2 min read
Loyalty Program card with colorful background with defocused lights

The Power of Customer Loyalty Programs

I remember when I signed up for my first customer loyalty program. It was at the urging of my husband during my checkout at a Hallmark store many years ago. I can recall them asking me to sign up and thinking, "why bother?", but my husband encouraged me to go ahead because what could it hurt? I think back to that every time I get Hallmark rewards coupons in the mail and sort of chuckle that I really didn’t think it would be worthwhile.

Now I am a member of many different customer loyalty programs. It seems that with almost every transaction, it’s a quick enroll to their “club” that will make future purchases easier and more attractive with savings opportunities. For example, once enrolled, you can track purchases easier and pay through apps. Those are great features considering we love to streamline things and get information faster. In addition to the ease of future transactions, these memberships allow for point accumulation which usually translates to savings and coupons on future purchases.

I have personally come to love the loyalty programs that I engage with. They are nearly effortless to join, just a quick submitting of an email, maybe a password creation and a downloading of an app and you're all set! I’ve noticed the rewards tied to some of these programs have become more attractive and enticing. I surmise that is because merchants have seen the growth they can obtain through retention of loyal patrons.

For example, our family frequents PotBelly Sandwich Shop pretty often. They have a system that racks up “smiles” for every purchase. After so many smiles, you are eligible for $5 off your order perk. The $5 off took a little while to earn, but eventually it came and it generated a positive reaction on the day it came through. This past summer, however, I noticed I was getting a $5 off perk MUCH more frequently. Finally, I realized they were doing a “summer of perks” promotion. I actually spoke to one of the PotBelly employees about it out of curiosity, telling him I felt like I was getting $5 off every time I turned around and that I was loving it. He stated that corporate had decided to forgo their advertising dollars and instead increase their perks distribution over the summer. It really got me thinking. They truly weighed their options and hung their hats on this marketing tool being more beneficial than traditional ad placement in the summer months.

Now that I'm on the "other side" (not just a consumer, but an online marketer) I know the value of the customer data from the businesses standpoint. They can easily track how often their best customers buy, what they buy, when they buy, and they can push messages to these customers that match their preferences. And this is really what effective inbound marketing is all about.

Now back to wearing my consumer hat. I feel good about going to PotBelly. Sure, their food quality is high but I also believe the perks played a role in the mindset I have about spending my money there. I will not be surprised if the trial was worth it. They are not the only program I engage with that I feel I get something back from. And with these preferred programs that are simple and rewarding, I will frequent their businesses more often.

I am not the only one who feels this way. So many of us have a high number of memberships in loyalty programs. Because of this, merchants need to continue to implement and evaluate their customer loyalty program offerings. Target recently announced that they were rolling out their loyalty program nationwide. Here's a great article from HubSpot regarding customer loyalty programs and how they fit into business growth and marketing.

American Airlines rolled out the first modern-day loyalty program in the U.S in 1981 and according to COLLOQUY Loyalty Census Search, as of 2017 there are 3.8 billion memberships in the U.S. in overall customer loyalty programs. They have changed as they’ve grown, but the fact remains that one of the most proven ways to grow business is through retention of loyal customers.