Setting up a Retail Customer Loyalty Program in 2023 [updated]

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Last edited: March 17th, 2023

Setting up a Retail Customer Loyalty Program in 2023

Setting up a customer loyalty program can bring many benefits to your business. It can help you retain customers, attract new buyers, and boost your sales and revenue.

According to the latest stats on customer loyalty programs, it costs 5-25 times more to get a new customer than to retain an existing one. Still, only 18% of companies focus on retaining clients, contrary to 44% that focus more on acquiring new ones.

But did you know that only 20% of your existing customers can bring 80% of your entire revenue? That’s because repeat buyers tend to spend at least 33% more than new customers.

What’s more, if you boost your customer retention by only 10%, you could increase your revenue by 30%.

It’s clear that businesses should run retail customer loyalty programs in 2023, but what should they focus on?

Let’s take a trip down memory lane to see how these programs have evolved over the years before exploring the key steps for building one.

What Is a Customer Loyalty Program?

A customer loyalty program is a marketing strategy for retaining customers. It entices buyers to keep purchasing from you to get more value, that is, snatch various benefits, such as discounts, freebies, experiential rewards, and other perks.

This program’s main goal is to retain existing customers, but it can also attract new buyers. A customer loyalty program that offers unique benefits can compel consumers to engage with your brand and earn loyalty rewards.

The Evolution of Customer Loyalty Programs

If you dig into customer loyalty programs’ evolution, you can see that they haven’t changed a lot over the centuries.

In 1793, merchants in the US started providing customers with copper tokens, which they could redeem in future purchases.

In 1896, the more cost-effective trading stamps replaced the copper tokens. S&H Company started providing various merchants with S&H Green Stamps, which consumers could get in retail stores. They were pretty popular until the late 1980s.

In 1929, Betty Crocker started printing coupons on its packages, which people could redeem for products from the company’s catalog. Known as box tops, these coupons were available until 2006.

1981 brought the first frequent flier program, pioneered by American Airlines. It focused on unique in-flight experiences and evolved into the air miles we know and love today.

The 1990s introduced card-based customer loyalty programs that still exist today.

Nowadays, online platforms and mobile apps are the most common ways to redeem various loyalty rewards, such as physical and digital gift cards and coupons, air miles, freebies for enough points earned on purchases, and more.

All of these different programs have one thing in common: enticing buyers to keep coming back by giving them tokens of appreciation for their loyalty.

How Retail Programs Are Different

Retail loyalty programs focus on incentivizing future purchases at a particular store.

One way to achieve that is through prepaid gift cards issued by retailers that people can use at specific retail stores.

Other popular ways include point-based and tiered systems that give consumers points for every purchase at a particular store. The more they buy, the more points they earn, and they get closer to various loyalty rewards.

Now that you understand how a retail customer loyalty program can bring value to both buyers and your business, let’s see how you can set up an effective one.

Be Unique

Almost every retailer offers a customer loyalty program, so you need to stand out to attract and retain buyers. Offer unique benefits that people can’t find anywhere else.

One of the best ways to be unique is to offer experiences. You can offer a host of experiential benefits, such as personalized shopping experiences, VIP checkouts, tickets to exclusive events, concierge services, dinner reservations at partner restaurants, travel experiences, and more.

Focus on the Core Values of Your Customers

Most loyalty programs are based on points for discounts on future purchases. Transactional benefits are great, but they’re more effective when combined with experiences.

For instance, Sephora’s Beauty Insider program offers points for high-end products, product samples, free gifts, exclusive events, and personalized shopping experiences.

To create the right program for your brand and offer real value to your customers, you need to know what they value the most. That’s how you can connect with them emotionally and inspire long-term loyalty.

Find the Right Channel for Your Audience

Where do your customers shop for your products the most? Do most of them make purchases at your brick-and-mortar or ecommerce store? Do they use your mobile app to make orders?

Find out what channels they use and set up your retail customer loyalty program there. For instance, if most prefer your mobile app, you can allow program members to link debit or credit cards for seamless payments within the app and a chance to win rewards.

If they prefer paying in person, you can provide mobile wallets or QR codes for them to scan at your POS terminal and earn points.

Be Innovative

Consumer behavior changes over time, so it’s vital to stay creative and innovative to meet your customers’ needs.

Take Amazon, for example. The retail giant keeps adding new benefits for its Amazon Prime members, such as free shipping, same-day delivery, on-demand streaming services, and exclusive deals and discounts. It taps into its customers’ needs and goes above and beyond to make its loyal customers feel special.

Add Premium Memberships

Premium memberships are excellent for acquiring and retaining customers. Paid loyalty programs generate value by changing buying behavior: People buy more often, choose the brand over competitors’, and spend more on the brand. The key is to offer something unique that they’ll value.

Apart from Amazon, you can take a page from Walmart’s book, which provides contactless checkouts, same-day grocery deliveries, and fuel discounts to its Walmart+ members.

Without copying your competitors, come up with something that your customers will love to entice them to join your premium loyalty program.

Build Your Loyalty Program Around a Cause

If you enable people to support a cause they care about by joining your loyalty program, you’ll build stronger relationships with them and inspire lifelong loyalty.

You can donate a certain amount of money per purchase to one or more charitable causes, or you can let customers donate various items to earn reward points or other perks.


Setting up a retail customer loyalty program in 2021 means focusing on convenience, personalization, innovative ideas, and your customers’ core values.

The pandemic has changed consumer behavior and expectations, so identify them and apply the tips above to develop your brand’s right strategy that will skyrocket your sales.


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