What Is a Loyalty Program?

A loyalty program is a customer rewards system that motivates people to purchase more often and return to your business.

It is based on bonuses, discounts, tiers, gifts, or special privileges that customers receive for their purchases.

Why Do Businesses Need a Loyalty Program?

High competition in the market, rising advertising costs, and the difficulty of retaining customers today are challenges for all business sectors, which is why building long-term relationships with customers and increasing their loyalty is so important.

A loyalty program helps with:

1. Increase the number of repeat purchases

Most businesses earn profit not from the first visit, but from the second, third, and all subsequent ones. A loyalty program increases the likelihood that a customer will return because:

• they have bonuses they don’t want to lose
• they see their progress (Silver/Gold/Platinum levels)
• they receive personalized offers
• they get push notifications with reminders

This psychologically and economically motivates customers to choose your brand again.

2. Retain existing customers

Many businesses are used to measuring success by the number of new customers: more traffic, more subscribers, more reach. However, the main revenue comes from existing customers — and they require significantly less investment. According to studies, acquiring a new user costs a business 5–7 times more than retaining an existing one.

A loyalty program reduces retention costs to nearly zero.

When you have a digital loyalty card and push notifications:

• you can bring a customer back with a single message
• remind them about their bonuses
• offer a gift
• re-engage someone who hasn’t visited in a long time

And all of this — without an advertising budget.

Advertising is getting more expensive, competition is increasing, and loyalty remains the most accessible way to maintain a stable flow of customers without constant marketing spend.

3. Increase average order value and visit frequency

Loyalty programs affect not only the number of repeat visits but also customer behavior inside the venue. When a person understands that part of the amount will return as bonuses or that they are just one visit away from the next tier, they begin making choices that are more beneficial for the business — completely voluntarily, without pressure or forced upsell scripts.

• Customers more often add an extra item to their order
• They choose higher-priced options
• Visit frequency grows thanks to gamification mechanics

What does this give the business in numbers?

HoReCa and Retail analytics across multiple markets show: The average check for loyalty program members is 18–25% higher.

Because they:

• buy more often
• choose higher-value items
• add more products to the order

Visit frequency increases by 20–35%.

This creates a “snowball effect”: the more often a customer returns, the higher their LTV becomes.

4. Collect customer behavior data

Loyalty cards make it possible to turn an anonymous flow of people into a manageable customer base. When a business does not know its customers, it operates almost blindly. A loyalty program, on the other hand, makes customers “visible” and allows decisions to be made based on data rather than intuition.

A loyalty system helps you see:

• who buys more frequently
• which products they prefer
• on which days and at what times they visit
• how much they spend
• how they react to promotions

All of this data becomes the foundation for growth, because the business starts to understand not only what is being sold, but to whom.

What this data gives the business:

• the ability to launch personalized offers
• work with cohorts
• detect customer churn
• adjust prices and promotions
• understand real LTV (lifetime value)

Without a loyalty program, a business is left with only “blank” receipts — they contain no identity. This means:

• it’s impossible to identify loyal customers
• it’s impossible to understand who left and why
• it’s impossible to make accurate forecasts
• it’s impossible to run targeted promotions
• it’s impossible to properly manage retention

Essentially, a business without a loyalty program operates in constant acquisition mode and does not control the real value of its customer base.

5. Reduce dependence on advertising

For many businesses, online advertising has become quite expensive. Acquiring new users is becoming increasingly costly, while returns are less stable. A strong loyalty program, in turn, becomes a strategic advantage, allowing businesses to rely less on external advertising channels:

• less dependence on Instagram/Google Ads
• the ability to bring customers back for free via push notifications
• organic growth through customer recommendations
• a sense of “attachment” — customers don’t want to switch to competitors

Bringing customers back without an advertising budget

When a business has a digital loyalty program, it gains the ability to bring customers back almost for free — especially when using push notifications via Apple Wallet or Google Wallet. A single well-configured automated notification can return a customer who hasn’t visited in weeks — without spending on Instagram Ads, Google Ads, or targeting.

Example: if a customer hasn’t visited for a long time, the system automatically sends a reminder or a personal bonus — and the person comes back because the offer feels valuable, not because of advertising.

Loyalty as a business asset

Advertising is rented attention — you pay for every impression, every click, every visit.

Loyalty is an owned contact base that stays with you forever. These customers are available at any moment: you can send a notification, offer a promotion, win back churned clients, and boost activity. It doesn’t depend on Instagram algorithms, doesn’t require a budget, isn’t affected by seasonality, and doesn’t disappear when ads are turned off.

6. Building trust and emotional connection

An emotional connection with a customer often becomes the deciding factor in whether they return or not. A loyalty program turns a purchase into a personal experience, where a person feels like part of the brand and the community.

When a customer receives personalized bonuses and offers, they feel a sense of attention and care. For a person, this is a signal: “I am known and valued here.”

Feeling of personal importance

VIP mechanics — tiers, statuses, exclusive conditions — strengthen the sense of belonging. The customer feels they are receiving more than others, meaning their contribution is recognized. This creates an emotional bond that cannot be achieved with regular advertising or discounts.

Positive user experience

When bonuses are applied automatically and the loyalty card is stored on the phone without requiring an app, the customer receives convenience and comfort. A simple, frictionless experience makes every visit more pleasant. Convenience itself builds trust — the customer sees that the business respects their time and comfort.

Higher likelihood of recommendations

People are more likely to recommend to their friends and acquaintances the places where they are treated with respect.

Strengthening brand value

A customer begins to perceive a venue or store not as a place for one-time purchases, but as part of their life: a favorite coffee shop, a favorite studio, a favorite store.

A brand becomes a habit — and that is the most powerful thing a business can achieve.

Why this is critical for HoReCa, beauty, fitness, and retail

In these sectors, people choose not the product but the experience. And when that experience is supported by attention, bonuses, privileges, and personalized offers, the customer stays for a long time. Here, emotional connection plays a decisive role, forming the foundation for regular and predictable revenue.

Loyalty as a Strategic Driver of Business Growth

Customer loyalty is what helps a business grow through several key factors:

• increases the number of repeat visits
• raises average check and purchase frequency
• retains existing customers
• provides deep insights into customer behavior
• reduces dependence on advertising and external platforms
• builds trusted, long-term customer relationships

This is the exact approach used by successful international brands in HoReCa, retail, fitness, services, and e-commerce.

The underlying economic logic remains unchanged: a returning customer costs a business up to seven times less than a new one, yet delivers significantly more profit in the long run.

That’s why companies that focus on loyalty gain a competitive advantage: their sales become more stable, their customer base becomes more valuable, and their growth becomes more predictable and sustainable.

This is why companies strive to retain, not just acquire.

How to Implement a Loyalty Program? (Short Guide)

1. Define the mechanics (bonuses, discounts, tiers)
2. Connect POS integration or a web scanner
3. Launch Apple/Google Wallet digital cards
4. Configure automation and push notifications
5. Launch a campaign to your existing customers
6. Analyze the metrics and refine the mechanics

Each of these steps includes many nuances: choosing the right mechanics, checking POS hooks, configuring tiers, designing digital cards, automating push notifications, and launching QR-based customer registration.

To break down these steps in detail and show how they work in real businesses, we’ve prepared a full guide:

👉 How to Launch a Loyalty Program with Loyallyst: A Complete Step-by-Step Guide