December 12

Are Customer Loyalty Programs Worth The Investment?

Customer loyalty programs can be a nice win-win for you and your customers.

This past week Delta Airlines added a new perk to their long list of benefits for their loyal customers, their Diamond Customers. As a loyal customer, you now get priority access into Delta Lounges. Nice addition! 

For Delta Airlines, anyone who achieves the status of Diamond has done a little flying. I know that because I myself am a Diamond Delta Customer. To Delta, that translates into a loyal customer, and for me, it means I fly too much. Either way I am grateful for both the status and the benefits, and both keep me loyal.

And that is the point of a customer loyalty program. To first identify those customers who continue to buy from, work with and choose you over the competition, second to find ways to say thank you, and third to provide benefits and perks that ensure these customers continue to choose you over the competition.

So are customer loyalty programs something you should consider for your company?

The Stats About Customer Loyalty Programs

Make no mistake implementing a customer loyalty program comes with its challenges, and ensuring the flawless execution of one comes with even more obstacles, so you need to first stop and consider whether it is worth the investment.

Let’s take a look at the customer loyalty program statistics

  • The probability of selling to an existing customer is 60-70%, while the probability of selling to a new prospect is only 5% to 20%.
  • It costs up to 7x more to acquire a new customer than to retain an old one.
  • Increasing customer retention by 5% increases profits by 25-95%.
  • 65% of a company’s business comes from existing customers
  • For most industries, the average customer retention rate is below 20%.
  • Loyal customers spend 67% more than new ones.

Pretty strong statistics, right?

When implemented correctly a customer loyalty program focusing on existing customers, and working to ensure they stay loyal can not only mean an easier sales process, but a far more profitable one. So if those stats tempted you, let’s look at a few areas to review before diving in.

Starting A Customer Loyalty Program

Areas To Consider Before Starting a Customer Loyalty Program

  1. What will success look like for your program – begin with the end in mind. Are you looking for 20 or 30 percent of your customers to sign up? What statistics will you measure – retention, product-depth etc. What are the pros and cons?
  2. What is the value of a customer? How much do you need them to buy or refer before they are considered a “loyal customer”?
  3. What is of value for your customers, what will they consider a perk? Some reward programs offer “freebies” while others offer access, and still others offer discounts etc.. Who is the customer that you want to target? What is important to them? And who will that value fold into your loyalty program?
  4. How will you engage your team in the process – don’t forget the ones in your company that need to implement the program – your team. Engage them in the process, and get their ideas on whether a loyalty program is a good idea, what the loyalty program should look like and which customers you should target. The more engaged your team is the better positioned you will be for success.

Let’s Get Started Building Your Customer Loyalty Program

  1. Choose Your Type – there are so many different styles of loyalty programs – points based, tiered, paid, valued based – and the list goes on. Do your homework and choose the one that is right for your company and your customers.
  2. Study Success – so many companies have GREAT loyalty companies, others have done a poor job, before you implement yours go out and study why they work and why loyalty programs don’t. Learn how they are structured, promoted, leadership engagement and team involvement.
  3. Market and Promote – get a strong strategy around your marketing and promotion strategy. The best strategy will fail if no one knows about it, and worse if your customers cannot understand it. Build a solid marketing strategy and then do a test run. Never roll out a loyalty program without doing a test run first as there are sure to be a few bumps before you get it right.
  4. Track and Measure – so you can learn if your customers like it, if it is producing results, if customers are signing up, and if your loyalty program is actually creating what you need it to produce - customer loyalty.
  5. Review and Adjust – and lastly don’t be afraid to review and adjust. To look at your program and double down on what is working with it, and let go of what is not. Consistently make changes and updates just like Delta.

This next year promises to be challenging, and finding new customers will come with a few obstacles, but none you cannot overcome with a strong customer loyalty program. If this strategy is right for you, follow these ideas and watch as all of this uncertainty becomes your competitive advantage.

Meridith Elliott Powell


Voted one of the Top 15 Business Growth Experts to watch by Currency Fair, highly engaging corporate motivational keynote speaker Meridith Elliott Powell delivers a cutting-edge message, rooted in real-life examples and real-world knowledge. Meridith’s presentations are full of powerful content, highly interactive, and fun. She helps her clients learn the leadership development, sales and business growth strategies to turn uncertainty to competitive advantage.

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