customer retention
customer retention
This is some text inside of a div block.
 min read
July 18, 2022

Loyalty Program Advice: Myths and Facts


Table of Contents

Get awesome content delivered to your inbox
Get Started

Some always buy from you.

Some never.

The rest need a reason.

A loyalty program is targeted toward the third type of customer. Experts define a loyalty program as -

“A customer retention strategy that involves incentivizing customers and motivating them to keep buying from you.”

However, a loyalty program is much more complex than the above one-liner definition. It involves a myriad of steps and a plethora of strategies that most people do not know or understand today. And that explains why hundreds of myths related to loyalty programs are floating around today.

In this post, we will take you through some of the most popular loyalty programs myth and bust them right in front of your eyes. Read on.

1. Loyalty Programs Burn a Hole in your pocket

A very common myth but is also the least absurd one we’ve heard so far. After all, a lot of upfront costs are involved in a loyalty program. Can’t blame the business if they think it is expensive? Isn’t it?


As a business, what you should be looking at is the returns and not the costs. Loyalty programs score high in that department. A study by Bain & Company shows that a small 5% increase in customer loyalty can increase the overall profit by 25% to 95%. How’s that for an ROI?

Speaking of ROI, you must not expect instant returns out of your loyalty programs. It’s just not fair. You need to play the long game as loyalty takes time. You must also count both tangible and intangible benefits that you derive over the years.

But remember - the above fact holds true ONLY and ONLY if you make your loyalty program appealing to your customers. Induce new strategies like gamification and personalized offers to make it interesting and then measure the ROI. You’ll be surprised at the results.

2. Loyalty Programs are not relevant today

Let us tell you this - ‘Feeling important’ never gets old. It doesn’t matter whether you are a millennial or a Gen Z shopper; you would love the feeling when a store pampers you with rewards.

According to KPMG, 87% of US millennials are enrolled in at least one loyalty program. The study also states that they are the most actively engaged participants in loyalty programs. And we need not tell you that millennials form a major percentage of active shoppers today. So when you add up all these little facts, it is clear that loyalty programs are as relevant today as it was years ago.

However, as people evolve, so should your loyalty program. Your loyalty programs can no longer survive with stamp cards or freebies for purchasing above a particular value. Today, customers expect you to reward them for referring and consuming content too. So create a loyalty program that’s tied to engagement and not just to overall spending.

3. You need a lot of customers to start a loyalty program

Of course, loyalty programs will see more engagement if there are more customers. But do you need a lot to start one? Not really. The golden rule about loyalty program is - there is no good time to start a loyalty program. Even if you have a bunch of customers shopping from you, it’s time to turn on the engine of your loyalty program. The sooner you set up your loyalty program, the better it is for your business. Why? Because you will get access to customer data that can be used later to personalize the offerings.

But once you have successfully set up your loyalty program, it’s important to promote it (like crazy). Talk about it on social media platforms and on your website. You can even send marketing emails to your customers. But irrespective of where you promote, ensure that you highlight what your customers will gain by joining the loyalty program.

4. It’s impossible to measure the success(or failure) of loyalty programs

A couple of decades ago, this could have been actual fact. But not today. Loyalty is indeed measurable. All you need to do is choose the right tools and technology. Apart from that, you must know what metrics to measure and how to interpret those data. Here are some metrics that you need to measure -

  • Repeat purchase rate
  • Average order value
  • Customer lifetime value
  • Enrollment rate
  • Referral Rates
  • Net Promote Score

Measuring the success of your loyalty programs is a necessary step to ensure that you have picked the right kind of loyalty program. Some loyalty programs look good on paper but won’t accomplish anything. These metrics help you to either stay away from them or replace them with better ones before it gets too late.

5. Popular brands don’t need loyalty programs

Popular brands feel that -

We have enough goodwill in the market. This is enough to retain customers. Why burn cash on loyalty programs.

What these companies and their management fail to realize is that even the best companies lose customers due to market dynamics. Imagine a new competitor comes up with some insane deals. Your customers are going to forget about you and flock there to save some money.

What about the recent pandemic? Many loyal customers made a switch to another brand due to the non-availability of products(with their original brand). Despite restocking the products later, the customers did not want to go back to the old brand because of the bad experience they had with you.

Remember - we are living in the era of experiential shopping. Customers value good experiences over a slashed price. This is where loyalty programs help and prepare the brands to face all types of situations.


Loyalty programs are undoubtedly one of the most important tools for businesses to retain customers. However, many people are skeptical about it due to various circling false beliefs like the above ones. We hope that you’re now better equipped to distinguish between fact and fiction and craft your loyalty program right away without any doubts.

If you are looking to build a mobile app for your store, your search ends with Vajro. We are an instant app builder who helps brands like you craft your dream app within a day. Your app can also be instantly integrated with most loyalty program tools such as Loyalty Lion, Rewardify, Flits, Marsello, and

To know more about us and how we can help you, book a demo now.

This is some text inside of a div block.

"Looking for creative push notification ideas? Check out our free templates and start customizing!"

Related Blogs

Wavy BackgroundWavy Background

Join our 24K-strong email list today!

Example of displayed product on Vajro App BuilderRocket Ship in circle icon

Engage. Convert. Retain.

Use our 30-day free trial to launch your app, engage with your customers, and watch your sales grow. We'll be your partner every step of the way.
Try Vajro today to win customers for life.