What is a loyalty program?

The main goal of a loyalty program is to strengthen customer relationships, increase satisfaction, and encourage repeat purchases—over and over again. The core idea of membership is to create loyal, long-term customers who build a lasting connection with your business. This, in turn, allows the company to sell more frequently and at a lower cost. A loyalty program is a strategic tool for identifying and rewarding loyal customers.

The benefits of starting a loyalty program

A loyalty program essentially becomes a marketing platform that can either replace or complement other marketing efforts. Since marketing is expensive, a loyalty program offers significant savings by reducing the need to constantly attract new customers to your store or online shop.

At Fredrik & Louisa beauty retail chain, 70% of customers are identified, known members. Members’ shopping baskets contain 1.8 times more products compared to non-members, and 15% of members make another purchase within the following month.

The customer journey – why loyalty is key to success

Diller Customer Journey 2024 copyright_EN

A loyalty program is an owned marketing platform

Acquiring new customers has become increasingly costly, with campaigns on Facebook, Instagram, and other third-party channels becoming more expensive and less effective. A loyalty program helps retailers to easily identify customers, collect valuable customer and purchase data, and engage in personalized, direct communication.

In reality the loyalty program becomes a marketing platform that can replace or complement other marketing. Diller is a software platform that ensures communication and dialogue with customers, and where all communication is in accordance with privacy legislation.

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How loyalty programs strengthen customer relationships

When customers accumulate points, stamps, or discounts through your loyalty program, they risk losing these benefits if they switch providers. This creates a sense of “losing money,” making them more likely to stay with your business to enjoy the rewards they’ve earned—even if a competitor offers a lower price. In this way, a loyalty program provides a strategic advantage for your business.

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Loyalty is not a program to be administered. Loyalty is a feeling.There is a difference between repeat business and loyalty. Repeat business simply means that someone transacts with you multiple times. You likely offer them some sort of convenience – price, location, selection.

Loyalty is different. It’s a willingness to go out of one’s way to choose to do business with you. When we are loyal we are willing to suffer some sort of inconvenience to continue to do business with you.

Stephen Shedletzky, Simon Sinek Inc.
Article from April 2021 (LinkedIn)

"All third-party marketing channels are becoming less effective, and we see that it is necessary going forward to own the dialogue with customers. I have no doubt that much of our growth is due to increased loyalty from members."

Kai Gulbrandsen

CEO, Princess retail chain