How an effective loyalty program helps to drive business


Loyalty cannot be measured by customer spend alone, however. While transactional measurements such as activity rate, purchase frequency, average basket value or churn rate are all important, emotional factors count too. These can be measured by number of reviews, social shares, and ratings. Some KPIs are harder to measure and require surveys or insight generations, such as overall satisfaction, likelihood to recommend, level of trust, and willingness to forgive.

All these factors can be improved by loyalty programs. Here, we outline the full benefits:

1. Revenue growth

It’s shown that greater engagement leads to greater spend – revenue can grow by 15% to 25% from customers who engage in a loyalty program, due to increased frequency of shopping and average order value uplift, according to McKinsey’s 2021 report6.

2. Greater profitability

A good loyalty program does not only offer discounts: with value creation, the focus shifts away purely from promos​ – it focuses on the wider customer experience, with the aim of creating ‘moments of joy’7. After all, 67% of customers say they’ll pay more for great service8. With the information gained from loyalty programs, retailers can develop a more data-driven strategy to discounting and avoid subsidizing sales that would have happened at full price anyway.

3. More cost-efficient customer acquisition

Customer advocacy is one of the most powerful marketing tools – referrals can generate a great deal of sales and at a much lower cost than paid advertising9. A strong loyalty program encourages greater advocacy and can even reward customers for it. But it can also be unique selling point in itself, attracting customers who are keen to take advantage of the opportunities it offers.

For example, Amazon Prime is a paid loyalty program, with consumers often selecting the join Amazon to take advantage of the program benefits, rather than using competitors.

4. A stronger emotional bond between brand and customer

Customers make brand decisions with their hearts as much as their heads. By increasing engagement and providing positive experiences, loyalty programs help to create an emotional bond, which makes customers more likely to choose the brand over competitors. It also makes them more forgiving when mistakes are made!

5. An increase in data quantity and quality

The data captured from loyalty programs is extremely powerful. By leveraging this data, retailers can gain insights into different demographics, engagement, purchasing behaviour, and interests. Brands can analyse which rewards excite the different customer segments. All the data captured is essential to perpetuating an effective loyalty program. And it can help organisations better understand their customers to make more data-driven decisions across the wider business.

So how to take it from here?
What if you are ready to take that next step but do not know how? Or what if are you interested and want to get to know more? Contact one of our Business Consultants or CX specialists or check-out this whitepaper


1 Customer Acquisition vs. Retention, Invesp

2 SurveySparrow 50+ Essential Brand Loyalty Statistics for 2022 (March 2022)

3 Forbes 50+ Essential Brand Loyalty Statistics for 2022 (March, 2022)

4 Mercle Inc 50+ Essential Brand Loyalty Statistics for 2022 (March, 2022)

5 Forecasted by MarketsandMarkets on Fortune Business Insights (October 2021)

6 McKinsey report 2021 “Next in loyalty”

7 “Moment of joy” phrase inspiration came from the [Webinar] How to Launch and Manage a Successful Loyalty Program (Jun 3, 2020) by Antavo Loyalty Management Platform and Salesforce.

8 Next in loyalty: Eight levers to turn customers into fans By José Carluccio, Oren Eizenman, and Phyllis Rothschild (October 12, 2021)

9 Why Referrals Are The Most Valuable Form Of Marketing (And How To Get More) By S. Efti


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