Loyalty Program
Also called: loyalty programme, rewards program
What is Loyalty Program?
A loyalty program rewards repeat purchase — points, stamps, tiers or cashback — to make returning more attractive than switching. It also creates a customer record, which is often the more valuable outcome.
Why Loyalty Program matters
Loyalty schemes are a margin decision. A 5% reward costs 5% of every sale it touches, so it only pays if it genuinely changes behaviour rather than discounting loyal customers who would have returned anyway.
Loyalty Program formula
Program cost % = Value of rewards redeemed ÷ Sales to members × 100
Compare against the incremental sales from members.
How Loyalty Program works in practice
Keep the mechanic simple enough to explain in one sentence, and measure the incremental visits it produced rather than the points issued. Reward frequency where visits are the constraint, and basket size where spend is.
Frequently asked questions
When they change frequency, yes. When they mostly reward customers who already returned, they are a discount.