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Customer Loyalty Program: Definition, Purpose & Example

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  • 0:00 What Is a Customer…
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  • 1:05 Example Customer…
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Lesson Transcript
Instructor: Tara Schofield
Customer loyalty programs can be beneficial for both customers and the company. This lesson discusses the purpose of a customer loyalty program and provides an example.

What Is a Customer Loyalty Program?

A customer loyalty program is a program run by a company that offers benefits to frequent customers. Those benefits may be in the form of discounts, rebates, free products, or other promotions. An effective customer loyalty program rewards customers who buy from a business on a regular basis, encouraging the customer to return frequently.

Purpose of a Customer Loyalty Program

Loyalty programs have several goals: increase business, improve sales, strengthen the relationship between the customer and the business, and keep the customer coming back on a regular basis. One important element of meeting these goals is ensuring the program has a benefit to the customer. If the rewards of the program are unattractive or uninteresting to clients, the program may see little success. However, if the benefits are enticing, the program can help increase sales and encourage customers to return for their next purchase.

Example Customer Loyalty Program

Imagine you own a small corner grocery store. Your store offers a nice selection of common products, and you attract a good business from local residents. However, a larger grocery store is only two miles away, and you worry that the store may take business away from your market. As you consider options, you decide one of the most immediate and easy actions you can take is to implement a customer loyalty program.

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