Customer retention is the most important form of marketing. These are people who have already engaged with your business and their return depends on the quality of your products and the standard of your service. A loyalty program offers added value and a tangible reason to shop with your company again.


The benefits of implementing a loyalty system

  • Customer retention – This is the major goal when implementing a loyalty program. Whether it be a coffee punch card, a points system, or other incentive, bringing your customers back to make another purchase is the ultimate aim.
  • Upselling – Negative churn is the rate that customers stay and engage further with your company. This is measured through their purchase of additional services, more or upgraded products, and generally going further with your company. Establishing this level of trust is a key reason to implement a loyalty system.
  • Metrics – An effective loyalty program will give your business invaluable information regarding your customers’ spending habits. You can identify high and low spenders, their frequency, and what they tend to buy, as well as target your marketing specifically to this information.
  • Build relationships – This is crucially important to retaining customers. Creating brand advocates relies on the trust your company builds with its most loyal clientele. A personal recommendation is generally considered more convincing than promotional material and strong relationships are essential for customers to vouch for your services and products.

The four main types of loyalty program

The aim of any business initiative is to increase sales and make profit. Happy customers will spend more money than neglected ones and tapping into what drives their loyalty will keep them coming back for more. The type of loyalty system your business implements will depend greatly on what your company sells and your price points.

Rebate or cash back

Customers spend to a certain threshold and then receive a voucher or discount for a subsequent purchase. This type of system gives customers a spending target to hit, which means they will often buy more than necessary to reach it. Woolworths regularly implements this with their till dockets. This program is simple to understand and a voucher will draw customers back to make another purchase.


The best example of this system is Kathmandu’s ‘Summit Club’. Customers pay a one-off fee and enjoy greater discounts at sale time, as well as a standard reduction across the store. This method provides instant gratification, which makes a customer likely to spend more than they originally intended.


These are probably the most common, with many coffee shops implementing a program of this nature. It comes in various forms, from actual punch-cards to digitised Rewardle-style smartphone integrated systems. These are simple to follow and generally low-cost.​


Customers earn points for every dollar they spend, which are then converted to a dollar value when it comes time to redeem. The key to the success of a points program is simplicity and transparency. Dymocks operate their ‘Booklovers Club’ and customers receive dollar value discounts on book purchases once they reach a certain figure.

There is no time like the present

Loyalty programs are not only for large businesses and retailers. Small businesses use them to good effect as they can drive growth through brand visibility. Adding this extra layer of value to your business can reap big rewards in retention of customers and the word-of-mouth spread of your brand.