Retail Loyalty Program Strategies That Will Be Effective in 2019

Vladimir Terekhov
7 min readJan 31, 2019
Retail Loyalty Program Strategy

If you’re a retail business, you need a retail loyalty program.


Because according to statistics, customers you already have spent more than new customers, and it costs more — via advertising — to obtain a new customer than to keep an old, loyal one.

Businesses are always measuring Customer Acquisition Cost (CAC) versus Customer Retention Cost (CRC). (Don’t you just love acronyms?)

Do any search online and you’ll find statistics similar to this from Wheelhouseadvisors: “70% of companies say its cheaper to retain a customer than to acquire one, while others have suggested that the cost of acquiring a new customer can be as much as seven times more expensive.” According to an article in Forbes, returning customers typically spend 67% more than new ones.

This is not to say that you can ignore new customers — ideally, you want to turn them into repeat customers and the way to do that is to offer a loyalty program.

Your loyalty program must be measurable

While a loyalty program is usually successful, it must be designed in such a way that you are receiving ROI — return on investment. You can’t give away too much so that you’re not making any money on the purchases of your return customers!

When you set up your loyalty program, make sure you are able to measure purchase frequency, especially so that you can compare purchases from members of the program and purchases from non-members. The equation for purchase frequency is simple:

divide the total number of your orders in a given month by the number of unique customers.

Another metric to look at is Customer lifetime value, or CLTV.

To measure your CLTV, you need to keep track of each customer’s purchases. (Each customer who is a member of your loyalty program should receive a membership number, and any purchases made by that membership number should be recorded in a database.) Then you will have the ability to compare the purchases of members and non-members to see how it improves.

This data will also show you if you are giving too much value back to your loyalty program customers. Obviously, you want to give them value, but not so much that it ceases to be profitable for you.

How can you calculate CLTV? First, don’t confuse Customer lifetime value (CLTV) for retail stores with Combined loan-to-value ratio (CLTV), which is an acronym used in real estate!

To calculate CLTV for retail stores:

Multiply the average order value of a customer by their purchase frequency.

If you’re a new store, the lifetime of our customer, in this context, will only be for as long as your store has been open. The statistics will change the longer your store is in existence.

By offering a loyalty program that enables you to collect all these statistics, you’ll be able to measure your ROI on yearly or even monthly basis, and be able to adjust your program accordingly.

Loyalty Program Software

There are several loyalty program software products on the market, such as Kangaroo, TapMango, Customer Loyalty Cloud, Zoho CRM, Marketing 360 and so on. Choose the one that best enables you to keep track of your customer’s purchases and doesn’t cut too much into your ROI! However, integration with your current software may be pretty challenging and prepare to pay monthly or annual fee.

If you have specific needs and want to have something unique and customizable without having to pay for the features you do not need, consider having your loyalty program software specially designed by a software development company. For example, Attract Group has recently successfully launched a personal account for a loyal clientele of a large Retail supermarket chain. This company decided to start online transformation because the market conditions dictated the need to adapt to the changing trends to compete with the booming e-commerce and other players. Custom software of this kind allows more flexibility for further development and provides a competitive advantage if done right.

6 Retail Loyalty Program Strategies For 2019

Now that we’ve got the basics covered, here’s a list of 5 Retail Loyalty Programs strategies that will help you turn new customers into return customers, and encourage return customers to continue to make purchases.

  1. The most basic — customer loyalty card

If you’re a bricks-and-mortar store and not ready to invest in a digital solution, you can institute the tried-and-true-strategy of offering a customer loyalty punch or stamp card. At its simplest, you offer your customers a business-card sized card on which the numbers one through ten are arranged. Each time your customer makes a qualifying purchase, the clerk uses a specially designed stamp or hole-puncher to obliterate one of the numbers. When the customer has completed their “Buy 10, get 1 free card,” you give them a free sandwich or a free drink, or whatever the arrangement was. No investment needed except to print the cards and for the stamp or specially designed hole punch.

2. Points program

The second most basic program. Customers earn a point for every dollar they spend, and each point is worth .01 cents. So, 100 points would be worth $1.00, 200 points would be worth $2, and so on. When the customer has accumulated 1000 points ($10), they may be redeemed for $10 worth of product.

You can also make it a tiered program. The more they spend, the faster their points will accumulate. For example, if a customer purchases from $1 to $100 worth of goods in a single purchase, they earn 1 point per dollar. If their purchase is between $100 and $500, they earn 2 points per purchase, and so on.

Having a digital loyalty app facilitates the process and keeps the customers more engaged.

3. Premium points program

With a premium points program, you charge for a customer to join your loyalty program, but then offer them value for money. This model suggests providing benefits in advance rather than in exchange for some actions in the future. Free shipping “on all orders over $25,” for example, is always a draw that customers appreciate. Amazon Prime strategy can serve as a great example of how people are willing to pay $119/year to get the perks they provide.

Traditional loyalty programs are beginning to fade away. If local customers have a loyalty card to every retail store in the vicinity, can it be called loyalty? So, a premium loyalty program offers instant gratification, which is a big deal for Millenials and modern society. In this case, retailers can enjoy more average order value and collect valuable data to tailor their future communication. This makes them not “just another store”, but an integral part of everyday life.

4. Omnichannel program

An omnichannel program is complex to set up and will require a software program or a software development agency, but it has its rewards for your business, as well as for your customers. Basically, you reward your customers for advertising for you. “Omnichannel” simply means that customers will earn points for a variety of tasks. They’ll earn points for making purchases, but they’ll also earn points for “liking” or “sharing” your company’s social media posts, and they’ll earn points for referring friends who make purchases. Moreover, having an app will keep them more engaged since it saves their time surfing and helps you deliver real value while being able to track people’s priorities and purchasing habits.

5. Partnership program

In a partnership program, you seek out businesses in complementary niches, and then you team up to offer a rewards program so that points earned at your store can be redeemed for items that your partner offers, and vice versa.

This gives you plenty of free advertising from your partner or partners, but it’s essential to keep track of your ROI to make sure you’re getting value for money here.

Customer loyalty programs work — so start researching the best loyalty program for your business today.

6. Digital program

Some of the most innovative and influential retailers consider reinventing their interaction with the customers with digital solutions trying to create “magical digital reality” in the physical world. They try to create the online experience in the offline world. Implementing Virtual Reality (VR), Augmented Reality (AR), Mixed Reality (MR), and Artificial Intelligence (AI) make shopping more personalized and immersive. What people thought of as future trends are becoming reality at a fast pace nowadays.

For instance, Amazon and Apple have launched a browser-based toolkit that facilitated the creation of AR experience for Apple apps. This lets retailers create compelling virtual content seamlessly in real life at a lower cost because this technology is available to many more developers now than it used to be. Tesco has already benefited from Engine Creative’s Reality Engine AR platform. Shoppers can scan their product labels, magazines and in-store POS and the application displays the data about the origin of Tesco products. This engages them with in-store experiences. Moreover, Ikea is another player that makes use of AR — arranging furniture virtually in your own house has become possible.

Attract Group knows the pain points of Retail business and we can help you create the customer experience your clients will appreciate. The powerful tool you will get will boost your ROI and shape your future successful business strategy to keep you afloat in a highly competitive niche. If you have any questions left, we will gladly lead you through each development step to ensure the solution meets your business needs.

contact us now

Originally published at on January 31, 2019.



Vladimir Terekhov

Digital Transformation Expert | IT entrepreneur | I help companies evolve using IT and digitalization 🚀