There has been a nearly 25% increase in customer loyalty program participation over the past 5 years, and this can make a powerful impact on the brand’s bottom line. The customer retention statistics speak for themselves, but there are also intangible customer loyalty program benefits.
So what are the benefits of a loyalty program, and are there really enough customer loyalty perks that it’s worth the time and resource investment to get yours off the ground? Here are all the benefits of customer loyalty programs you’ve been missing out on:
- Boosts Customer Retention and Repeat Purchases
- Increases Customer Lifetime Value (LTV)
- Encourages Brand Advocacy and Word-of-Mouth Referrals
- Enhances Personalization and Customer Engagement
- Improves Profit Margins Since You’re No Longer Competing on Price
- Strengthens Brand Affinity and Emotional Connection
- Drives Higher AOV (Average Order Value)
- Reduces Churn and Strengthens Customer Relationships
- Creates New Revenue Streams (Paid Loyalty Models)
- Better Data Collection and Customer Insights
But the key to unlocking all these advantages of loyalty programs starts with choosing the right type of program for your brand and customer base. You also need to set up with the right Shopify loyalty program platform and align incentives with customer desires.
We’ll cover all this and more so you can hit the ground running and reap all the customer loyalty program benefits. It’s quick and easy with Rivo, so request a demo today or learn the basics below!
What is a Loyalty Program?
Before getting into the benefits of customer loyalty programs, you need to know exactly what we’re talking about. These structured systems incentivize repeat purchases and ongoing brand engagement.
You can reward any number of actions, with the most obvious being purchases. However, referrals, social media engagement, and leaving reviews are all things worth rewarding in some way, shape, or form.
There are different customer loyalty strategies, from points-based systems to tiered memberships, and subscription-based loyalty programs. Some offer immediate perks, while others encourage long-term participation with exclusive discounts, early access, or free shipping.
We’ll help you choose the right one later on. Across all these variations, though, the customer loyalty program benefits remain the same - so why is this something you should invest in?
10 Customer Loyalty Program Benefits
The benefits of a customer loyalty program can be summed up pretty easily. They can drive higher profitability while supporting organic growth by creating brand advocates. But let’s get more specific about the benefits of a loyalty program below.
Boosts Customer Retention and Repeat Purchases
The right loyalty program gives customers a reason to keep coming back for more, increasing retention and encouraging repeat purchases on a regular basis.
This is so important for Shopify sellers who are competing with countless other brands offering more or less the same thing. How do you stand out from the alternatives? Create a better customer experience! A loyalty program is a powerful step in the right direction.
For example, offering points or tiered incentives encourages repeat transactions, in turn reinforcing buying habits. The end result? A higher percentage of returning customers and a lower churn rate.
Increases Customer Lifetime Value (LTV)
It’s no secret that in comparing customer acquisition cost vs customer lifetime value, you need to nurture relationships to keep your business alive in the long run.
A recent poll found that E-commerce brands spend roughly $70 to bring a new customer into their ecosystem. But the average cost of an E-commerce product is only $20-$100 - so most brands are losing money on that initial sale.
The only way this makes sense is if you make it up on the backend, driving more sales over the course of a customer’s life after bringing them into your ecosystem.
Enter the loyalty program.
It’s a no-brainer way to incentivize larger, more frequent transactions by offering exclusive perks, early access, or better pricing for top-tier members. The longer a customer stays engaged, the more revenue they generate - not just from repeat orders but also through upsells, cross-sells, and premium offers.
Encourages Brand Advocacy and Word-of-Mouth Referrals
One of the most overlooked customer loyalty program benefits is how it actually grows your customer base organically. You can structure your loyalty program to reward advocacy and referrals, turning your most loyal customers into a marketing channel.
Whether through referral bonuses, shareable discounts, or social media incentives, you can fuel word-of-mouth marketing and bring in high-intent customers who trust recommendations from people they know. Learn more about setting up a Shopify referral program.
Enhances Personalization and Customer Engagement
Customers who receive personalized experiences are 60% more likely to become repeat buyers, and improving personalization efforts through a loyalty program can drive as high as a 10% increase in customer retention.
This is effortless with the right loyalty platform. You gain a wealth of data when you set up with Rivo, for example, and can then track what customers buy, how often they engage, and their preferences.
Tailoring experiences will then start to feel less like mass marketing and more like a one-on-one conversation. This is how you build brand advocacy that lasts.
Improves Profit Margins Since You’re No Longer Competing on Price
We mentioned earlier how competitive the E-commerce space is today, and brands find themselves feeling forced to compete on price. But the truth is, price-driven customers are fickle. They chase deals, not loyalty.
This is another one of the benefits of a loyalty program. You can shift the focus from discounting to value-building, keeping customers around for the right reasons.
Exclusive perks, member-only access, or experiential rewards create differentiation that makes your brand worth sticking with - without needing to slash prices and sacrifice margins.
After all, a 5% increase in customer retention can drive profound profit margin improvements, up to 25-95%! Instead of competing in a race to the bottom, you build an ecosystem where customers choose you for the experience, not just the cost.
Strengthens Brand Affinity and Emotional Connection
Transactional loyalty is one thing, but emotional loyalty is what makes customers truly invested in your brand. A loyalty program that goes beyond discounts creates a connection your competitors can’t replicate.
Customers feel a sense of belonging, knowing they’re part of an exclusive group with privileges that make them feel valued. You can offer early access to new drops or behind-the-scenes content that makes them feel like family.
Whatever the case, you’re encouraging long-term brand affinity in every touchpoint, and this will pay off in the long run.
Drives Higher AOV (Average Order Value)
The loyalty program benefits on the profitability front don’t just come from the lower marketing costs associated with repeat purchases. There’s another factor at play - higher AOV.
64% of customers say they’ll spend more on a brand that remembers them and prioritizes personalized touchpoints through a loyalty program. You can take this a step further by fine-tuning the loyalty program perks you offer your customers.
For example, you might offer more points at higher spending thresholds, or you can get creative with bundle pricing. Even setting free shipping above a set order value will help increase basket size, and these are all simple improvements you can make through a loyalty program platform.
The best part? When you do it right, it feels like a natural nudge to spend more because the customer gets more value. It won’t feel forced.
Reduces Churn and Strengthens Customer Relationships
Churn is a tell-tale symptom of a disengaged customer base. Sometimes it’s merely because a customer forgot about your brand - they’ve got a lot going on after all. Re-engaging customers through a loyalty program can bring churn down.
Exclusive member content, surprise-and-delight rewards, or proactive outreach based on inactivity are all simple ways to bring customers back for more. The more consistently a customer interacts with your program, the less likely they are to explore competitors.
Creates New Revenue Streams
Subscription-based loyalty programs bring unique customer loyalty perks to the table, driving more revenue and better profitability.
Think Amazon Prime, REI’s membership, Best Buy’s Totaltech - these are prime examples of customers willing to pay for better service, exclusive access, and enhanced benefits.
This creates a predictable, recurring revenue, while also increasing customer commitment. The customers who pay to be a part of your loyalty program are going to maximize their benefits by engaging and spending more with your brand.
Better Data Collection and Customer Insights
There’s one more thing we want to touch on before shifting our focus to the loyalty program perks for customers: the goldmine of first-party data you collect is reason alone to set one of these up!
Your loyalty program can be a powerful tool for understanding purchasing patterns, engagement trends, and customer preferences without having to rely on third-party cookies or external tracking.
From there, you can refine marketing strategies, predict purchasing trends, and improve decision-making based on real, actionable insights.
The Loyalty Program Perks Extend to Your Customers Too!
The benefits of customer loyalty programs from the brand’s perspective are clear. But what’s in it for your customers? The loyalty program benefits are undeniable for everyone involved, it’s the ultimate win-win!
Exclusive Discounts, Perks, and VIP Treatment
Your customers want to feel valued and recognized for their loyalty, and there’s no better way to show them your appreciation than with:
- Member-only discounts that non-members don’t get.
- Early access to new product launches or limited-edition drops.
- Birthday gifts, surprise perks, or free shipping as a thank-you for their business.
Every purchase starts to feel more special. It’s not just a transaction.
Seamless Shopping Experience With Added Incentives
Loyalty programs don’t just reward spending though, they also make the shopping experience easier, more enjoyable, and more personalized. As it turns out, this will translate into higher spending!
This is because Shopify customer accounts enjoy faster checkouts with their preferences and payment details saved. They’ll also get personalized product recommendations based on data and automatic reward tracking so they don’t have to think about earning points or discounts.
The less friction there is for a customer to make a purchase, the more likely they are to do so!
More Ways to Engage with Their Favorite Brands
The traditional brand experience is fairly one-dimensional - place an order, use the product, and leave a review. But with a loyalty program in place, customers get new, exciting ways to interact with their brands, such as:
- Earning points for social media engagement (liking, sharing, posting UGC).
- Unlocking rewards by referring friends.
- Participating in VIP events, community forums, or brand ambassador programs.
These experiences create a sense of belonging and connection, turning everyday shoppers into brand insiders who feel like they’re a part of the movement. That being said, let’s get into how you can start enjoying the customer loyalty program benefits yourself!
Getting Started Reaping the Benefits of a Loyalty Program
The best advice we can offer to anyone interested in the benefits of customer loyalty programs is setting up on the right platform that supports your goals. There are a lot of options to choose from, so we’ll provide a bit of guidance on this below.
But first, ask yourself - what type of loyalty program do you want to set up?
Choosing the Right Type of Loyalty Program
The best loyalty program for your business depends on your goals, industry, and customer behavior. These are the most common approaches:
- Points-based programs: Best for businesses with frequent, lower-cost purchases (beauty, apparel, coffee, etc.).
- Tiered programs: Great for brands that want to encourage higher spending and long-term loyalty with VIP perks.
- Paid membership programs: Perfect for companies offering exclusive benefits, faster shipping, or premium perks (Amazon Prime, REI Co-op, etc.).
- Hybrid models: A mix of different structures so that every customer feels as if their desires are being met.
The right style is one that feels natural and intuitive, not forced or confusing. If you already have a good bit of customer data, consider polling your most loyal customers to find out what they want.
Setting Up With the Right Loyalty Platform
The technology you use to build your platform is the foundation of all the customer loyalty program benefits. This is not something you should take lightly. You need a solution that:
- Integrates seamlessly with your Shopify store.
- Lets you customize the layout to match your brand’s look and feel.
- Automates rewards, redemptions, and brand loyalty segmentation.
- Provides detailed customer loyalty analytics to gauge performance and refine strategy.
Of all the options at your fingertips, you can’t go wrong with Rivo. You get everything you need to build loyalty and drive retention. Fully customizable, easy to get started with, and packed with features to help you maximize the benefits of customer loyalty programs.
You can take a look at some of these case studies to see what’s possible with Rivo, like a 52x ROI, 3.1x repeat purchase rate, or 4% increase in revenue driven by Rivo. You can also weigh other options below:
Request a demo for a more inside look at how Rivo can help you reach your goals.
Aligning Rewards With Customer Expectations
Figuring out how to reward customer loyalty in a way your audience actually finds valuable can make or break your results with customer loyalty programs.
As we said earlier, it should feel natural and intuitive, not forced or complex. If your incentives aren’t compelling, attainable, or relevant, customers won’t engage. Similarly, it has to be easy to earn and redeem rewards. Friction will negatively impact results. There are three things to note:
- Make rewards meaningful: Free shipping, early access, and exclusive perks typically perform better than generic discounts.
- Rewards must be achievable: If it takes 10 purchases to earn a $5 reward, customers won’t bother.
- Keep rewards fresh: Rotate limited-time rewards or seasonal perks so you don’t deal with as much attrition for reward programs.
Again, these case studies can help inspire your own reward structure. You don’t need to reinvent the wheel!
Promoting Your Loyalty Program to Maximize Sign-Ups
A loyalty program won’t drive results if customers don’t know it exists. Even after the initial launch, you need to constantly remind customers of the program to encourage participation.
The best results come from treating your rewards program like a product launch. Make it front-and-center on your website with homepage banners, product pages, and checkout prompts.
You should also automate email and SMS marketing campaigns to educate existing customers, encourage sign-ups through social media, consider influencer partnerships, and potentially even offer referral bonuses.
Make the value so immediately clear that it’s a no-brainer for customers to sign up. The landing page for your loyalty program matters more than you may realize, so design with that in mind.
Tracking Progress and Calculating ROI
You might think the work is done once your loyalty program is live. Sure, you may start seeing early benefits of customer loyalty programs - but the real value in these comes from improving results with constant refinements. Make sure you’re tracking metrics to gauge success:
- Repeat purchase rate: Are customers returning more frequently?
- Customer lifetime value (LTV): Has their total spending increased over time?
- Redemption rates: Are rewards being used, or do they feel out of reach?
- Churn reduction: Are more customers staying engaged with your brand?
Don’t hesitate to make adjustments if something isn’t working. This could be the reward structure or your segmentation. Or, maybe it’s the program visibility. Optimization is key to enjoying the long-term customer loyalty program benefits.
Final Words on the Benefits of Customer Loyalty Programs
There you have it, all the benefits of a loyalty program, not just for your brand, but also the customer loyalty perks as well. Everyone wins with the right loyalty program in place!
It strengthens relationships, increases lifetime value, and turns one-time buyers into lifelong advocates. Given how easy it is to set up, there’s no reason your brand shouldn’t have one. Take our advice on getting started and turn it into action today!
