What is Customer Loyalty?

It’s commonly thought that getting new customers is the only way to expand a business. Though new customers are good for your business, it’s definitely not the only or best way to increase sales.

Keeping your current customers coming back to your store consistently is a lot less effort than what it takes to find new customers.

And it can significantly increase your business too.

In fact, did you know that increasing your customer retention rate by just 5% can increase your revenue by as much as 95%?

That’s the value of having a well-designed loyalty rewards program.

In this post, I’ll walk you through why loyalty rewards programs are so valuable and how you can tailor a loyalty reward program to your business. We’ll go over the seven most effective types of customer loyalty programs and you’ll see how surprisingly simple they are.


What does it mean to have Customer Loyalty?

Customer loyalty is a measurement of how likely a customer will consistently purchase your brand. 

Seems simple, right? So then, how are you going to use your customer’s positive experiences to encourage brand loyalty?

The best option: reward them with a beneficial loyalty rewards program.


What is a Loyalty Rewards Program (and Why Does it Matter)?

Loyalty programs offer your customers rewards simply for being your customer.

You can incentivize future transactions by rewarding each purchase with a point system or a gift card that can only be used in your store. With rewards like these,  your customers will be encouraged to return to your shop to make future purchases.

This increases customer retention as well as profits. Customers will be inclined to buy more for the opportunity of higher rewards. This creates a win-win relationship with your customers: the more the customers benefit, the more your business will also benefit.

Over 90% of companies offer some type of loyalty program or customer engagement. Loyalty programs have been shown to increase your sales and profits. Loyalty rewards program not only incentivizes newly acquired customers to continue purchasing from you, but also makes current customers feel valued about their loyalty towards your business.


Here are three facts that help illustrate just how loyalty rewards programs can increase revenue:

  1. A study showed that just by offering your customers a customer loyalty program, an eCommerce platform could potentially increase its average order quantity by a massive 319%.
  2. 75% of consumers say they are more likely to make more transactions with a brand after receiving an incentive.
  3. Customer loyalty programs can grow customer retention by 5 percent, which can increase revenue by an impressive 25 to 95 percent for some businesses.


A fear that many business owners have about loyalty programs is that it may be more expensive to keep them going than what they would earn. Even though a loyalty rewards program can have some startup costs, overall sales and profits will increase with the addition. Plus, there are ways to choose incentives that don’t cost as much and are able to be set up to make sure you have a net positive return on investment (ROI).