Customer Loyalty Programs: All you need to know

How much do you spend on advertising to acquire new customers? You may spend a lot trying to convince new people into doing business with you. However, have you ever thought of your existing users and retaining them? If no, it’s time you did. 

You save a lot on advertising because you spend much more trying to acquire new consumers. Even if you do get new ones, it’s the old customer who spends more than the new ones. This proves that old shoppers who regularly do business with you are always better than new ones. The best way to ensure they come back to you is through customer loyalty programs

What is a customer loyalty program?

As the name suggests, these are reward programs that recognize loyal customers who frequently buy from you. They are generally rewarded with free merchandise, rewards, points or coupons in gratitude for their business.

 The customer, in turn, increase their loyalty to the company to ensure their repeat business. Loyal customers may get graduated to higher loyalty levels with better perks when they buy more from you. These incentives and increased benefits lead to them doing more business with you. 

 The strategy is not necessarily an additional cost to the company. Even 10 cents will reap much more in return. It’s because humans by nature love receiving something for nothing. Spending a little to retain customers is much better than losing customers to another business. 

How do customer loyalty programs work?

It’s up to the business owner to decide how your reward program works. The most common customer loyalty programs in retail are:

  • The point program where the shopper receives a certain amount of points for each purchase made. It’s usually decided by the amount spent, where the more they spend, the more points they accumulate. 
  • The paid program is where customers are offered an opportunity to join your VIP members club by paying monthly or annual fees. This is effective only if you offer benefits that will interest, and offer some advantages to consumers. 
  • The charity program is where you use your business values to build a relationship with like-minded customers. For example, animal lovers will love being a part of your animal welfare program. 
  • The tier program involves a tier system where the more loyal customers buy from you, the better rewards they receive. It usually follows a gamification concept where the more they play, the higher the levels they reach. 
  • The partner program involves your helping customers achieve a goal. They end up being more committed to their efforts and attribute their success to you. This is an effective psychological trigger that encourages repeat engagement. 
  • The community program is where you provide loyal shoppers access to a community of like-minded people. Community members end up connecting and may even sign up for exclusive events. 
  • The subscription program is where you offer consumers products on a subscription basis. Though customers don’t receive any rewards or benefits, they don’t have to worry about making the next purchase. 

What is the purpose of a customer loyalty program?

Customer loyalty needs

No matter what your business may be, a customer loyalty program is a great way to bring back repeat shoppers. You give them a reason to do business because of the points, community access and subscription they stand to gain through it. 

It is extremely valuable to a company in today’s competitive and crowded business world. It gives your shoppers a reason to return to you instead of doing business with another shop. 

Following are some key benefits associated with starting a customer loyalty program:

1. Customer retention

Consumers today buy things based on not only price but also on engagement, shared value and their emotional brand connections. This is where a customer rewards program helps provide value and reason for them to keep doing business with you. 

2. Customer referrals

Customers happy with your rewards program will tell their friends and family about you. Word of mouth advertisement is the most trusted form of advertisement because customers referred by loyalty members are more likely to do business with you.

3. Positive reviews and feedback

Reward programs lead to customers posting positive, authentic and trustworthy reviews and feedback on your website and social media. This, in turn, helps entice more people to do business with you.

4. Cost-effectiveness

It’s cheaper for a company to retain a happy consumer than to look for new ones. It’s in fact about 25% more expensive to acquire new shoppers. 

5. Sales

The customer loyalty program questionnaire that your consumers fill to be a part of your program provides you with useful data. You can use it to personalize their shopping experience. This helps increase your bonding with consumers and create targeted marketing campaigns towards certain products. Besides, loyal shoppers already trust you and are more likely to buy from you. 

6. Show appreciation

Loyalty programs create an emotional connection between your customers and brand. This increases their patience if anything goes amiss like faults or repairs. Besides, you can also show your appreciation by giving rewards like discounts on special occasions like their birthday. 

7. Track analytics

The consumer data you collect helps you measure your customers’ engagement and sales. Data like repeat customer rate, program engagement, and purchase frequency lets you know which customers buy most from you. 

8. More growth

Your rewards program don’t have to be stagnant. You can improve it by incorporating more customer loyalty program ideas that benefit regular visitors. 

How to create a customer loyalty program?

Now that you know quite a bit about customer loyalty programs, and you may be a part of a few, here’s how you can create one for your company. 

How to start customer loyalty programs

Choose an appropriate name

Choose a unique name, different from the other rewards programs that your customers may be involved in. It should be something that makes them curious to learn more while urging them to be a part of it. 

Make it meaningful

Most customers don’t trust rewards programs because they think that these are created just to make them spend money. While it is partially true, you have to prove that your program is more than money. Show them any unrelated offers and benefits your customers stand to gain through it. Show your corporate social responsibility by incorporating it into the program. You could donate a dollar from each loyal shopperr’s sale to a cause. 

Reward actions other than buying

You could reward your customers for not just buying things. Give them rewards for other things they do like watching product videos, blog subscriptions or following and sharing your social media content. 

Offer interesting rewards

Don’t just offer discounts but also unique rewards. For example, those who spend enough to reach a specific limit could exchange their earned loyalty points for entertainment, free tickets or a social cause. 

Give valuable points

Make your program worthwhile to consumers. Offer them something valuable in return for their business. You could assign points with a monetary value so that customers know that they will also earn while buying from you. 

Don’t forget about your corporate social responsibility

Most customers are happy to spend money on brands that take stances on social issues they relate to. So tap into values like clean water access and animal welfare and make it part of your rewards program.

Create multiple enrolment opportunities

It’s not enough to create the perfect loyalty program. You have to keep promoting it, showing customers how to join and its benefits. Use social media channels for promotion and add on-site push notifications where customers earn points for completing activities. 

Co-branding helps

Partnering with other brands and products adds value to your brand. It also gives shoppers more reason to join your rewards program.  


Everyone loves games, competition and especially the winning. Using it in your program will give a reason for customers to interact more frequently with your brand. The game can be placed anywhere you like. It could be at the point-of-purchase, website or an app. All that matters is that customers should earn points through them.  


Customer loyalty programs for small business

Small businesses don’t have to lose out on the benefits of customer loyalty programs. They may not have the same amount of money as their bigger counterparts. They can, however, get creative and come up with something unique that benefits both the company and customers. 

Here are some customer loyalty program ideas for small businesses:

  • Punch cards are very common in B2C company reward programs. The shopper is given a business card where a hole is punched after every purchase made. The shopper receives special perks upon reaching a certain number of holes. The rewards give them more reason to buy from you.


  • Opt-in email. You can send those offers or promotions through email once customers provide their email. Emails are also cheap, easily distributed and can be sent out at any frequency. There are also email automation tools that help efficiently distribute mass emails. 


  • Free trials. You can try releasing free trials for you new products to your program members. It works both as a reward program benefit and marketing tactic for new launches. 


  • The partner program involves combining your resources with other businesses. You basically offer benefits for both companies and the customer. 


  • Referral programs are programs where you offer loyal consumers attractive rewards for their referrals. It’s proven that most shoppers are ready to recommend a brand with a good loyalty program. So as long as the rewards program is good, most loyal shoppers will take the time to network and promote the business

Examples from proven customer loyalty programs

Following are a few examples of proven and successful international and Malaysian customer loyalty programs worth taking a look at:

  • BCard is Malaysia’s premier lifestyle and brand-centric reward program offered as a free lifetime membership. It follows a point mechanism where members earn points for buying from participating merchants. Members generally earn 1Bpoint for each RM spent, but can redeem an RM  only after accumulating 100 points. 
  • Popular Card is a favorite with bookworms. It gives a 10% discount on items bought at the store and a 20% discount on selected books. 
  • Watsons VIP Card offer dual benefits of a Watson chain membership, and a Touch ‘n Go function. Members earn a point for each RM 1 spent, 5 points for using Watsons VIP and 2 points for buying Watsons brand products.
  • The points can be redeemed for items on offer or give a discount for various products. The VIP card offers members dining privileges at selected Malaysian restaurants and Touch ‘n Go benefits. 
  • Virgin Atlantic Flying Club members not only earn miles but also tier points. Club Red tier indicted members can get bumped to Club Silver and Club Gold. Club Red members earn flight miles and discounts on car rentals, hotels, and holiday flights. Club Silver members earn more flight points and other benefits like priority seating. Club Gold members get double miles, boarding priorities and can access and use clubhouses  before flights. 
Virgin Atlantic Flying Club
  • Petron Miles Card is not just a fuel loyalty card but has some great privileges for members. They earn a point for each RM1 spent on fuel and points for renewing AIG car insurance. The points can be redeemed for fuel and convenience store purchases. Petron’s partners also offer special deals and discounts. 
  • American Express Plenti Program lets members pool rewards accumulated from various retailers like AT&T, Rent-a-Car, and Hulu. The rewards can later be redeemed at any of the partner retailers. This means that points earned at Hulu can be used to pay for car rentals. Flexibility is the strong point of this program which appeals to maximum customers.

Final words

In a nutshell, it doesn’t matter if it’s a big or small company. Customer loyalty programs are important in promoting any business. The right rewards program can turn your customers into your brand ambassadors. The increased business makes all the time, money and effort invested in the program worth it. 

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