Blog Post - Minos Makris, Dec 12 2018

What benefits can loyalty schemes have for retailers?

What benefits can loyalty schemes have for retailers?

Customers today look for more value from the brands they buy from. And, for retailers, securing customer loyalty is more important than it has ever been. Increasingly, loyalty schemes are proving important for retailers seeking to add value to the customer experience and they have been shown to contribute significantly to customer loyalty. Loyalty schemes offer a range of benefits to retailers looking to get more return on investment in customer relationships.

The benefits of loyalty schemes for retailers

Retaining customers

The presence of a loyalty scheme gives customers a strong incentive to return and shop again with a specific retailer. Customer retention is incredibly important in today's ultra-competitive retail landscape. According to research carried out by Bain & Co, this has a direct impact on the bottom line - a rise in customer retention of just 5% can increase profits by 25 to 95%.

Building strong relationships with customers

A loyalty scheme effectively opens the lines of communication between retailers and customers, which can be useful for promotions and sales, as well as introducing new products or services.

Collecting data

Within the right data collection parameters (i.e. those that comply with GDPR), a loyalty scheme can be a goldmine of insight into customers for retailers. It can be used to establish preferences and behaviours, to customise communications with a customer, as well as to create opportunities to cross-sell and up-sell.

Redefining strategy

The data collected as part of a loyalty scheme is also essential when it comes to key strategic and operational decision making. From pricing to planning promotions and the choice of marketing channels the business uses, each of these decisions can be better informed thanks to data collected via a loyalty scheme.

Designing the ideal loyalty scheme

Given the benefits of introducing a loyalty scheme, it's worth investing time and effort in the project to get it right. There are three key elements that every loyalty scheme should have.

A focus on the customer

To be effective, a loyalty scheme needs to be designed with what the customer wants in mind. If it is simply a tool to further the retailer's business interests, the savvy consumers of today will soon see through it and trust is broken.

Simple structure

Complex schemes that are difficult to understand will make it hard to reap the benefits of loyalty programmes. Not only are customers put off by overly-complex loyalty schemes, but they may feel that somewhere there is a catch that means they're losing out as a result. The simpler the scheme is, the more trustworthy it will feel.


Given the wealth of consumer data that a loyalty scheme generates, there are significant opportunities to personalise communications using those insights. Personalised discount codes based on what the consumer actually wants, as well as the opportunity to feel like a VIP, for example, can be very effective.

Loyalty schemes have a lot to offer retailers looking for new ways to make inroads into customer loyalty and retention.

And the best loyalty scheme in the world?

We'd argue that accolade goes to Amazon with its Prime service. There is no escaping just how big an impact Amazon Prime is having on online retail, and especially in cementing Amazon's position as the dominant force in eCommerce. Amazon Prime presses all the right buttons in what online consumers want from the digital shopping experience - competitive prices, convenience and simplicity, fast delivery, on a single platform that combines product search, research and purchasing, in one.

Our Future Shopper 2018 survey confirmed Prime as an extremely successful loyalty programme, with members using Amazon more frequently than other channels and spending more money there than anywhere else. It is also a driver of innovation, establishing behaviours that are ahead of the curve in digital commerce. The Prime customers we spoke to included early adopters of voice technology and automated ordering, with the spoils of these innovations again mainly going to Amazon.

Find out more about how powerful and effective Amazon's Prime service is:

Find out about the Amazon Prime Effect