Customer Loyalty Discount: Do Rewards Lead to Better Retention?

Rob Elgar - Writer for Egnition
By Rob Elgar
Head and shoulders photo of Michelle Meyer
Edited by Michelle Meyer
Joel Taylor
Fact-check by Joel Taylor

Published July 3, 2024.

eCommerce merchant reviewing loyal customer 5-star reviews on a laptop

According to Harvard Business Review, it's 5-25 times more expensive to acquire a new customer than to retain an existing one. Customer loyalty programs are a win-win on platforms such as Shopify, where the customer gains a discount while the seller retains their customers, builds loyalty, and increases sales through targeted marketing.

Customer Loyalty Discount Programs

Customer loyalty discount programs can drastically increase ROI by simultaneously increasing sales and reducing customer acquisition costs.

Customer Loyalty: Your Secret Weapon

New customers are incredibly hard to convert and can be expected to do so only 5%-20% of the time. However, Forbes estimates that returning customers have a 60%-70% conversion rate.

So, how do you entice customers in a world full of distractions? Loyalty discounts. Bain and Company estimate that customers who are part of a customer loyalty program spend 67% more than customers who aren't. Customers love feeling valued, and loyalty programs are a great way to achieve this because they let each customer build a meaningful relationship with your brand.

» Want to sweeten the deal for your customers? Try these marketing incentives

The Benefits of Having a Loyalty Program

Well-thought-out loyalty programs, although difficult to conduct efficiently, can greatly benefit your business. Some of these key benefits include:

  • Increase customer data: With a more targeted audience and greater consistency, you can gain better insights into customer preference and buying behavior.
  • Reliable sales expectations: With a loyal and returning customer base, your business can rely on a steady sales income.
  • Cheaper acquisition costs: Loyalty programs can bring your marketing costs down and help ensure your investment doesn't outweigh the result.
  • Increased sales: Returning customers are 50% more likely to buy new products or try new services on offer.

» Can you combine discounts? Here's how

Generate Loyalty Discounts for Any Order With Egnition's App

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Loyalty rewards programs can become complicated, especially as your client base grows, but this doesn't make them any less necessary.

I've found Egnition's Order to Discount app very useful because it simplifies the entire process. So many functions are automated, and it just saved me an incredible amount of time. The app automatically calculates discount rewards for me and even gives me email templates to personalize before I send them to my customers. It beats sitting with a calculator for hours, any day!

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» Learn more about this handy app in the following Order to Discount review

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