their loyalty programs.

9. Open the Door for Advanced Tools

With all-inclusive retention marketing platforms such as Patch’s Retention Platform, it’s easy to keep track of your customers and offer them tailored incentives to remain loyal. These powerful tools let organizations analyze customer behavior patterns to gain insights into specific segments or types within the market space. 

They also come equipped with targeted dashboards that will help pinpoint where improvements need to be made, letting you supercharge your engagement tactics. The best customer loyalty programs are harnessing the power of these advanced tools.

What are you waiting for? Speak with a consultant to find out how Patch helps you amplify your customer loyalty programs.

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