Why Loyalty is important for Acquisition & Retention

by | Apr 10, 2020

If you had a bucket that was leaking, would you repair the holes first or keep filling it with water?

Imagine now that your business is the leaky bucket and the water is your acquired customers. Do you have enough strategies in place to prevent your customers leaking out, or are your strategies focused on adding more customers to the bucket?

This metaphor shows that by ignoring the causes of your customer churn, you will have to work much harder – and spend more money – to keep the bucket full.

Customer loyalty impacts almost every metric that’s important to a successful business. Without repeat customers that continue to purchase, the business won’t survive. This is especially true when you consider that repeat customers are usually the most profitable. New customers tend to cost more to acquire, and don’t spend as much money as loyal, repeat customers. Keeping customers coming back for more is critical to business success.

The most successful companies are the ones that make customer retention a priority – because they know that the customers they already have are the ones that facilitate growth and drive profitability making them a sustainable, thriving business.

Directing resource towards improving customer retention is one of the best investments a business can make. One of the main ways to do this is by way of a loyalty programme.

Loyalty programmes help you keep your best customers

An emotional connection is the main driver of brand loyalty and incentive/points-based loyalty programmes are one of the best ways to show customers you value their business.

Customers who are emotionally connected to a brand have a significantly higher lifetime value and recommend brands at a higher rate.

A Deloitte study found that only 3% of customers will recommend a company based on shared values or principles, while 44% of customers will make recommendations based on emotional criteria, such as how much compassion, happiness, or security the user feels.

“It’s not the value of what you find. It’s that something positive happened to you”

An emotional connection is created through shared positive experiences and a sense of belonging and understanding. The simple act of giving customers an incentive to thank them for their business is an excellent way to build loyalty, regardless of the incentive’s monetary value.

You don’t need to give every customer a new car or a Mediterranean cruise to earn their loyalty. You need to positively reinforce their actions by offering them something in return for their custom. A customer gives you their repeat business, and you give them a reward – a win-win situation to keep customers coming back.

3 loyalty strategies for customer retention

Win Back Programme

As the name suggests, the aim of a win back programme is to re-engage customers who have stopped engaging with your brand.

It might appear unwise to chase customers who appear to have lost interest in you, but the chance of converting them is far higher than converting a new customer as they have already been through the qualification stage with your brand.

Depending on the business sector and frequency of transaction or engagement, a win back programme can target against various segments including:

  • Customers who haven’t purchased in 3 months
  • Customers who haven’t logged in for a month
  • Customers who have cancelled their subscription


A tiered VIP rewards system with better rewards for your best customers shows that you care about their repeat business.

By setting usage or spending goals for customers and offering exclusive rewards to those who reach them, customers are more likely shop with you when they know rewards await them in the future. It gives customers a reason to be active.

For example, an e-Commerce website could assign VIP status for customers who spend £100 or more in a single month. Being a VIP would grant customers access to a free gift or a discount coupon for their next purchase.


Loyalty programmes allow you to capture valuable customer data such as gender, purchase history and date of birth which allows you to offer them a personalised experience. Tracking and celebrating a customer’s Birthday is a simple and effective way to recognize and reward each customer individually and personalise their experience. A birthday reward, such as £10 off when you spend £50 during your birthday month, is a perfect yearly opportunity to re-engage inactive customers and continue to reward loyal users.

While we can’t ignore the impact of delivering exceptional customer service and providing a quality product or service, incentive-based loyalty programmes need to be a part of your marketing mix to facilitate retention. It’s all about making your existing customers feel special and appreciated through your messaging and offers.

How can Loyalty programmes help customer Acquisition?

Customer retention is concerned with ongoing engagement, personalisation and value provided over time, whereas acquisition is about your ability to reach out and attract new customers.

With loyalty programmes still a relatively new concept for many online businesses, this presents an opportunity for loyalty initiatives to act as a brand differentiator. Leveraging loyalty-based incentives as part of your acquisition strategy means that you don’t need to rely on price as your only competing metric. This is especially pertinent with new customer acquisition getting more expensive. When you successfully advertise and position your loyalty programme via your acquisition marketing as easy-to-use and valuable, this can be the reason someone chooses your brand over a competitor.

In reality, successful brands need to establish both effective acquisition and retention strategies. Loyalty can be the answer. Brands investing in customer loyalty can attract new customers and help drive engagement and retention simply by designing a programme that rewards existing customers and appeals to new ones. Loyalty can play a role in every step of the customer lifecycle when a relationship-oriented approach is taken. Loyalty programmes shouldn’t be used as a cash grab, but rather a way to build the foundation for a long-lasting relationship with customers. Loyalty isn’t just a tool to get your existing customers to come back.

That’s why we turn to loyalty programmes as a cost-effective way to help attract new customers and make sure they stay engaged and active to deliver a positive ROI over time.

Interested in setting up a Loyalty Programme?

We’re established experts in the field of Loyalty. Having worked within the retail space for nearly two decades, we’ve initiated loyalty programmes for numerous retailers and know the ins and outs of what works. If you’re interested in learning more about our proven methodology, please do get in touch.