Benefits of Customer Loyalty Programs for your Online Business


What are Loyalty Programs? Why have they become an important element for online businesses? What are the benefits of customer loyalty programs? How do loyalty programs work?

If you have these questions running through your mind, you have landed at the right place to get an answer to all these questions. Let’s begin.

When the eCommerce industry was less crowded and people had limited options to shop online, Brands did not use to be much concerned about losing customers. Since the choices were few, people used to shop from the same brand from which they shopped earlier.

But today, when the eCommerce sector has hugely expanded, people have countless options to shop from. This led to brands losing out customers to their competitors, and hence loyalty programs came into existence.

What is a Loyalty Program?

A Loyalty Program is a marketing strategy used by Brands where they reward incentives or loyalty points to the shoppers every time they purchase from their website/store. The points are awarded so that the customer continues to shop from the same brand in his/her future purchases.


Recommended Blog: How important is an eCommerce loyalty program for an eCommerce store?

How do Customer Loyalty Programs work?

To begin with, the customer makes a purchase and receives some points in his/her wallet. It is a gesture by a Brand to thank customers for choosing their brand to shop for.

Upon receiving loyalty points, the customers can redeem those points as a discount on their next purchase.

What’s exciting about customer loyalty programs is that it is a continuous cycle where customers get rewarded for every purchase.

So customers keep buying, receive rewards, and then use them during checkout, and this is how the loyalty program cycle works.

The types of loyalty programs vary from business to business but they all have their focus centred around one purpose- Making customers loyal to the brand or in short, building customer loyalty.

Recommended Blog: How PrestaShop Loyalty Point Program can take your Marketing to Next Level

Benefits of Customer Loyalty Programs

A loyalty program offers numerous benefits. In this article, I have put forward the top 6 benefits of loyalty programs for your online business.


1. Improve Customer Retention

The first and foremost benefit of a loyalty program is it helps you improve customer retention. I mean, every loyalty program has one primary motive, i.e. to retain customers, and they do make one of the best and most effective customer retention strategies.

Did you know around 60% of the retailers find customer retention their biggest obstacle? Loyalty Programs eliminate that hurdle to a certain extent.

2. Increase in Sales

increase sales using loyalty programs

Increased sales are the next advantage of loyalty programmes. So, loyalty programs are highly effective in boosting your eCommerce revenue. Offering loyalty points to a customer for buying products ensures repeat purchases and helps you win customer loyalty over time.

Once you win their loyalty, they will be likely to put more trust in your brand and prefer it over your competitors. And once they become your loyal customers, your sales graph would often remain high.

What if I tell you that existing customers contribute to 65% of a company’s business? I guess this is enough to make you understand the importance of customer loyalty programs.

Recommended Blog: 8 Ways to Build Customer Trust and Loyalty

3. Loyalty Programs are Cost-Effective

Retaining existing customers is comparatively less expensive than acquiring new ones. The credibility that you have built with your existing customers would have taken you a lot of effort, time and money. To turn a new customer into a loyal customer would require the same commitment.

But your existing customers have been through your journey, hence, the expense to persuade them for regular purchases is less than what would be required to influence new customers.

Research says acquiring new customers costs 5 times more than retaining the existing ones.

4. Take Customer Relationships to the Next Level

take customer relationship to the next level

To grow as a brand requires a healthy relationship with customers, and Loyalty programs help you build a strong bond with your customers.

76% of consumers think that Loyalty programs are a part of their relationship with brands. By getting rewards or loyalty points for making a purchase, customers feel more attracted and emotionally attached to your brand and prefer it as their go-to option for online shopping.

Value your customers, and treat them special. Make them feel that they are important and you want them to return to your store again. Build a personal connection through your loyalty programs.

5. Grow Brand Awareness

Grow Brand Awareness using loyalty programs

Adding to the benefits of customer loyalty programs is they boost your Brand Awareness.

If a customer receives loyalty points on a purchase, he or she will likely suggest your brand to his/her friends, family, colleagues or relatives. Those customers are what we call Brand Advocates who do word of mouth for your brand and bring you, new customers. So we can say that customer loyalty programs are effective in customer acquisition as well.

This gets your brand noticed. More and more people visit your store and look to buy from your brand.

Recommended Blog:  7 Ways to Increase Average Order Value

6. Loyalty Programs make Customers happy

Customer happiness and fulfilment are one things that customer loyalty programmes promise. Any consumer would adore getting anything in return for their buy.

And customers would also appreciate you for this and will have more liking towards your brand. It reflects that you not only see them as one-time customers but want to maintain a healthy relationship with them in the future as well.

Loyalty Points module by KnowBand

Customer Loyalty Programs- Testimoal

If you are also looking to set up a loyalty program for your eCommerce business, our Loyalty Points module will help you do so efficiently. It not only helps you with customer retention but also provides you with an opportunity to acquire new customers. How?

Well, the Loyalty Points module lets you reward a joining bonus to new users when they sign-up on your website and when a user makes a purchase. Customers can use loyalty points in the form of a discount voucher.

This is a feature-packed module that lets you define several conditions for a customer to earn loyalty points, for example, when a user has shopped for a certain amount or a certain quantity, etc. Simply expressed, a user will only be qualified to collect loyalty points if they meet the criteria established by the store.

To make things more interesting, you can surprise your customers by crediting loyalty points in their store wallets anytime. Knowband offers the Loyalty Points module for PrestaShop, OpenCart and Magento 2. Check out the module to know its complete features and benefits-

Over to You

More than 80% of online shoppers said that loyalty programs encourage them to continue purchasing from certain brands. Therefore, you simply cannot overlook the benefits of loyalty programs.

Your competitors, somewhere, are taking away your potential customers from a loyalty program scheme. It’s high time that you have a similar program too. Do not overthink what your competitors are doing. Focus on what you can do best to motivate your customers to remain loyal.

Stats collected from Invesp

I Hope, this information that I shared with you made you understand the importance of customer loyalty programs. If you would like to add something to this article, feel free to leave a comment below. For any assistance or queries regarding the module, you can contact us at

Manish Barthwal

Manish Barthwal

Following his passion for writing, Manish has been providing value to his readers through his write-ups. He predominantly writes for the e-commerce industry. Apart from writing, Manish's love for cricket is unmatchable. He is an ardent cricket fan.

4 thoughts on “Benefits of Customer Loyalty Programs for your Online Business

  1. @Manish, Really interesting benefits of Loyalty Programs are explained.

    I also want to add 1 thing that is “Personalization”. If businesses are impliment Loyalty Programs with Personalization then revenue will boost more then up to 95%.

  2. Oh, customer loyalty program is indeed a great strategy to keep a customer. The customer feels appreciated whenever the brands always giving updates and gift voucher.

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