Do these 3 things before closing this tab:
1Scan for outdated or missing drivers - takes under a minute2Repair Windows errors before they cause bigger problems3Fix the driver behind crashes, sound loss and screen glitchesiTechGuides is reader-supported. When you buy through links on our site, we may earn an affiliate commission. As an Amazon Associate I earn from qualifying purchases. Learn more
Customer loyalty matters because repeat customer relationships can support retention, customer lifetime value, stronger brand relationships, and growth. Loyalty programs are one common way businesses try to encourage those outcomes, but a program existing does not prove that loyalty has been built or that the program pays for itself. The business case depends on customer value and on measurement, and both are covered below.
What customer loyalty means for a business
Loyalty is a pattern of repeat choice. A loyal customer keeps coming back, buys more over time, and is more willing to consider the brand’s other offers. Points, tiers, and discounts are mechanisms a company can use to reinforce that pattern, but they are not the pattern itself. A shopper who earns points and still defects to a competitor with better prices was never loyal in any meaningful sense, and a shopper who stays without any program may be loyal because the product or service fits their needs.
How loyalty supports the business
Retention
Keeping an existing customer is usually cheaper than winning a new one, and it protects revenue that the business has already paid to acquire. Retention is the outcome most often cited by companies running loyalty programs. In the 2024 EY Loyalty Market Study, corporate respondents named increasing customer retention (44%) as one of their leading reasons for offering a program.
What’s actually slowing this PC down?
Pick the symptom - the matching free tool is one click away.
Customer lifetime value
Customer lifetime value (CLV) is the total profit a business expects from a customer across the whole relationship, not from a single transaction. Repeat customers tend to raise CLV because each additional purchase adds to it without the acquisition cost of a new sale. EY’s 2024 study found that 35% of corporate respondents cited increasing customer margin or CLV as a reason for offering a loyalty program.
#1 Best Overall
Brand relationships
Loyalty also gives a company a way to build a relationship that goes beyond price. Recognition, relevant communication, and experiences that fit a customer’s habits can make a brand feel like a dependable choice. This is the reason most cited by corporate respondents in the EY study: 46% said improving brand relationships with target customers or groups was a leading reason for their program.
Growth
Repeat customers can become a source of growth when they buy more, try new products, or bring in others. The growth link is real in principle, but it is harder to isolate than retention. EY’s study found that 36% of corporate respondents cited acquiring new customers as a reason for offering a loyalty program, which shows that companies expect programs to support both keeping and adding customers.
Rank #2
What the survey evidence shows
The figures below come from surveys and sector studies published in 2024. They describe what respondents said, under the conditions each survey used. They are not controlled experiments, and they should not be read as the effect a program would have on any particular business.
| Source and date | Who was surveyed | Finding | What the finding does not establish |
|---|---|---|---|
| Coresight, report dated April 16, 2024 (March 2024 survey) | US consumers | Net 39.5% of respondents said they spent more with a brand or retailer after joining its loyalty program. | This is a self-reported response, not an estimate of causal lift. Customers may have spent more for reasons unrelated to the program. |
| EY, 2024 Loyalty Market Study (reported December 20, 2024) | Consumers | 58% said loyalty programs increased their spending to a moderate or great extent. | Reflects self-assessment, and it is worded differently from the Coresight measure, so the two should not be combined. |
| Deloitte, Consumer Loyalty Program Trends, 2024 | Consumers | 86% rated financial rewards and simplicity or ease of use as important or very important; four in five valued flexibility in earning and redeeming rewards; 60% were satisfied with customized and targeted experiences currently offered. | Describes stated preferences. It does not rank which rewards produce the most sales. |
| National Restaurant Association, April 9, 2024 | Customers of loyalty or reward programs | 96% said programs were a good way to get more “bang for their buck”; 52% said they participate in restaurant, coffee shop, snack-place, or deli loyalty programs. | Restaurant-sector evidence. It is not a general estimate for other industries or the wider population. |
Taken together, these results point in one direction: consumers say value, convenience, and clear rules matter to them, and many say programs affect how much they spend. What the surveys cannot tell a business is how much of that spending a program caused, or whether the program earned more than it cost.
Rank #3
A program is not the same as loyalty
The gap between a loyalty program and actual loyalty is the most common mistake in this area. A program can be one mechanism for building a durable relationship, but poor value or friction can undercut it. Points that are hard to earn, expire unexpectedly, or can only be redeemed for items customers do not want will frustrate members and may push them away. The same is true of enrollment processes that require too many steps or rules that change without notice.
Companies should also separate the reason they offer a program from the outcome they can demonstrate. A company may launch a program to improve retention, and survey respondents may say they spend more with a brand that offers one. Neither fact proves that the program produced the retention or the spending. Demonstrating that requires measurement.
Design trade-offs
Loyalty programs involve choices that pull in different directions. The cited research supports discussing these trade-offs, but it does not establish a single best program format or a universal return that applies across industries.
| Design axis | Option that favors customer appeal | Option that favors business economics | Trade-off to watch |
|---|---|---|---|
| Customer value | Financial rewards and savings | Relevant services, access, recognition, or experiences | Cash-like rewards are easy to understand but can be expensive and may discount purchases that would have happened anyway. |
| Convenience | Easy enrollment, clear rules, flexible earning and redemption | Restrictions that limit reward cost or fraud | Every restriction adds friction. Flexibility increases reward cost and operating complexity. |
| Business economics | Spending and retention that lift customer lifetime value | Control over reward expense, operating cost, and fraud risk | A benefit must be valuable enough to matter to customers and affordable enough to keep the program profitable. |
| Measurement | Participation, enrollment, and redemption counts | Incremental outcomes and profitability | Participation counts are easy to report but may not show whether the program changed behavior. |
How to test whether loyalty is paying off
Because survey responses do not prove impact, businesses that run programs need their own evidence. The steps below describe a practical approach; they are general guidance rather than a prescribed method.
Best Value
- Define the outcome you expect. Choose one or two measures tied to the reason for the program, such as repeat purchase rate, retention over a set period, or average spend per customer.
- Compare members with a comparable group. Measure the same outcomes for customers who did not join, or use a holdout group in a controlled rollout. Without a comparison, changes in spending may reflect seasonality or other factors.
- Account for the full cost. Include reward expense, discounts on purchases that would have happened anyway, operating and platform costs, and an allowance for fraud or abuse.
- Look at profitability, not only activity. A program with high engagement can still lose money if rewards outweigh the incremental margin it produces.
- Review the result on a regular schedule. Customer behavior and reward costs change, so a result from one period should not be assumed to hold later.
Gartner analyst Brad Jashinsky made the measurement risk clear in a June 5, 2024 interview on the profitable loyalty program equation:
“Teams often make mistakes in their measurement by grabbing onto simple statistics, ignoring costs or focusing on the wrong metrics altogether – these can overvalue the contribution of the loyalty program and limit its long-term success.”
EY’s December 20, 2024 article reported a related difficulty: 41% of corporate loyalty leader respondents said they faced challenges quantifying the overall impact of their programs.
Limits of the evidence
- Most figures come from self-reported surveys, which capture what customers and companies say rather than what changed in their behavior.
- The 2024 studies describe a point in time. Consumer expectations, reward economics, and program practices may have changed since then.
- The restaurant figures describe a single sector and should not be applied to software, retail, or services without separate evidence.
- No source cited here establishes a universal profit multiplier for loyalty programs, and no single program format is shown to work best for every business.
The defensible conclusion is narrower than a sales pitch but more useful: customer loyalty is important because repeat relationships support retention, customer lifetime value, and growth, and a loyalty program is worth building only when it delivers real value to customers and can be shown to earn more than it costs.
Quick Recap
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
