Why Customer Loyalty Programs Are So Important in the Retail Sector

A key objective of loyalty programs is to drive market share. Although retail executives recognise the importance of customer loyalty in this process, few have taken in-depth action. Here are the key takeaways from this blog:

  • Loyalty programmes in the retail sector need to be simple to access, relevant to industry trends and appealing to today’s digital consumer.
  • Start by considering the consumer experience. A good rewards programme will heighten a customer experience, but it won’t compensate for a bad one.
  • A great rewards programme will compile customer data and information on buying behaviours.


Loyalty programmes should be consistent. However, new, novelty rewards should be introduced to keep customers intrigued. By using the analytics in our loyalty console you can identify which rewards are most popular and which are a dead weight, to keep your interface clean and relevant.

Feel free to contact us for a free consultation on your Retail Loyalty App. Many retailers find themselves in a low-growth world. Millennials, showrooming, and changing technology platforms are disrupting the industry and stalling growth. Cost-cutting is a common strategic response, but retailers should focus on customer loyalty.



Customer loyalty programs are proven methods for growing and sustaining market share. Consumers who are already enthusiastic about a brand are more likely to continue buying and are a prime market for that brand’s new products.

Still, there is a disconnect. Retail executives recognize the importance of customer loyalty programs, but few are taking action. Many companies, in fact, have merely tinkered with programs that were established years ago when consumer expectations and the competition were very different. They also don’t have an accurate way of measuring how their loyalty programs are even performing.

Old patterns of consumer behaviour no longer hold true in the current retail marketplace, and retailers need to adjust to survive. Loyalty programs can still drive market share, but they need to be simple to access, relevant to industry trends, and appealing to today’s digital consumer.



So how do you do that? Let’s start with an action plan to establish four priorities for optimal results:

Start with the customer experience. A good loyalty program will multiply the impact of a good customer experience, but it won’t compensate for a bad one. So companies need an accurate way of measuring the customer experience, which should be the starting point of any loyalty program.



Use the data effectively. What separates a good loyalty program from a great one is the way it uses customer data. And companies need to integrate the data into their entire business operations, not just loyalty programs.

Keep rewards fresh. Loyalty programs have to be consistent, but consumers also like novelty. With the right approach to testing and personalization, a loyalty program can frequently introduce new and different benefits that excite customers at a reasonable cost. At the same time, the right analysis will identify benefits that are not popular or profitable. So sweep out the dead weight while winning attention with new ideas.



Design a business model first. Before you worry about a budget, figure out what program you want and design a business model around it. That will allow more creativity in coming up with funding and loyalty benefits.

Understanding what your customers find valuable is key—and it’s not always what will save them the most money. In a recent KPMG survey, half of the loyalty customers polled said they would do “almost anything” to earn more rewards in at least one program.



The rewards program also has to be flexible. Consumer preferences change, so your loyalty program has to change too. In the KPMG survey, more than 80% said they prefer surprise deals or gifts to information on sales, special privileges & time-saving opportunities. A program that offers frequent surprises will likely see a spike in sales and can be less generous with other benefits.

Companies should also consider a partnership to make a loyalty program more affordable. Co-branded credit cards and working with suppliers to reduce costs for products or funding are just two among many partnership options.

Source: https://www.forbes.com/

Share this Article

Rachel Nobel

Rachel Nobel

Head of Marketing and Social Media

Rachel was the Head of Marketing and Social Media at White Label Loyalty and kept our blog up to date with all the latest industry insights.

Post Tags

Customer Loyalty
Customer Retention
Customer Engagement
Loyalty Programmes