7 Ways a Rewards Program Benefits Your Business

In a world where attracting and keeping customers is harder than ever, offering incentives can make all the difference. In fact, 53% of customers expect brands to offer special deals and discounts.

Whether you’re a small business or an established brand, a rewards program can give you an edge by building customer loyalty, boosting sales, and strengthening your brand’s reputation.

In this article, we’ll dive into the key elements that make a rewards program successful and share examples of businesses doing rewards right.

1. Boost customer retention

COST x 25

Acquiring a new customer costs up to 25 times more than retaining an existing one, that’s why it’s so important for businesses to keep their loyal customers happy.

A well-designed rewards program gives customers a reason to return to your business instead of heading to your competitors. By offering points, discounts, or special incentives for repeat purchases, you can create long-term customer loyalty.

Example: The LEGO Insiders program rewards customers with redeemable points for purchases and registering their LEGO sets. Member-only rewards also include special discounts on LEGO gear, LEGOLAND tickets, and limited-time gifts.

2. Increase customer spend

40% 
MORE SPEND

When customers know they’re earning rewards, they’re more likely to increase their spending to earn those rewards faster. First-time customers who join a loyalty program spend 40% more than those who don’t—and are 47% more likely to make a second purchase.

A strategic rewards program encourages larger purchases and frequent transactions, driving up your average transaction value. By incentivizing bigger buys, your business can grow its revenue with little additional effort.

Example: Sephora’s Beauty Insider program allows customers to earn points on purchases and redeem them for deluxe samples or full-size products. Insiders also gain access to exclusive promotions, early access to sales, and special events.

3. Enhance customer experience

A rewards program is a valuable tool for gathering customer data. Every time a customer signs up, engages with your program, or makes a purchase, you gain insights into their buying behaviors, preferences, and trends.

This data can be leveraged for personalized marketing, helping you offer targeted promotions, special deals, or exclusive products and events that are tailored to your customers’ interests.

Example: The Adidas Creators Club program rewards members with points to level up—four levels. The more customers engage, participate, and train, the more benefits they earn, including free customization, early access, and special events.

4. Improve customer engagement

A rewards program encourages customers to interact with your business more frequently. Whether they’re checking their points balance, redeeming rewards, or receiving special offers, these touchpoints keep your business top-of-mind. 

+ENGAGEMENT

Increased engagement strengthens your relationship with customers and creates brand loyalty. Gamification where customers can join challenges, obtain badges, win prizes—and even earn cashback rewards are fun—and boost social sharing, team challenges, and competitive leaderboards. By integrating social elements, businesses can amplify the viral potential of their rewards programs, increasing user acquisition and retention.

Example: ZBD, a leading digital payments company, is partnering with Finfare Connect, a top rewards platform that helps businesses engage customers with personalized offers. ZBD users will gain access to affiliate, card-linked, and instant cashback offers, allowing them to earn extra Bitcoin on everyday purchases, games, and entertainment, in addition to what they already earn through the ZBD app.

5. Generate word-of-mouth referrals

AMPLIFY

Satisfied customers who love your rewards program are more likely to spread the word. Referral programs tied into your rewards system can amplify this even further by offering additional incentives for bringing in new customers.

Word-of-mouth is one of the most trusted forms of marketing, since people are more likely to believe the opinions of their friends, family, and peers. It can also have a wide reach, as happy customers share their experiences through social media, online reviews, and other user-generated content. Ultimately, it can amplify a brand’s message, attract new customers, and turn loyal customers into brand advocates.

Example: In the Uber referral program, current users can refer their friends to the platform and receive a free ride credit once their friend takes their first ride. The referred friend also receives a free ride credit. This incentivizes current users to refer their friends and family to Uber, which helps drive new business for the company.

6. Build brand loyalty

Rewards programs are an excellent way to cultivate a deeper connection with your customers. When consumers feel valued and appreciated, they’re more likely to develop a strong sense of loyalty toward your brand.

Loyalty programs often foster emotional connections, which can be more powerful than price-based decisions. That’s why loyal customers are more likely to choose your brand even if a competitor offers a lower price.

Example: Patagonia’s Local Rewards program offers loyal customers a $25 coupon for every $250 they spend instore and online. With a brand built on sustainability and ethical manufacturing, Patagonia has earned a loyal base of eco-conscious consumers. Patagonia also promotes product repair and recycling, reinforcing its dedication to sustainability.

7. Drive sales during slower periods

A rewards program can help you maintain steady revenue even during slower business periods. You can offer limited-time promotions, bonus points, or exclusive deals to encourage customers to make purchases when they otherwise might not. By keeping customers engaged with time-sensitive offers, your business can smooth out seasonal dips and generate consistent income.

Example: MyMcDonald’s Rewards program grew by 45% in 2023 by incentivizing loyal customers to download their app, link their payment card, and get a free Big Mac® with their first purchase of $1+. Every $1 a customer spends earns them 100 points, redeemable for free food.

Boost customer loyalty with a tailored rewards program

Implementing a rewards program can transform your business by increasing customer retention, sales, and loyalty. Beyond short-term perks, you’re building a community of engaged customers who feel a genuine connection to your brand. As customer expectations evolve, businesses that prioritize personalized, engaging rewards programs will have a competitive advantage. Start small, test what resonates with your audience, and watch as your business reaps the benefits of a customer-focused rewards program.