Three Reasons To Invest In a Loyalty Rewards Program

Have you ever been outraged by a special offer that is only available to “New Customers”?

As an existing customer, you feel totally unappreciated or even cheated. Why does this happen?

On average, businesses spend 90% of their marketing budget for customer acquisition i.e. acquiring new customers and getting them to make their first purchase. But few make enough effort to retain these customers – leaving them vulnerable to be stolen by their competitors.

A balanced approach that focuses equally hard on customer retention is a sound business strategy.




According to Marketing Metrics, on an average, only 8% of visitors are repeat, but they account for a staggering 41% of the company’s revenue.

What is the value of a repeat customer

Any investment in improving the percentage of repeat customers or increasing the size of each repeat order delivers an exponential Return on Investment (ROI).



So why is a loyal customer enormously profitable? Let’s examine it in more detail.

Loyal Customers Buy More Often 

After one purchase, a customer has a 27% chance of making the next purchase. However, you have to make an effort to get the customer back to visit your store. Similarly, after the customer makes a second and third purchase they have a 54% chance of making another purchase! For most businesses, a 3-peat customer becomes a loyal customer with a life time value of 10x compared to their initial purchase.Loyal customers buy more often

Loyal Customer Are More Likely to Convert Every Time They Visit 

A typical sales conversion rate for a new customer is about 5-20%. A visit from repeat customer can convert at over 60%, about 12X higher than a new customer. That’s because you have already established a trusted relationship with them.Loyal customers are more likely to convert

Loyal Customers Spend More

A new customer is trying out your product. Hence, she tends to make a small initial purchase. A loyal customer has already purchased and experienced your product. Typically, a repeat customer spends 3-5X more than a new customer.Loyal customers spend more

Loyal Customers Make More Referrals

Loyal customers are also your most passionate brand ambassadors. Bain & Company found that the more purchases a customer makes, the more likely they are to talk about your store. A customer that has purchased from you 10 times, refers 3X more people than a first time customer.Loyal customers make more referralsThrough referrals, loyal customers bring new customers to your business. Such referred customers tend to convert at 7 times higher rates than traditional paid campaigns.



A 360-degree loyalty rewards program is the best way to create customer loyalty for the following reasons:

  • It creates a reason for new customers to buy from you again. It is critical to get customers to buy from you at least three times to make them loyal to your brand.
  • 360-degree rewards program encourages users to stay engaged with your brand even in between their purchases. The more they engage, the more brand equity you build and the more they are likely to buy from you again
  • By rewarding customers for their loyalty, you make them feel appreciated and special. It guarantees their ongoing patronage of your business



A good loyalty rewards program increases the percentage of your repeat customers and the size of each repeat order. If implemented correctly, it should easily generate a high ROI and should have the greatest impact on your bottom line.

Loyalty rewards program delivers meaningful ROI


“How to Improve Ecommerce Revenues: Getting the Balance Right between Acquisition and Retention” – Martin Walsh
“The ROI from Marketing to Existing Online Customers” – Adobe Systems



This info-graphic highlights the 3 key reasons as to why it is imperative for businesses to invest in a modern day loyalty rewards program to maximize customer engagement and retention and to create fiercely loyal customers.

Why Invest in a Loyalty Rewards Program - Infographic by Zinrelo