Five common myths 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 myths about loyalty programs:

  1. Loyalty programs are expensive
  2. Loyalty programs are complex
  3. Customers are tired of loyalty programs
  4. You don’t have enough customers to start a program
  5. It’s hard to measure success

Myth #1: Loyalty programs are expensive

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.

Myth #2: 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.

Myth #3: Customers are tired of loyalty programs

Fact: 81% of consumers say the chance to join a loyalty program makes them more likely to continue buying from a brand. Huge corporations like Starbucks and Sephora keep investing in their own programs. So, if the big players see value in such schemes, you should consider it too!

Myth #4: You don’t have enough customers to start a program

Fact: You don’t need a huge customer base to launch a loyalty program. Yes – the more customers you have, the more potential members you have. As soon as you’re getting sales, however, you have an audience that could return to buy from you.

Myth #5: It’s hard to measure success

Fact: There are many metrics that can help you to measure the effectiveness of your loyalty program – from repeat purchase rates and average order values to net promoter scores.

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.

About the author

Mollie Woolnough-Rai

Mollie is a Senior Content Marketing Executive at LoyaltyLion. After graduating from UCL in 2016, she has worked both in-house and at marketing agencies providing expertise in content for both B2B and B2C clients. At LoyaltyLion, Mollie manages our content, making sure our readers get the best quality resources about customer loyalty and retention.