Why You Need A Loyalty Program

Did you know that repeat customers spend 67% more than new customers?

Yet, majority of businesses allocate most of their budget trying to acquire new customers rather than retaining their existent customers.

If we told you that we had a way where you could maximize your revenue and build a strong community of loyal brand ambassadors – all without high acquisition costs  – we are 99.9% sure that you would want to know what it is.

So here it is: Loyalty programs.

What are loyalty programs?

A loyalty program is an initiative that rewards your long-term customers for continuing to do business with you. This encourages more and more customers to stay loyal to your business.

A good loyalty program focuses on providing your customers with incentives that are valuable to them. So, today, we thought we would share our top 3 favourite loyalty programs that help increase revenue, improve customer experience and provide value to your customers!

Top 3 favourite loyalty programs

1) The VIP program

As part of being a VIP club member, your customers pay a monthly or annual fee in return for certain VIP privileges such as free express shipping , additional discounts on your products or even a free welcome gift with your first purchase.

Here is a great example from JustFab:

How JustFab Works JustFab

JustFab VIP members receive special discounts, a personalized boutique, exclusive access to certain styles, duty free shipping and free exchanges! The one thing that we like about the JustFab VIP program is that you can skip a month and avoid getting charged the membership fee if you are not planning on shopping that month. This does not affect your membership in any way! Isn’t that a sweet deal?

Weight out the options:


– Customers that are part of your VIP Program are loyal brand ambassadors and you can trust them to stay with you for a long time.

– By segmenting your strongest customers, you have the ability to harness valuable feedback on your user experience and ways you can improve your eCommerce site. Time to start getting more reviews!


– In order to implement a VIP program, you need a solid base of customers that are willing to pay a premium. This method is not beneficial for new businesses that don’t have a very strong customer following

– In order for this program to be efficient, it is important that the perks you offer are valuable to your customers. It is difficult to understand what can be valuable without customer feedback. Hence, it might take some trial and error before you have a VIP program that is lucrative and performs well.

2) The Point-System

In the point-system loyalty program, your customers acquire points for every dollar that they spend in-store or on your eCommerce site. They can then redeem these points in exchange for products or discounts on future purchases.

One of the best examples of a point-system loyalty program is the Starbucks Rewards program:

Starbucks® Membership Starbucks Rewards™ Starbucks® Coffee Company.png

Once signed up, Starbucks customers can see their progress through an interactive mobile app. They are reminded of when they can redeem their rewards, what is their account balance and what membership level they are on.


The Starbucks Rewards program is a combination of two types of loyalty programs: the tier-system program and the point-system program. There are two tiers – the green level and the gold level. All customers start at the green level and receive certain perks. After obtaining 300 stars, they are upgraded to the gold level where they have more opportunities to earn stars and redeem their points.

Weighing out the options:


– The point system is at simple as it gets. It is usually broken down by how many points you get per dollar spent and is easy to keep track of.

– The point system makes rewards more tangible. When your customers are able to see how many points they have and are able to exchange them for products, it makes the rewards more real, making it easier for customers to continually realize the value of the program.


– The point system has one of the longest waits for your customers to be able to reap benefits. In order for your customers to utilize the points, they not only have to frequently buy your products, they also have to shop big to reap big. Since points are allotted by dollar value, if your customers are not making frequent, relatively pricey purchases – they are not going to be able to redeem their rewards which might result in them leaving the program.

– Starting and maintaining the program can be a lengthy process. You and your team have to decide how many points per dollar can you profitably afford to provide and what products are worth what number of points. You also have to come up with different ways in which your customers can gain and redeem their points so that they are not waiting for a long time to see value in the program.

3) Value-Based loyalty program

A relatively untapped area, value-based loyalty programs or charitable loyalty programs have great potential and have proven to be successful time and time again. A value based loyalty program provides incentive based on your customer’s core values. Your customers can accumulate points or air miles over time and then donate them to a charity of their choice. Not only does this program allow your customers to donate hassle-free, it also provides them with a strong, feel-good reason to gain and redeem their points!

Here are two great examples of a value-based loyalty program:



Weighing out the options:


– Value based loyalty programs create an emotional connection between you and your customers by rewarding them for giving back to their communities. This can be transformative in how customer’s view and engage with your brand as well as why they would pick you over your competitors


– Value based loyalty programs have to be thought out very carefully. Not only does the charitable cause need to align with your business motives, it also needs to be something that your customers would be interested in donating to.In addition, you need to efficiently communicate to your customers how the donation process works including what charity the donation is going to, when it is being donated, what amount is being donated and what proof can you provide to warrant the donation. All of this takes a lot of time, effort and expertise – specially since there are third parties involved.

Should you implement loyalty programs?

If you are trying to build a loyal community that helps you increase revenue AND inspire new prospects to turn into customers, then we would say – yes, definitely implement a loyalty program. A 2016 study found that customers who are members of loyalty programs generate between 12 and 18 percent more revenue than non-members. It is time to tap into this revenue!

When implementing your loyalty program, make sure that you implement a program that aligns with your business values and the values of your customers. This helps build a program that is lucrative and sustainable. As we have seen, loyalty programs can take months of planning and implementation so it is better to do it once and do it well!

Looking for an eCommerce solution? To set up a demo, contact sales@commercebuild.com, we would be happy to help!


Supriya Gupta

Digital Marketing . Travel . Foodie

Content Marketing Strategist

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