The simple answer is ‘yes’.

The practice of offering incentives to reward customer loyalty is a proven way to boost customer retention, attract new customers, and increase customer lifetime value:

  • 77% of customers agree that loyalty programmes make them more likely to keep doing business with a company
  • 68% of shoppers will sign up to a customer loyalty programme for a brand they like
  • 63% of customers will adapt their spending habits to get the most from a customer loyalty programme.

Amazon’s Prime membership program is a well known paid loyalty program.  For a flat annual fee, Prime members get access to unlimited free two-day shipping on millions of items, as well as other perks, like Amazon’s streaming service and Prime Day sales.

Prime is how Amazon differentiates itself and convinces customers to buy products through Amazon exclusively. And it works: Prime members spend an average of four times more than other Amazon customers.

Another successful customer loyalty programme is Starbucks Rewards with almost 20 million members.  Its popularity with members is such that in 2019, Starbucks attributed a whopping 40% of its overall sales to the Starbucks Rewards Programme.

The benefits of having a customer loyalty program

A customer loyalty program helps you build stronger relationships with your customers by rewarding them for buying your products or services. There are several important benefits of having a customer loyalty program:

  • Improving customer retention;
  • Encouraging repeat business;
  • Increasing customer lifetime value;
  • Building stronger relationships with your customers;
  • Increasing customer satisfaction;
  • Providing a differentiator with your competitors;
  • Boosting revenue.

Accenture found that members of customer loyalty programs typically spend, on average,12% to 18% more than other customers.

How can you gain a head start in the quest for loyalty?

 Incentives – that’s how………
 
A study was done at a carwash. The staff handed out 300 loyalty cards to people.
 
Every time customer came in for a carwash the loyalty card would be stamped and this moved them toward a free carwash.
 
But there were 2 types or cards.
 
On one, eight stamps were required for a free car wash. There were no stamps attached.
 
On the other card, 10 stamps were required, but two stamps were already affixed. This meant that both cards needed 8 stamps.
 
Now here’s the interesting point.  The second group with 2 stamps already affixed felt well on way to receiving the reward.
 
19% of 8 stamp people came back. 34% of 10 stamp clients did.
 
Reframing a programme as one that has started but is incomplete, rather than one that has just begun means people feel more motivated to complete it.  The closer people get to achieving the reward the more effort they put in.
 
People are more likely to stick with the programme and tasks if you can offer them some evidence of how they’ve already made progress toward completing them.