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6 Little Known Benefits of Loyalty Programs for Businesses

6 Little Known Benefits of Loyalty Programs for Businesses
  • Opening Intro -

    What are loyalty programs or reward programs?

    Many of you are part of loyalty or reward programs either by choice or you are rewarded for spending your dollar bills on a business frequently.


For example, if you are a frequent flier you get awarded extra miles. Others are in form of simple cards, buy five coffees the sixth one is free.

These marketing efforts are structured strategy to influence the buying behavior of a customer.

Loyalty programs have become a standard practice, be it in the retail sector, travel and tourism sector, hospitality or even financial services. With technological advancement, customers are encouraged to register online and get e-cards or enroll in some other scheme.

What are the benefits of loyalty programs to a business?

  • 1. An obligation to remain loyal

    Switching cost is a factor that prevents customers from switching brands as it implies losing rewards or points in a loyalty program. Starbucks can be used as an example here.

  • 2. Positive Surprise factor

    Who is not delighted to receive an extra something in addition to the value of the purchase.

  • 3. Referral Component

    A customer under a loyalty program is likely to spread the word about the rewards and this encourages others to opt for the brand as well.

  • 4. Highlight your product or service

    Whether you are introducing a new product or service or you wish to highlight some other dormant product or service, it can be achieved using your loyalty programs without having to spend money on other marketing strategies like advertising and other such methods.

  • 5. Decrease cost

    This can be achieved if your business ties up with other business who wishes to promote its product or service. If you reward your customers with products and services offered by such brands, you do not have to spend a dime on the rewards. The rewards are offered through your loyalty programs but you do not bear the cost!

  • 6. Fulfill your Corporate Social Responsibility

    Yes, you read it right, many customers wish to contribute to society and if your brand gives them the platform then you have surely hit the bulls-eye. At the same time you are fulfilling your Corporate Social Responsibility as well.

TOMS Shoes is one such example, it donates a pair of shoes for every pair purchased. Although this is different from a traditional loyalty program, it still holds water. It is not the customer who is rewarded but it is someone who the customer chooses to reward.

However, the question that remains to be answered is, if the brand wants to earn loyalty or buy loyalty with these loyalty programs.

Image Credit: Pixabay

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CFOne Business Managment Reference:

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Amazon Bestsellers: Customer Loyalty Programs

Bestseller No. 1
The Membership Economy: Find Your Super Users, Master the Forever Transaction, and Build Recurring Revenue
200 Reviews
SaleBestseller No. 2
Evergreen: Cultivate the Enduring Customer Loyalty That Keeps Your Business Thriving
79 Reviews
SaleBestseller No. 3
The Customer Loyalty Solution : What Works (and What Doesn't) in Customer Loyalty Programs
2 Reviews
The Customer Loyalty Solution : What Works (and What Doesn't) in Customer Loyalty Programs
  • Arthur Middleton Hughes
  • Publisher: McGraw-Hill
  • Edition no. 1 (02/20/2003)
Bestseller No. 4
100 Loyalty Program Strategies with Master Resell Right: Discover 100 customer loyalty strategies
2 Reviews
SaleBestseller No. 5
Leading Loyalty: Cracking the Code to Customer Devotion
  • Sandy Rogers, Leena Rinne, Shawn Moon
  • Publisher: AMACOM
  • Edition no. 0 (04/16/2019)

Last update on 2019-04-02 / Affiliate links / Images from Amazon Product Advertising API



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