“IF YOU LIKE IT PUT A RING ON IT” – How to Increase Customer Loyalty in 2021

Retaining a customer is far more cost-effective than trying to attract a new one. The probability of selling to an existing customer is much higher (60%-70%) than to a new prospect (5%-20%). How do you manage customer loyalty? Do you think a well designed loyalty program can help you grow? 

In this article, Team Luxeveda dives into a deeper understanding of customer loyalty programs and how it can change the relationship between you and your customers. 

What is a customer loyalty program?

A customer loyalty program is a marketing strategy used to increase customer retention. It entices customers to favour your brand over competitors. Although old-fashioned, customer loyalty programs are beneficial for businesses across sectors. 

Types of customer loyalty programs

  • Point system: Customers earn points for spending money and these points translate into rewards. Lidl introduced their Lidl Plus app where customers can receive discounts. Every week, there are new coupons available for various items that customers can redeem at the till. This is a simple yet effective way to persuade customers to keep coming back. Most importantly, it makes them feel good for receiving something extra with their purchase.
  • Tier system: It is similar to the point system, however, there are levels of loyalty. With every level, a customer unlocks, the bigger the rewards and perks. It creates exclusivity and encourages lower-level tiers to unlock higher tiers to redeem exclusive benefits. 
  • Membership (VIP): Customers pay a monthly or annual fee for a membership that gives them access to unique offers and services. If there are no special offers available exclusively to members, the program loses its value. Amazon’s Prime membership program sets them apart from other e-commerce retailers. Their members enjoy fast delivery on millions of items, exclusive discounts, streaming services, and more. 
  • Purpose-driven programs: As consumers become increasingly eco-friendly conscious, a loyalty program does not need to revolve around spending money to earn discounts. For instance, LUSH offers a free face mask for every five signature black pots brought back after use. Additionally, they sell a Charity Pot lotion, where they donate 100% of the sales (minus taxes) to various causes such as animal rights, human rights, and the environment. Consequently, this makes customers feel that their purchase is contributing to a small improvement in the world. 

How to Design an Effective Loyalty Program

  • Create true value: Though loyalty programs are fundamentally built to drive additional sales, offering true value to customers will make it more compelling for customers to join. Therefore, creating real value should be an integral part of your program creation strategy.
  • Diversify your rewards: Offering customers discounts to your brand is not enough. To keep your customers excited, offering a variety of rewards such as free tickets to sporting or entertainment events or a free subscription to services is vital. It entices existing loyalty members to stay and attracts new sign-ups. Clearly, customers seek experiences not just price-offs. 
  • Present various moments for customers to register: Every customer touchpoint should be utilised to persuade customers to enroll. For instance, if a customer receives points for purchasing online, the number of points they can redeem can be mentioned next to the price.  

Benefits of a Customer Loyalty Program

A well-designed loyalty program increases customer retention. Indeed, existing customers are willing to pay 31% more for new products and services and are 50% more likely to try said products. An attractive rewards program can appeal to new customers. For example, you can grow your customer mailing database by offering a sign-up discount. Implementing a retention strategy leads to a higher return on investments. According to Bain & Company, a 5% retention rate can boost profits by 25%-95%.

In conclusion, implementing a loyalty program shows your customers that you value their support. At Luxeveda, we partner with you to create a sustainable program that will enable you to engage consumers and build long-lasting relationships. We leverage technology to enable you to manage and drive your loyalty programs with ease and efficiency. 


January 14 2021


Brand awareness
Brand engagement
Brand Loyalty
Customer Loyalty
customer loyalty program
Customer retention
marketing strategy
word-of-mouth marketing
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