What Is Loyalty Marketing?

Customer rewards have been around for centuries, long before cereal box tops could be redeemed for special prizes. In today’s economy, loyalty marketing has evolved into a complex digital strategy that uses data to provide customers with personalized experiences and help companies build their bottom lines simultaneously. To understand the power of loyalty marketing, you need to study the importance of customer retention and prioritize long term metrics like average customer lifecycle value.

Let’s get started with a loyalty marketing definition, then we’ll examine the benefits and trends pertaining to this popular strategy.

  • Personalization
  • Mobile apps
  • Gamification
  • Philanthropy
  • Engagement

What Is Loyalty Marketing?

Loyalty marketing is a strategy focused on retaining customers with a system of perks, rewards, and benefits. While other marketing strategies are dedicated to finding and acquiring new customers, loyalty marketing aims to make the most of the customers you already have. Offering incentives encourages high-value customers to stay loyal to a given brand instead of bouncing to a competitor or simply moving on. By turning one-time buyers into repeat purchasers and interested individuals into dedicated fans, companies can achieve all kinds of important metrics and successes, from increased average lifetime customer value to business growth through referrals.

What Are the Benefits of Loyalty Marketing?

Effective loyalty marketing supports increased revenue and business growth, and also works as a part of omnichannel strategies that include many different approaches toward the same overarching marketing goals. Some key benefits of loyalty marketing can include:

  • Identify high value customers: The customers that participate in loyalty programs are those most likely to become repeat buyers and lead to revenue growth for your brand.
  • Improve customer lifetime value: By focusing on nurturing repeat customers instead of acquiring new ones, brands can significantly grow their revenue from a single source.
  • Increase customer retention: Repeat customers typically spend more than one-time shoppers; increased spend on retention can lead to a 200% increase in market share.
  • Earn competitive advantage: Enticing customers to keep coming back for more and creating a sense of loyalty helps companies beat out pressure from the competition.
  • Improve customer experiences: Collecting data enables brands to provide personalized experiences that delight customers and drive revenue at the same time.
  • Create brand evangelists: Loyalty programs that incorporate referrals turn your highest value customers into brand advocates, leading to growth through customer acquisition.
  • Increase engagement: Customers that respond to loyalty marketing are likely to engage more frequently with your brand through both private and public channels.

How Does Loyalty Marketing Work?

Loyalty marketing is typically built around loyalty programs, which can take many different forms. The punch card you use to earn a free drink at your local coffee shop is a type of loyalty program, albeit a very analog one. By contrast, effective loyalty marketing strategies make use of valuable digital data, ranging from customer preferences to purchase history and even patterns of customer behavior.

Modern loyalty marketing programs then offer specific rewards informed by those data points, providing a personalized experience by offering the appropriate discounts, freebies, exclusive access, perks, or points based on each individual customer’s specific engagement with the brand.

It’s important to understand that in today’s marketplace, effective loyalty marketing strategies are those that reach beyond a spend-to-earn model. Today’s loyalty marketing trends are all about building trust and creating relationships — that takes more than dishing out points that customers can redeem for more goods or services. Instead, companies need to provide real engagement opportunities with perks that are personalized, relevant, and give customers the experience of building mutually valuable relationships.

5 Loyalty Marketing Trends for 2022

Loyalty marketing is a constantly evolving discipline. These are the loyalty marketing trends that companies should pay attention to this year:


One of the most important trends currently dominating loyalty marketing is an emphasis on personalization. When customers participate in loyalty programs, they generate huge quantities of data that companies can use to improve the experiences they provide. 80% of customers are likely to make purchases when companies offer personalized experiences. And according to Google, 90% of marketers say that personalization significantly contributes to profitability.

Mobile apps

Launching a dedicated mobile app is a great way to manage your company loyalty program. Not only does it give your customers a hub where they can browse, shop, and redeem their rewards, it also gives your company a direct line to the kind of first-party data that rules personalized marketing today. In the post-IDFA and cookie-free world, companies must invest in collecting their own customer data in order to deliver the experiences they demand.


Loyalty programs are built on incentivization, but gamification takes things one step further. Giving your most loyal customers opportunities to play infuses those relationships with a critical and often overlooked element — fun! Whether you create a custom game that users can play in your mobile app or translate the play-to-earn experience into real world events, gamification helps keep customers engaged and naturally drums up conversation on social media platforms.


71% of consumers prefer to do business with companies that share their values. That’s why loyalty programs that help customers give back are on the rise. While there’s a clear understanding that loyalty marketing benefits both the company and the customer, adding an extra dimension by encouraging philanthropic donations through loyalty programs themselves is a great way to build trust and strengthen those relationships.


Over 80% of millennials and nearly 75% of baby boomers want to earn loyalty rewards for engaging with a brand, not just for making a purchase. On many channels, the more customers engage the more value they create for your company, either through user-generated content that increases brand awareness or through data that you can use to improve your approach. Use your loyalty marketing strategy to both encourage and make the most of customer engagement, and everybody wins.


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