Customer Loyalty Program: 7 Low Cost Tips

Customer Loyalty Definition:

While there are so many ways to define what customer loyalty is; every one of them has one thing in common that it comes from emotions. Now I could bore you with definitions from dictionaries, books or articles. But I’d rather explain in the easiest way possible.


If you are a startup company and are willing to expand your business then, implement loyalty at the very beginning. Loyalty has become a separate department.

What is loyalty?

It is the bond between a customer and a businessman. It is not satisfactory, as a satisfied customer will switch service if someone else provides them with a better discount offer. To be loyal customer satisfaction is not necessary, but a loyal customer will never switch. Loyalty is an emotion built strategically so that the customer won’t leave a service no matter how cheap or discounted other services are such as, Apple customer stick with iPhone despite their prestige pricing.

Loyal customer acts as an unpaid employee by spreading the word to other people which helps in terms of promotion and acquiring a new customer. It has been established that acquiring new customer cost 7 times more than retaining an existing customer. Customer loyalty increases:

  1. Brand Equity
  2. Repeat Purchase

Friend reference works more than fancy endorsement it helps to increase

  1. Brand Awareness
  2. Customer Engagement
  • Prospect Generation

The loyal customer plays an important role in feedback and forecast as better feedback makes the forecast more accurate. The forecast is important for

  1. Planning
  2. Product
  • Expenses

  1. Reach
  2. Marketing
  3. Budgeting
  • Accuracy

Customer Engagement is very important for customer loyalty the below example provides a clear picture:

Starbucks started a campaign taking customer input such as:

  1. Suggestion
  2. Discussion
  • Feedback

They did so by creating a website making people feel like Starbucks will do as you say. People responded to this campaign after which they were asked for further engagement through:

  1. Like
  2. Share
  • Comment

  1. Input
  2. Validation

The most liked idea will be was implemented. Through this campaign over the course of few years Starbucks implemented more than 300 new ideas. This increased customer engagement thus increased customer loyalty. Through Starbucks brought upon 3 fascinating changes:

  1. Product Idea
  2. Experience Idea
  • Involvement Idea

So How to Acquire Customer Loyalty?

  1. Point-based Loyalty: Give customer points upon purchase which they can redeem. A survey from Deloitte demonstrated that brands using point-based loyalty program are 88% more profitable.

This will build:

  1. Online Conversion
  2. In-shop Experience

Jet Airways Case study the divide frequent flyers into a different category from high to low. They provide different facilities such as Lounge access, Baggage Allowance, Early check-in benefit, etc categories. These privileges are easy to redeem and increase loyalty.

  1. Build loyalty through Social media: Incentivize customer through social activities.
  • Customer Referral Program: This decrease staff expense, provide loyal customer benefits and in turn, brings the customer.
  1. Analyze with data: Keep customer data always keep CRM
  2. Emotional Engagement: Analyze the data and engage with emotion based on the data
  3. Build Anticipatory Content: Understand through which you can benefit your customer.
  • Transactional Business vs Delightful Surprise: Customer likes an unexpected surprise, build and OMNI channel strategy. Such as, on the birthday of your customer, make it special through:
    1. Phone Call
    2. SMS
    3. Social Media
    4. Gift or Coupon
    5. Cake
    6. Scheme
    7. Discount

Give 80% and sell 20% is the 80-20 rule.

You know you have achieved customers’ loyalty when-

  • You see sales going up without providing any discount
  • You see the same old familiar faces pop up your shop (online or offline) even though they have many options to choose from
  • While scrolling social media, you stumble upon comments where som, one has recommended your product/ service.

You know you have loyal customers when you see some customers keep coming back to you and heck they even bring other ones with them!

Customer Loyalty Programs

Customer loyalty programs are those programs which plan and provide loyal customers with rewards. Some customer loyalty program examples include treating the customers who make a regular purchase from a company to keep the customer more satisfied. These rewards are aimed to be used as incentives for the customers so that they keep coming back to a particular brand.

For example, a company can provide loyal customers with-

  • Free samples
  • Coupons
  • Points for every purchase
  • Token of appreciations etc.

Customer Loyalty Importance

Now you may wonder how loyal customers may help you grow your business. Are they worth all these efforts? The answer would be yes. You would be surprised by how much customer loyalty benefits you.

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Higher Sales

Loyal customers would make frequent sales if not regularly. It all depends on their needs, the type of product you’re providing them with. A loyal customer will keep coming back to your shop whether or not you have provided the discount. As long as they are satisfied, they will purchase from you. Loyal customers will also tell their friends, family, acquaintances all your other potential customers about your product. So when these potential customers hear about your brand, some of them if not all will come to you.
Thus, your revenue increases!

Brand Popularity

WOM (Word of Mouth) refers to customers sharing their opinions or views of a product or brand to another one.
Like mentioned before, loyal customers will talk about their experience and your product to others. And customers usually value another fellow customers’ opinion more than anything else while evaluating a brand. And when they hear about your brand from the loyal customers, that’s when your brand will get more coverage to the market. You’re getting more popular than before, and the best part is, all those are positive evaluations!

Less Customer Acquisition Cost

It’s easier and not even expensive to maintain a regular old customer than acquiring a new one. For example, if you already have a customer who knows and admires your brand, you don’t have to introduce that customer to your brand again & again. All you need to do is, keep coming with products. You can reward loyal customers by giving coupons, points or free samples, etc. occasionally to make them more interested.

Higher Profits

Profits will rise in sales. According to research, one loyal customer tends to spend more than two new ones combined. Loyal customers already know what type of products or service they are going to get from you. They know, they are already satisfied. So they will come back & make more purchase than a new one will.

Low Advertising Cost

The more attached your customers are with you, the less adverting you would have to do for your products. Why? Cause they already know about you and they are happy with the service they are getting. So you would not need to spend as much money on advertising your product.
Think about what you need to do when you want to attract new customers.

You need to make sure your targeted segment gets a positive vibe from your brand; you would have to lure away the potential customer from many competitors. You would have to be more careful as the old loyal customers may overlook simple mistakes but the new ones won’t. You would have to be made very lucrative offers if you are trying to gain new customers who are already purchasing from another brand.

Stronger Position in the Market

When you have loyal customers who shop from you, share their positive experience with others and choose you over others, they have already got your back. They are already boosting up your revenues and profits. They are bringing you, potential customers, as well. All these make you a strong competitor in the market. When you have bigger market coverage and an army of loyal customers to protect you, you’re already standing taller than your competitors!

You will they will forgive you

Mistakes occur in businesses all the time. While dealing with any customer, you should try your best to avoid them. But even if something happens, there’s a higher possibility that a loyal customer will forgive you or overlook your mistake. At least, they will give you a second chance to correct it. Whereas, a new one may not do so.

Grow the connection

When you have loyal customers who have stuck by you through thick and thin, you have their data as well. You can use that data to make sure they stay even more connected to you.


Use the important dates like their birthdays or partners’ etc. and give them surprises on these special days. These things do not cost much, but they will mean a great deal to the customers. Let your customers know they are being appreciated; make them feel important to you. Hence, the customers will feel more emotionally connected to you, and that’s another reason why they will stick by you!


Customer Loyalty vs. Customer Satisfaction

Although it may seem like it, these two aren’t the same. One is temporary but may or may not last very long. Whereas the other one is permanent.
A company gets to know about its customer satisfaction via the reports they collect from the customers they have done business within the previous periods. A customer may be satisfied with the lasts interaction he/she has had with you, but that does not mean that he/ she is a loyal customer.

That customer may leave when a more lucrative offer from another company pops up or simply the mere convenience if buying from another brand or availability of another. Now, this customer is satisfied with the products bought from you, sure. But he/she may not stay with you. And that’s not loyalty.

Seven Low-Cost Tips for Creating Loyal Customers

Now we will discuss the most important and beneficial seven low-cost tips or strategies to create loyal customers. Courtesy of these tips has been given to DR. VIVEK BINDRA.

Customer Name is The Sweetest Desert to Him.

  • The customer likes to hear his name from another person.
  • Give a personalized, specialized, and customized service. Customers tend to like these types of service.

For example,

A survey conducted represented that:

In a restaurant during bill clearance, a waiter served the bill only; another waiter served bill with mint. The latter received a 14% extra tip. Again, a waiter served bill with mint, but the kids did not like mint, so he got chocolates for the kids. The kids were happy as a result parents were happy which got the waiter a 27% extra tip.

This extra personalized service requires low cost but increased brand equity and value significantly.

Even if a shopkeeper calls his customers with the name, it will increase customer loyalty without any cost at all.

customer loyalty
customer loyalty

Co-Creation of Innovation With Your Customer

  • Do not innovate alone.
  • Co-create innovation
  • Co-create the idea or the changes to a product with the customer.
  • Take a lot of customer feedback making them feel they created the product

This model is known as the ABCDE model.

  • Analyze
  • BrainStorm
  • Co-Create
  • Deliver
  • Evaluate

All these are to be done with customer

The success of SUBWAY lies in the fact that a customer has complete freedom to choose from a variety of ingredient. He is in complete control of creating his subway-sandwich. Even if it turns out bad the liability is on him. Thus, he won’t be disappointed.

There are two types of innovation:

  1. Manufacturer led innovation: Here the manufacturer is in complete control of the innovation. The customer has no involvement.
  2. User-led innovation: Customer and manufacturer work together to innovate a product.

The two products were made to satisfy the same need but Product a sold 19 million whereas, the second product was sold 150 million. This is because in the second product customer thinks he is in control and thus acceptability increases.

Customer’s Love Loyalty Program

Customer loves to come back if such a program is designed which gives him a reason to come back which must be easy and exciting.

There are two types of benefits:

  1. Financial Benefit
  2. Emotional Benefit

Emotional benefit is a psychological benefit.

For example,

A bank offers 3 types of cards Diamond, Ruby, and Emerald ranked from high to low. The customer is willing to pay extra, upgrade and take the highest emerald card if he feels superior that a ruby and emerald card holder.

Frugal “wow” and a Delightful Surprise

This process does not depend on price but requires such an action were customer gets delighted.

  1. Financial wow: Never spend too much money to get a wow. This decreases the frequency of wow.
  2. Frequent wow: It’s better to get more frequent wow with low expense. This increase the frequency of customer satisfaction.

For example,

A customer is in a call with a call center executive regarding a problem; it’s taking a long time to solve his problem. The executive decided to order a pizza for his customer. When he receives the pizza, he is delighted and wowed. This requires low expense but can be done frequently.

Don’t See it as Product See it as a Project

Sell a product to a customer as project management.

Project management has three pillars:

  1. Scope: Scope includes:
  2. Deliverables
  3. Specs
  • Objectives
  1. Exclusions
  2. Constraints
  3. Characteristics

These define what a customer will get in a product. It is necessary to figure out if you can under commit and over deliver. Whatever was promised if the extra amount is given customer will be highly satisfied.

  1. Time: If the project is delivered ahead of time then the customer will appreciate it.
  2. Cost: If the cost can be reduced and extra can be given then customer loyalty will increase.

Create a purposeful emotional story.

According to Neuro-Linguistic Programming (NLP), people don’t remember data, fact or figure but, they remember the story. The story has a higher retention time in the human brain. If a powerful story can be created the product will be remembered more.

For example,

EnGio personnel described a story about a boy,

Wearing torn clothes the boy picked up a rotten apple from a dustbin. Almost whole of the apple was rotten black. He cleaned the part which was not yet rotten and ate it.

He added “I was devastated by this scene, it broke my heart, and I started this Feed and Educated Hungry Child Campaign. To help these poor kids are you willing to help?”

It is almost impossible to say know to hear this story and thinking about the poor kids. This backed up story also helped to register this information in the human brain.

Sell Experience Over Money

Creative ad campaigns help create recall value. Instead of talking about the benefits and feature of a product, if the experience can be shared in the tagline, then product recall value will increase.

Establishment of 5 Formulas For Customer Loyalty

loyalty Formula

  • Repurchase Rate – Repurchase rate is very important in case of Multi-level marketing, B2bNS

                                             Number of Repurchase/Number of Unique Purchase x 100

  • Net Promoter Score – It gives an idea, How satisfied your customer with your services?


It is the review of staying in a hotel or the review of the food in the restaurant. If you give rating 6 from 10, then you are not satisfied with her services. If you give rating 4 out of 10 then, the services are very bad and if you give 9 or 10 then the services are excellent. So they are the loyal customer of yours and you give a recommendation to others to go there.

Loyalty Calculations

Loyalty can be calculated by the feedback scale. Like 100 customers come towards you. 70 people give rating (9-10) and 10 people give a rating from 7-8 and 20 people give a rating from 1-6. So the 10 peoples rating is neutral.


70 (Promoter) – 20 (Detractors) = 50 (Net Promoter Score )

When a customer is the promoter of your brand, the business can build up automatically. This called Loyalty.

Up-Selling and Cross-Selling Ratio

If the customer comes to buy one thing but you convince him to buy more than the turnover rate is double.


Suppose, you sell Commodities, Currency, Mutual Fund, PMS, Types of Insurance, Fixed Income Plan. The customer comes to buy Insurance, but you convince him to buy PMS and Mutual Fund then the sales turnover rate is increased.

Number of Customer Buying more than one Product – 1000

Number of Customers who bought single Product – 5000


  1000/5000 X 100  = 20

So Up- Selling and Cross Selling loyalty Ratio is 20%

Frequency and Recency

Frequency means the number of times customer comes to purchase.

Recency means how recently a customer has made a purchase.


Mahindra shop is closed for a one month so customer comes to purchase from you. But when the Mahindra shop is open than the customer stop to purchase from you. So Recency is very important to build up the sales rate.

Redemption Rate

Provide customers with Coupon, Loyalty bonus and point coupon. Provide coupons for the future sale, this generates more loyal customers.

Redemption rate= Loyalty Point Redeemed/Loyalty Point Issued X 100

At the End

Customer loyalty is gained when you see a familiar customer is doing business with you again and again. Even when you are not offering discounts or lucrative packages, that customer purchases from you, these customers stay with you for the long term and let others know about your product. These customers do not just bring you revenues; they help you grow as a brand.

Finally, customer loyalty is something every business strives for, and all the efforts given to gain this are worth it. If you have a business and aim to grow, your loyal customers are your best friends!

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