Here’s Why Your Business Needs a Loyalty Program

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Ask any seasoned business owner and they’ll tell you that customer loyalty is an invaluable metric, especially when it comes to retail. The old saying that it costs five times more to acquire new customers than it does to retain current ones rings particularly true, especially if you’ve overseen marketing budgets.

Customers who continue to keep buying your products and services also allow you to keep a steady stream of revenue, as existing customers are 50% more likely to try a new product of yours.

In a recent podcast on Lazada Insider discussing customer loyalty, Tyler Tai, an Account Executive with Brandwatch, a social listening company, shared that “Most people think of loyalty as repeated purchases, but loyalty can also be non-profit driven engagements. Think of customer loyalty as an ongoing relationship between the customer and the brand.”

He added, “In today’s online space, it is not just how many times the customer orders or purchases something, but also how many times they browse your products, open your emails, and follow your account. All of that is important as it not only drives profits, but research has shown it is cheaper to keep a customer than engage or acquire a new one.”

Katrina Wang, Senior Manager for Lazada Group Strategy and the host of Lazada Insider, shared that customer loyalty has a very powerful impact on the business world in the online space. However, it has also become much easier for consumers in today’s market to access more information and purchase options. As a result, customer loyalty has also become increasingly fragile.

Think of customer loyalty as an ongoing relationship between the customer and the brand.

Tyler Tai, Brandwatch


A good way to work around this is implementing a loyalty program that can help you build a stronger customer base and grow your business faster than your sales and marketing teams.

So what drives consumers to be loyal?

In a nutshell, it’s experience. A customer has to have had a delightful and remarkable experience with a brand in order to go back to it over and over again.

In e-commerce, this means a brand or store has to deeply care about customer’s needs. One way a business can learn about what trends and needs customers have is through internal and external data. Getting both datasets can only be achieved by implementing the right systems and tools to measure loyalty metrics – essential for businesses to understand and determine what clients want as well as which perks and benefits will encourage them to keep coming back.

How does it work?

Loyalty programs can take a number of different forms, but they should first and foremost be easy to understand! Loyalty programs reward customers with some sort of advantage for joining the program and continuing to patronize the business. For instance, some may offer discounts, member-only offers or points that can be accumulated for free items. Others offer perks such as free shipping, priority scheduling, birthday gifts, services and other benefits that offer convenience but perhaps not discounts.

Benefits of a loyalty program for businesses:

Reduce costs: The most obvious benefit. A loyalty program may have its own costs and investments but the likelihood of it being more expensive than having to attract new customers is low.
Differentiation from competitors: When you provide customers with benefits with their purchase, you are building loyalty because you are differentiated from other brands. At a time when consumers have endless information and options available to them, it is crucial to build relationships to stay ahead of the game. This creates engaged customers that may find value in spending more than they normally would otherwise.
Reputation: Customers convert and spend more time and money with the brands to which they are loyal. They also become brand advocates, by telling their friends, family and colleagues about the brands they love. Through simple word-of-mouth, this drives referral traffic and improves your reputation.

At a time when consumers have endless information and options available to them, it is crucial to build relationships to stay ahead of the game.

There are many ways to start a loyalty program but they don’t have to be complicated. Offering returning customers just a little incentive is a good start and can be further built on as the business grows.

For a deeper in-depth discussion on customer loyalty, check out Lazada Insider’s podcast.

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