Do you want to grow your business? What if there was one solution that could help you attract more customers or clients to your business, increase the amount they spend, how often they purchase from you, improve their satisfaction level and get more referrals? You may be surprised to learn that there is a single tool that can achieve all of these goals, and it involves giving back to your customers and clients.


Whether you are looking to attract the attention of new customers, help convince them to buy from you, or get them to come back and buy from you more often, a loyalty program can do it all. A well-rounded customer loyalty program achieves ALL of these goals and more!


In this article, we are going to walk you through seven incredible reasons why a loyalty program is the unsung hero of a successful marketing strategy.



1. A loyalty program enhances all marketing efforts

Make no mistake, marketing can be tricky. Many small businesses simply do not have the background and budget to compete with big brands in their marketplace. However, a loyalty program can be one simple addition that makes waves across all areas of marketing for small to medium businesses.


To be clear, a customer loyalty program does not replace other forms of marketing altogether. Rather, a loyalty program enhances all forms of marketing and advertising. Loyalty programs have an important part to play in all stages of the buyers’ journey.


A loyalty program brings added appeal to any traditional or digital advertising campaign. Loyalty programs provide a reason to send marketing emails to your clients and they can give you an angle for endless promotional campaigns, without cutting prices.


To put this into context, in one study, a low-frequency specialty retailer wanted to use their loyalty program to increase the frequency of shopper visits. They made various loyalty program offers to their clients over seven months through direct mail and email campaigns. The results were very impressive! The retailer noticed an increase of 34% in visits to their store during the promotion period.


Through countless marketing channels, the addition of a loyalty program helps businesses attract new customers, encourages them to spend a little more, improve their experience and helps turn them into raving fans. And what business doesn’t want a larger group of happy buyers that spend more money?



2. A loyalty program makes your brand more attractive to potential customers

For small to medium-sized brands, getting the attention of new potential customers is difficult. Brand awareness advertising is often considered a luxury to many small businesses because most smaller companies need to see a direct return on ad spending that brand campaigns just don’t offer. However, all relationships with new customers must start by getting noticed and is the first step to building a bond between buyers and what you’re selling.


If your brand awareness could use a boost, partnering with a well-recognized loyalty program will get you much-needed recognition. One perfect example of a loyalty program’s brand power is the AIR MILES Reward Program. Did you know that 99% of Canadians recognize the AIR MILES logo and brand? When a business partners with the AIR MILES Reward Program they can use the logo in their advertising, making ads instantly more attractive to the two-thirds of Canadian households who actively collect Miles.


Whether a business is looking to attract the attention of new potential clients and customers on social media, or through ads in a newspaper, a bus bench, or even on the radio, partnering with a major loyalty program helps gain attention.



3. A loyalty program helps you stand out from your competition

Have you ever been frustrated by your competitors getting more business than you? If your competition is keeping you up at night, ask yourself the following questions. Why does a customer decide to purchase from you? What makes your product/service/business more appealing than the next? If these are tough questions for you, you’re not alone. Many businesses are competing on a level playing field with no edge over their competition.


Offering a great product or service at a fair price is not enough to expand market share in today’s competitive marketplace. Potential buyers are inundated with brands promising to be the best choice every day and they are becoming more skeptical of marketing claims. All businesses need a method to stand out from their ever-increasing competition in their marketplaces. But, when businesses implement a loyalty program, all that changes. Now, they have something their competition doesn’t and a new reason to be the top choice for buyers in their marketplace.


Today’s buyers are always seeking extra value for their money and it’s up to your business to win their favour. When a business offers potential buyers something back in exchange for their purchase, it makes a brand more attractive than the competition and improves their experience and satisfaction.



4. A loyalty program boosts the value you bring to your customers

This brings us to our next point, value. Thanks to loyalty programs being used by bigger brands, buyers now come to expect a little something extra for their dollars. Value is based on many factors, but ask any consumer what matters most and their answer will typically be, the best value for their money. Whether they are spending a little, or a lot, value is a characteristic that appeals to all buyers at all price points.


Make no mistake, getting the interest of new prospective buyers is increasingly difficult, but the next step can be even more challenging. When new prospective buyers get to the point where they are considering their options, making their decision now takes longer than ever.


Thanks to modern technology, and the rise of e-commerce, anyone can research numerous buying options, right from their phones. Buyers under the age of 55 spend more time researching potential purchases than any other time in history!


When buyers are researching their options, they are looking for the one that best meets their needs, and gives them the most value. Rewards and incentives offered by loyalty programs help increase the value of products and services. From points to in-store currency, to travel, the extras that loyalty programs offer make any purchase more enticing.


For example, in one case study, customers at a mid-frequency retailer were offered the choice of two options for their purchase: loyalty program rewards or 15% cash discounts. The loyalty program rewards were chosen more often than the cash discount and cost the business 50% less! This example showcases the value of loyalty program rewards and shows that buyers don’t always just look for the lowest-priced option.



5. A loyalty program boosts your revenue and profitability

What is your sure-fire strategy for boosting revenue and profitability? You could put your prices up, but there is another way, and it doesn’t involve potentially losing some of your loyal customers. Our strategy does the opposite — it helps boost loyalty.


The best way to boost revenue and keep your profits high is to sell more of your higher-margin products and services! A loyalty program offers businesses new and creative ways to do just that. Loyalty programs allow you to drive sales of particular products and services without changing prices. Say, for example, warranty packages have the biggest margins for a business. Rather than discounting them to boost sales, offering rewards can help incentivize greater sales. Rewards give buyers a valuable reason to increase by a high margin product, increasing a business’s bottom line.


Businesses of all kinds, from restaurants to consumer retail, benefit massively from add-on selling. Plus, in many cases, the add ons also help to improve customer experience. Add ons and useful suggestions, from an insurance package to a side of gravy can show your customers that you care and help you retain their business.


In one study, a used car dealership wanted to increase their in-house financing. Within their loyalty program, they decided to implement a consistent base offer in all departments, plus bonus offers to clear out old inventory. Their results were impressive; 62% of buyers chose in-house financing and the dealership sold 14% more vehicles than in the previous year. Not only did they sell more vehicles, but the interest earned on in-house financing helped boost profits even more.


Incremental increases on each sale add up to serious additional revenue over time. Also, because it costs less to sell to current clients than it does to new clients, the return on investment is significantly higher! When a customer or client may have originally shopped at several different businesses to meet their needs in a certain category, a reward program helps earn greater market share.



6. A loyalty program increases the frequency of transactions and average spend

Would you like to lower your costs of doing business while increasing revenue? What business wouldn’t? Margins in some industries can be quite tight, so increasing the amount each buyer spends is a key strategy for boosting profits without increasing overhead. Getting a new buyer in the door costs more than getting them to come back!


The Pareto Principle tells us that 80% of your sales revenue comes from only 20% of your clients. This is thanks to one word. Loyalty. This principle is the foundation that loyalty programs are built on.


After attracting the interest of your ideal clients and customers, keeping them loyal is where a loyalty program shines. But, did you know, it’s also where a significant amount of your annual revenue can come from? It’s true. Studies show that on average, loyal customers spend 67% more with a business than new ones.


In one study, a mid-frequency retailer offered customers loyalty program currency for $20 spent and triple the currency on selected products. The loyalty program members spent 87% more than non-members! They also spent an additional 75% during promotional periods. Overall, some loyalty program members spend almost twice as much as non-members, and their spending can be substantially increased during promotional periods.


One specific business with a loyalty program reported their average member transaction size grew by 59% after implementing the loyalty program in their business. Plus, the number of transactions by members grew by 118%. Overall, gross sales by program members grew by 88%.


Another great example of the financial value of a loyalty program is CVS Pharmacy’s CarePass. According to their data, CVS CarePass members increase their spending by up to 20% after joining. Which proves that loyalty programs increase the amount their members spend.



7. A loyalty program gets your customers to come back (and bring their friends)

Some businesses spend ALL their entire marketing budget trying to attract new clients, completely neglecting the goldmine of revenue that’s hiding right under their noses. Studies show, on average, it costs between five and twenty-five times more to earn the business of a new client, than to sell to an existing client. So, doesn’t it make sense to get your best customers to come back more often?


The “know, like and trust” steps are necessary before expecting a new customer to open up their wallet and decide to buy from you. However, businesses can fast forward those steps when they focus on keeping their current customers happy through a customer loyalty program.


It’s much easier and more cost-effective to keep current clients happy and encourage them to refer their friends and family. Research by Frederick Reichheld of Bain & Company shows increasing customer retention rates by 5% increases profits by 25% to 95%. Happy customers stick with you and multiply, so investing in customer retention is an investment that pays big dividends.


Referrals and social influence are critical components of modern marketing. According to Statistica, influencer marketing is currently worth a whopping 13 billion dollars. With all the options available to us, trust has become harder to earn, yet consumers still trust the opinions of their friends and family. A loyalty program helps ensure your brand stays in good favour and gets recommended.


These big Canadian brands know how to boost profits and earn the loyalty of their customers.
Big corporations may feel like the enemy of small to medium-sized businesses at times, but we can learn from them and mirror some of their strategies. One thing many large corporations have figured out is the value of loyalty programs.


Leading Canadian businesses with successful and highly profitable reward programs.

  • Adidas
  • Best Buy
  • Canadian Tire
  • DSW
  • Old Navy
  • The Gap
  • Amazon
  • Lululemon
  • McDonald’s
  • Nordstrom
  • Rexall
  • Sephora
  • Shoppers Drug Mart
  • Sport Chek
  • Starbucks
  • Subway
  • Walmart


Not only do big businesses have loyalty programs, but they also love them! The Clarus Commerce Loyalty Industry Data Study 2021 polled some of the top businesses with loyalty programs. A massive 90% of these polled businesses say enhancing or expanding their loyalty programs is a priority for them this year.


In research from KPMG, they found that 85% of business growth comes from loyal customers. The same study showed that 90% of retail CEOs are concerned about customer loyalty, and 24% of retail CEOs have customer loyalty as a top ten priority!



Loyalty programs are not just for big brands!

Customer loyalty programs are becoming staples for businesses of all kinds, and for good reason. Loyalty programs are a marketer’s best friend when looking to achieve business growth and a better return on investment from all other marketing efforts. Some of the biggest and most successful businesses, from coffee chains to B2B services, rely on loyalty programs to help them reach their goals.


Customer loyalty may be a focus for big businesses, but small businesses can easily get started with loyalty programs too. Simple tactics like punch cards can be all your business needs to start enjoying the benefits of added customer loyalty.


Creating and implementing your very own loyalty program may sound like a big task, and depending on your goals, it might be. When the opportunity is there, the ability to partner with an existing customer loyalty program is an excellent fit. Partnering with an established loyalty program has many benefits such as ease of use, timely set-up, the ability to tap into an established collector base, a well-known brand and an existing inventory of reward options.



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