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Why you should build a customer loyalty program

Retailers in the current low-growth environment usually reach for ‘cost cutting’ as their time tested strategy when looking for more sales. Lower prices should get more people through the door – right? But cost cutting won’t create the thriving base of loyal customers that you’re really hoping for – the kind that keep coming back.

So, how do you create loyal customers? It starts with a great product and a great experience time and time again. If you’ve got all of that and still aren’t seeing the brand loyal customers you know you should, it’s time to focus on building them through a customer loyalty program. You need those valuable customers coming back to your business regularly.

While many retailers recognise the value of a customer loyalty program, not many are doing much to build them. And those who have loyalty programs in place are finding that they’re tired and worn out – and aren’t providing the value they should be. So, does the customer loyalty program still have a place in the modern retail market?

Try these benefits on for size:


#1. You can use the data

This is an often overlooked benefit of retail customer loyalty programs. Not only can you collect shopping habits and data about specific customers, but you can use the overall information to help you make stock and buying decisions. You can get valuable insight into purchase times, sizes, product types and much more. For example, when do your customers react most to a sale? What kind of sales do they love? If they receive a gift card for your store, do they spend more than the gift cards value? Using real data can help you shape your business and marketing to appeal even more to your target market.

#2. Repeat customers are cheaper and more valuable

Everyone seems to know this, but it warrants another mention. Repeat customers are cheaper than new ones and much more valuable. In fact, attracting a new customer costs five times as much as keeping an existing one (Lee Resources 2010). Not only that, the probability of selling to an existing customer is sitting between 60 and 70%, while the probability of selling to a new one is between 5 and 20% (Marketing Metrics).

If you provide them with a great experience and get them coming back you’ve created someone who will spend more money with your business and could perhaps be an advocate to their friends and family. How do you get them coming back though? That’s where the customer loyalty program comes in. Giving them incentives that speak to your particular customer base will get them thinking of you first when they need whatever it is you sell.

#3. Cost cutting won’t cut it

Likely, your range of products are not the first of their kind. And that means there are always going to be competitors in your market. Many of us would reach first to cost cutting and sales events to bring more people through the door, but this isn’t going to cut it forever. There is nothing more powerful than a loyal customer advocate, and a thriving database of loyal customers will be the ticket to growing your business.

Building your customer loyalty program


Now that we’ve established some of the reasons why a customer loyalty program might be what your business needs to grow, let’s have a look at some ways to build an effective program:

What do your customers want?

This is the first question you need to ask yourself when building a customer loyalty program – what do my customers want? Once you know what they want you’ll be able to give them a loyalty program that they’ll put effort in for. Do your customers come to you for coffee & breakfast and would love a free coffee? Or do your customers want free delivery for their online shopping purchases? Figuring out what they want will keep your customers coming back to your business rather than going somewhere else.

How will you offer it?

There are so many different loyalty programs out there – because there are lots of different customers out there. The customer loyalty program you build should be tailored to your customers. You could offer dollars for future purchases, collecting points for free gifts, exclusive offers just to members or event invitations.

With just over 5 million members, Myer One is known to be one of the best loyalty programs in Australia and it’s not hard to see why. Members earn Shopping Credits on purchases at Myer, with these credits converting into a Reward Card on a quarterly basis. For every $1,000 spent at Myer, Members receive a $20 Reward Card. The more you spend, the more benefits available to you. Top tiered members get faster delivery of online purchases, a gift card on their birthday and invitations to exclusive shopping events.

There’s no way the customers who are realising the benefits of the Myer One program are going to David Jones when they’re shopping.

How will you use the database?

Once you’ve got some customers on your loyalty program it’s important to use the data to further drive brand loyalty and tailor your business around your best customers. Find valuable answers from the data you’ve collected like: who your customers are, what do they like to buy and how they like to be communicated with? 

These are all important insights when making buying decisions or shaping marketing campaigns.

We’ve got you covered for customer loyalty


Redegroup are one of the biggest loyalty card manufacturers in Australia, and have a range of customised loyalty card printing to help create brand loyalty with your customers. We can even help you test your loyalty cards with your existing POS system to make sure it all works well.

Find out more about Redegroup’s gift card printing