Benefits of Loyalty Programs for your Online Business

What are Loyalty Programs? Why they have become an important element for online businesses? What are the benefits of 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 brand 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 make a purchase. The points are awarded so that the customer continues to shop from the same brand in his/her future purchases.

How do Loyalty Programs work?

Upon receiving loyalty points, the customers can redeem those points as a discount on their next purchase. What’s exciting is customers get rewarded with loyalty points on 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 program 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.

Benefits of Loyalty Programs

A loyalty program offers numerous benefits. In this article, I have put forward the top 5 benefits of loyalty programs for your online business.

1. Improve Customer Retention

The first and the 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 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

Moving forward with the benefits of loyalty programs is increased sales, that goes in flow with our first point.

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 loyalty programs.

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 Relationship 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, treat them in a special way. Make them feel that they are important and you want them to return. Build a personal connect through your loyalty programs.

5. Grow Brand Awareness

Grow Brand Awareness using loyalty programs

Adding to the benefits of 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 as Brand Advocates who do word of mouth for your Brand.

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

Loyalty Points module by KnowBand

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 obviously when the 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 a number of conditions for a customer to earn loyalty points. To put it simply, a user will be eligible to receive loyalty points only after he or she matches the condition as defined by the merchant.

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

PrestaShop Loyalty Points addon

OpenCart Loyalty Points extension

Magento Loyalty Points extension

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 about what your competitors are doing. Focus on what you can do best to motivate your customers to remain loyal.

Hope, this information that I shared with you made you understand the importance of loyalty programs. If you would like to add something in this article, feel free to leave a comment below.

For any assistance or queries regarding the module, you can contact us at

Stats collected from: Invesp

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.

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