Six Reasons To Implement A Loyalty Program

Loyalty Programs help increase loyalty and revenue at the same time. With advances in technology, these programs provide valuable tools for merchants.

The History of Loyalty Programs

Loyalty Programs date back to 1793 when retailers awarded copper coins to customers. These coins could be redeemed on their next purchase. Other forms of loyalty programs were introduced in the 19th Century such as S & H Green Stamps and later, Blue Chip stamps that kept grocery store customers coming back to collect stamps that could be redeemed for items such as vacuum cleaners or televisions. By the 20th Century, box-tops became widely popular for merchandise redemption. In 1981, American Airlines introduced the Frequent Flier program, and that concept is now used by virtually every airline and hotel brand in the world.

 Mobile App Loyalty

The 21st century delivered eCommerce, technological innovations, and the introduction to digital transactions through mobile apps. Apps are steadily replacing the use of plastic loyalty cards and the days of using a hole-puncher to keep track of visits or loyalty are long gone. Consumers love the convenience of an app that is used to order product and keep track of loyalty points.

How Loyalty Programs Work

Loyalty programs maintain a registry of transactions and/or points a customer accumulates for visits or purchases. Those points can be redeemed for certain rewards and benefits set up by the merchant. When Starbucks offers a Double Points Day, revenues skyrocket for the day as loyal users attempt to earn more points for a free cup of coffee in the future. Loyalty programs are intended to fulfill two primary missions: The first is to build loyalty and the second is to increase revenue by motivating customers to come back often and spend more. Paytronix, a software company for restaurants and convenience stores reported 55 percent of restaurants reporting 5 to 17 percent of total revenue is driven by the most loyal 2 to 3 percent of customers.

Reasons You Should Implement a Loyalty Program

#1 – Encourage Repeat Business

Loyalty programs use a psychological formula of “shop more to earn more.” Every purchase should reward a customer for their purchase and their loyalty while earning points for free or discounted merchandise or service in the future. This tactic encourages customers to purchase repeatedly from the brand. Chili’s recently revealed that 37 percent of all transactions include a discount applied as a result of loyalty points.

#2 – Gathering Customer Data

Customer data has become a valuable tool that helps build loyalty and revenue. Customer data such as home addresses, email addresses, date of birth, wedding anniversaries and purchase history can help merchants send the right message at the right time. Data helps you understand your customer more deeply and formulate marketing strategies that keep customers engaged and help acquire new clients.

#3 – Improve the Experience

Making your customer feel valued improves the customer experience. Elevating the transaction experience can help foster repeat business and improve customer satisfaction levels. Customers no longer feel like they are just another customer when you send personalized messages to them.

#4 – Create Brand Ambassadors

Everyone likes getting free stuff and sharing their success. Kohl’s loyalty member shoppers frequently brag to friends about great deals they receive using Kohl’s Cash and coupons combined. A satisfied customer who feels like they received an outstanding value is likely to share that experience with friends and family and encourage them to join your loyalty program as well. If they post it on a social media platform, you are benefiting from their advocacy.

#5 – Brand Recognition

Loyalty programs improve customer retention rates, increase sales, and boost revenue while building a positive image for your brand. Loyalty programs boost loyalty and trust among your customers resulting in improved brand recognition and credibility.

#6 – Creative Revenue

The latest trend in loyalty programs has turned them into a new revenue source. P.F. Chang’s announced last month it would introduce P.F. Chang’s Platinum Rewards for $6.99 per month. Members will earn 15 points for every $1 spent at P.F. Chang’s with unlimited free delivery and priority reservations. Subway has adopted a similar strategy selling 10,000 subscriptions at $15 that entitles customers to a 50 percent discount off sandwiches. Taco Bell has launched a $10 monthly taco subscription.

The Importance to Customers

  • Customers with loyalty cards will work diligently to gain special status such as Platinum Elite. The longer a customer is enrolled in a loyalty program, the more special discounts and recognition they are offered. Customers love this!
  • Being a member of a loyalty program means saving money through discounts or free items. Customers love special offers and discounts on special occasions, like birthdays and anniversaries, along with other landmark occasions. Send them an offer and they will come and redeem it.
  • The best loyalty programs offer special privileges such as invitations to exclusive events, meet-and-greets, and member-only parties. As an example, Sephora’s Beauty Insider Loyalty program hosts much-appreciated events and workshops throughout the year for loyalty members and you can do the same.


Implementing a Loyalty Program can ultimately help your business earn more money, gain more customers, and retain customers longer. Aurora Payments can help you implement a Loyalty Program. Call us at 833-AURORA2 (833-287-6722) or send an email to: