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A Beginner’s Guide To Loyalty Programs For Your Retail Store

Loyalty Programs

Shoppers have plenty of choices when it comes to shopping. They have the freedom to flit from one store to another in search of the best bargains. That means that you need to step up your customer engagement. You need to keep trying to acquire new customers, which can lead to high costs and reduced profits.

That said, it’s far better to retain customers since it costs five times less to sell to existing customers while it is easier to encourage these customers to buy more. That’s where a loyalty program comes in. If you do not already have one, you should seriously consider implementing one for your retail store.

After all, according to The Loyalty Report by Bond, 79% of customers say that loyalty programs encourage them to stick with one store and 70% of Millennials appreciate the value of such programs.

So how can you implement a loyalty program for your retail store? Below is a guide to help you.

Examine Your Business

Examine your business

First, examine your retail business. Do you deal with items that are one-off buys with fewer chances of the same customer returning to buy again? Do you deal with items of regular use such as groceries and consumables or apparel? In the case of the former, a loyalty program may not be of much use. A computer dealer may fall into this category.

In the second instance, you will find that a loyalty program certainly helps provide you with volume sales to support the reward system. A shopping mall that sells a variety of goods fits this category. A retail loyalty program will work wonders and keep customers returning to buy the same products while also considering other products with the reward points they have earned.

Analyse Your Targets

Analyse your targets

The days are long gone where you print vouchers or cards and expect customers to fill them in or be happy with them. These days you must know what drives loyalty and the experience that you can provide. 13% of shoppers prefer the ease and enjoyment of a loyalty program while 11% stress the importance of recognition and support.

For a loyalty program to succeed, it must be personalised to suit your customers. People have their take on personalisation. For instance, 25% are likely to be happy if the interaction is through the right channel, at the right moment, and the right time with the right royalty reward matrix. This will help you to craft reward strategies and interactions to draw customers in and retain them.

Design an Exclusive Experience
Design an exclusive experience

It is human nature to want to belong to an exclusive clique.

You can create this by sending out emails, text or WhatsApp messages to select customers, stating that you are starting a loyalty program and membership is by invitation only. You could also have in-store sign-ups.

The exclusivity, among other things, involves activities or benefits not directly associated with buying anything. Also, as Shep Hyken writes for Forbes, “The best loyalty programs go beyond rewards.”

But that doesn’t mean that rewards are not worth using. Reward points can encourage continued buying and future loyalty.

Set up A Rewards System

Set up a rewards system

Loyalty could hinge around how you design and offer your rewards system. When setting up your loyalty program, you consider making it customer-friendly. Here’s how:

  1. Offer reward points and make it easy to redeem them. Alternatively allow cash back instead of an involved system of repeat purchases that your customer might not want.

    In such cases, the reward system would rarely be used. If, however, repeat purchases of something they need is linked with more rewards and possibly a chance to compete and win a prize, that has far more intrinsic value. It’s also likely to encourage your exclusive members to spend more.
  2. A sign-up benefit is a good way to get new customers interested in your loyalty program. It is also easier to offer deferred reward points that are redeemable on a future purchase to keep them returning. However, some customers may like immediate cash back. It is important to be flexible and offer options that your customers will welcome.
  3. A referral system is one thing you should implement for existing and new customers.
  4. Go social on Facebook and Twitter and announce your referral schemes. Keep track of responses and ensure that whoever becomes a referrer gets their due rewards. Social is a great way to get responses and feedback by asking your customers questions about what they think of your reward system. You could even modify your system based on their responses to suit them and their wants.

That said, there is no fixed rule on how to define your reward points. Also, how much you should offer. However, your customers will expect something of value in return for their loyalty. Your loyalty program solution provider should be able to help you work out any and all cost benefits. Regardless, participation and the claiming of rewards should be as easy as possible.

Invest in a Tech Platform

Invest in a specialised tech platform

As time passes, you’ll build up a solid base of customers who will be part of your loyalty program. So how do you keep track and ensure each customer receives a satisfactory experience without any glitches?

The answer is to invest in a loyalty program software solution for retailers.

A typical tech platform has a back-end where you have a database of customers tied to a CRM, users who handle various departments and a facility that defines various loyalty programs with reward points and features.

When customers buy something, it automatically reflects in your loyalty account. The front-end is the app your customers install on their phone and use to claim reward points as well as for any interactions with your store. You can also keep in touch with push notifications to keep your store top of mind.

Yes, the loyalty program will mean spending more on your customers. However, consider this: after your loyal customers buy more, thereby generating more sales and profit; you can offset any costs.


LoyaltyXpert is a loyalty programs agency in India that offers solutions integrated with powerful retention strategies. It ensures a perfect mix of functionality, affordability, and flexibility to manage and run loyalty programs for small businesses.

To be precise, LoyaltyXpert helps  to make businesses future ready to overcome challenges that act as a hurdle in increasing customer retention rates.

Giriraj Rajpurohit

Giriraj is a content marketer at LoyaltyXpert, a loyalty program company in India. He holds skills in loyalty programs, marketing, and customer retention.

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