Five common misconceptions about customer loyalty programs

No matter the size of your store, no decision is small or should be taken lightly as there are a lot of factors affecting customer loyalty – and that includes investing in a loyalty program. However, there are a few misconceptions out there giving loyalty a bad name. We’re here to separate fact from fiction so you can get on with what’s important – retaining loyal customers.

Let’s look at these five misconceptions about loyalty programs:

  1. Loyalty programs are costly
  2. Loyalty programs are complex
  3. You have to have lots of customers to start a loyalty program
  4. Loyalty programs are hard to measure
  5. Customers are tired of loyalty programs


Fiction: Loyalty programs are costly

Fact: Nobody’s saying that there are no costs involved with a loyalty program. The rewards and points you offer customers will of course come with associated costs. But let’s take cost one step further and think about ROI. LoyaltyLion data shows that customers who join loyalty programs and redeem points spend 2.5 times more than non-members, meaning you’ll more than cover your costs.

Rewards can also take many forms that are not financial. Consider offering members unique content, or early-access to sales or new products rather than points.

Read more about the ROI of loyalty programs.


Fiction: Loyalty programs are complex

Fact: Loyalty programs are only as complicated as you make them. There’s a lot to be said for starting small, offering points and rewards for purchases, account creation and birthdays. As you begin to see success you can expand the rewards you offer, and start experimenting with tiering, or rewarding other activities such as referrals and reviews.


Fiction: You have to have lots of customers to start a loyalty program

Fact: The more customers you have, the more potential members you have. But the truth is, as soon as you’re getting sales you have people you can encourage to join your program, engage with your brand and talk about it with others. In fact, the earlier you start, the more time you’ll have to test rewards structures, email rhythms and much more.

Read more about the best time to start a loyalty program.


Fiction: Loyalty programs are hard to measure

Fact: If you know what metrics matter to you, you can measure them. There are many metrics that can help you to measure the factors affecting customer loyalty programs, including repeat purchase rates, average order values, and net promoter scores. The real barometer for success is being able to measure the customer lifetime value of a member versus a non-member.

Find out more about customer lifetime value.


Fiction: Customers are tired of loyalty programs

Fact: People say that one of the factors affecting customer loyalty is that they are tired of loyalty programs. But research shows that 81% of consumers agree that loyalty programs make them more likely to continue doing business with a brand. Add to that, the fact that US consumers alone hold nearly four billion memberships to customer loyalty programs. Loyalty program fatigue does not necessarily mean that shoppers are tired of loyalty programs. It means that they are tired of programs that don’t deliver meaningful, personalized experiences or rewards that differentiate their shopping experiences.

Read more about differentiating yourself with a personalized loyalty program.


If you have other concerns about starting a loyalty program, don’t hesitate to get in touch, or visit our LoyaltyLion Academy which highlights the benefits of loyalty programs in more detail.


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