Loyalty Program Benefits for Customers That Boost Retention 

Everyone talks about how loyalty programs are a great strategy for increasing revenue for ecommerce brands. But loyalty programs don't just serve your business. They are designed to benefit customers who choose to keep coming back to your brand, incentivizing them with offers and discounts that give them a better deal on your products.

85% of shoppers are more likely to continue to shop from a brand with a loyalty program.

More than the rewards, the right kind of loyalty program helps you build a relationship with your customers, increasing customer lifetime value as they continue to choose your brand. But, what’s in it for your customers?

In this article, we’ll dive into how loyalty programs work and the 6 benefits that they offer to customers while increasing retention and driving repeat business for DTC stores. 

What are loyalty programs?

Loyalty programs are designed to reward your customers for their repeat purchases through incentives such as discounts, points, or exclusive benefits. This way, you encourage customers to come back to buy from your brand, building loyalty and increasing retention.

Tailored Athlete is a clothing brand that understands the value of referrals in growing their small business. They set up a successful loyalty program using Social Snowball where customers turn into affiliates right after purchase. For every successful referral, these customers would receive cash commissions. 

With this strategy, the brand saw a 444% increase in referral revenue and a 10x ROI.

Types of loyalty programs 

Different brands structure their loyalty program based on the kind of products they sell, the rewards they want to offer, and the goals they have. Brands usually choose one of these 4 types of loyalty programs:

1. Points-based programs

In points-based loyalty programs, customers earn points with each purchase. These points can be redeemed as discounts on the next order or even to unlock special perks.

Points-based loyalty programs are one of the most popular because it’s straightforward to implement and easy for customers to understand. 

Sephora has a rewards program called “Beauty Insider” where members earn 1 point for every $1 spent.

2. Membership programs

Customers unlock membership status based on their purchase behavior. Once they join the program, members get perks like discounts on every order. 

Some brands have different tiers within their membership program where customers can unlock larger rewards like early access to new launches.

Some membership programs are paid, where customers pay a small subscription fee to be a member. Amazon Prime is one such example. Customers pay a monthly or annual fee to enjoy exclusive benefits, like free and faster shipping, discounts, and free access to digital content.

3. Referral program

Referral programs are another way that brands tap into incentivizing customers, offering rewards like discounts and cashback for every new referral that the customer brings. 

Unlike other kinds of loyalty programs that drive repeat purchases, referral programs increase word-of-mouth marketing for your brand, helping you convert new customers at a lower cost than other acquisition methods like ads.

SUPERJELLY, a protein supplement brand, does this well. For every new customer referred, affiliates get $15. On top of that, members also get exclusive access to new products before they launch and gifts at different milestones.

4. Tiered loyalty programs

In tiered loyalty programs, customers can earn larger rewards as they move up the different levels. Moving up the different loyalty tiers is usually based on their purchase history or frequency. This incentivizes customers the longer they stick with the brand and continue to shop.

Duradry is a dry deodorant brand that has a tiered referral program where customers earn $10 cash for each successful purchase. After three referrals, customers become VIPs, earning $15 for new referrals.

Benefits of loyalty programs for customers

When customers join a loyalty program, they aren’t just getting discounts or rewards— they’re becoming part of a community that values the customer’s commitment. Let's take a closer look at the key benefits that a rewards program would offer to your customer base:

Benefit #1: Exclusive rewards and discounts

One of the main reasons that customers love loyalty programs is the exclusive rewards and discounts they receive. Depending on the brand, these rewards are in the form of loyalty points that turn into discounts, early access to new products, or special members-only offers. 

There’s no doubt that this exclusivity makes them choose your brand over others.

Benefit #2: Better customer experience

Loyalty programs improve the customer experience. These programs are designed to cater to customers in a personalized way, tapping into their purchase history to tailor offers that would create value for them. 

For example, a customer who’s part of a skincare brand’s loyalty program and often orders sunscreen would get exclusive notifications about new sun protection products or special offers on their sunscreen collection. 

Many loyalty programs offer early access to sales or new products specifically for loyalty program members. Such elevated customer experiences help build a stronger connection with the brand, increasing customer loyalty.

Benefit #3: Building long-term relationships

One of the biggest advantages of loyalty programs is how help create long-term relationships between the brand and its customers. Over time, as customers participate in the program and see the rewards accumulate, they feel a stronger connection to the brand.

Coupled with efficient and friendly customer support, loyalty programs make customers feel valued, driving them to engage with the brand more, shop frequently, and increase customer lifetime value (the total amount a customer will spend with a brand over their relationship).

This often leads to better word-of-mouth marketing. Customers who feel connected to a brand are more likely to recommend it to friends and family. 

Referrals from loyal customers are quicker to convert, with 30% higher conversion rates than any other channel. All this without any acquisition costs to the brand! 

Benefit #4: Better deals, better savings

As customers earn more loyalty points with every purchase, those points can quickly add up to better savings. 

For example, every time a customer buys from a brand, they earn a percentage of their spend back in the form of points. They can later redeem these points for free products, discounts, or exclusive offers.

Rewards often add up faster than you might think, especially if the customer is a regular shopper or is restocking on products they use frequently. 71% of millennials who have opted into a loyalty program use them to save money. 

Some programs even have cashback offers! Outway Socks, for instance, has found a way to drive more word-of-mouth referrals. When their paid ad costs tripled in 12 months, they turned to referrals, launching an affiliate program that incentivized customers to spread the word. For every person they referred, customers would earn $15.

The result? A 5x ROI on their referral program, with over 5,000 active affiliates in the first week.

Benefit #5: Gamification 

Walk into a casino and you’ll see just how effective gamification is. The chance to “win” keeps people engaged, making it a great tactic for loyalty programs too. 

Gamification elements like earning badges, leveling up, and tracking progress towards a goal (like earning enough points to unlock a higher tier) motivate customers to shop more frequently. This adds an element of play to the shopping experience, making it feel less like a transaction and more fun.

Some programs even let customers compare their progress with other members, bringing in a little friendly competition. This sense of achievement and competition encourages them to continue purchasing to reach the next milestone.

As customers work toward the next level, they are likely to spend more frequently and feel more connected to the brand.

Benefit #6: VIP treatment and status

Many tiered loyalty programs reward loyal customers with special VIP perks. As customers accumulate more points or reach higher spending thresholds, they gain access to exclusive benefits that aren’t available to regular customers. These can include perks like VIP events, priority customer service, or faster shipping.

This VIP treatment helps foster a deeper sense of belonging. Customers being acknowledged for their loyalty feel more connected to the brand. They’ll be more likely to continue shopping from the brand, referring new customers, and even giving honest feedback that helps you improve your products and brand experience.

Set up loyalty programs to improve customer relationships and sell better!

Loyalty programs go beyond just rewarding customers. They create deeper connections that drive retention and advocacy. Customers who receive personalized rewards, exclusive discounts, and better experiences are more likely to return, engage with your brand across multiple touchpoints, and recommend your business to others. These benefits directly impact your bottom line, reducing acquisition costs while increasing customer lifetime value.

Tools like Social Snowball make these benefits more accessible by seamlessly automating affiliate onboarding and rewarding customers in real time. It’s an effective way to acquire new customers and skyrocket your revenue by incentivizing word-of-mouth marketing with minimal effort on your part.

‍

Want to see how affiliate programs can increase sales for your ecommerce store? Book a demo today!

Frequently asked questions 

How do loyalty programs drive more sales for my store?

Loyalty programs encourage repeat purchases by rewarding customers for their continued business. By using a point system or offering cashback, these programs incentivize customers to return to your store instead of choosing your competitors. 

Customers who accumulate loyalty rewards are more likely to redeem these rewards on their next purchase and spend more to reach the next reward tier, giving them a better deal on your products and driving more sales to your ecommerce store.

Can a loyalty program help me differentiate my store from competitors?

Yes, a well-structured loyalty program can set your store apart. 

By offering unique rewards, personalized experiences, or early access to sales, you can create a sense of exclusivity that attracts and retains customers. This makes shoppers feel appreciated and valued, making them more likely to choose your store over others, even if competitors offer similar products.

What are the long-term benefits of launching a loyalty program for my store?

A loyalty program can build lasting relationships with customers, increasing customer retention and lifetime value. Over time, loyal customers become brand advocates, sharing their positive experiences with others and driving organic growth. 

Loyalty programs also provide valuable data about customer behavior and preferences, helping you tailor your marketing efforts and product offerings to fit changing customer needs.

‍