Customer Loyalty Programs: How They Work & Why You Need One

Your customers are leaving. Are you doing enough to retain them?

With customer expectations increasing, delivering great products is just the beginning. To foster customer loyalty, you should go beyond the transaction and create meaningful relationships with great customer support.

However, it isn’t enough on its own. Your business should combine strong customer support with a customer loyalty program that rewards customer engagement and helps create lasting connections.

Let’s explore how to build loyal customers and the steps to create an effective loyalty program that attracts and retains them.

What is a customer loyalty program?

A customer loyalty program is a business initiatives designed to increase customer engagement and repeat purchases through perks like discounts, cashback, and VIP tiers. By offering such value beyond products or services, businesses can strengthen customer relationships, increase retention, and stand out in a competitive market.

According to a McKinsey study, 59% of loyalty program members are more likely to choose a brand over its competitors. A notable example of a customer loyalty program is Starbucks rewards, which motivates repeat purchases by allowing customers to earn “Stars” for every dollar spent. These Stars can be redeemed for free drinks, food, or merchandise.

Types of customer loyalty programs

There are several types of B2B customer loyalty programs that vary from one business to another.

Here are some of the popular loyalty programs to get started:

Selecting the optimal customer loyalty program requires aligning with your business goals and understanding customer preferences. Assess different program types, considering their fit with your brand and engagement strategies. By leveraging customer data and feedback, you can design a program that enhances satisfaction and fosters long-term loyalty, ultimately driving business growth.

What are the benefits of a customer loyalty program?

Creating an effective customer loyalty program involves a thoughtful blend of strategy and insight. Data-driven approaches and strategic programs can translate into tangible benefits for both brands and customers. Let’s look at the derived benefits.

1. Enhance customer retention and prevent churn

According to Forbes research, 76% of customers are likely to return to a company with a good customer loyalty program.

So, customer purchase decisions or loyalty to a brand are more than just pricing—they’re about the value, engagement, and emotional connection you provide them with exclusive perks, early access to sales, and rewards for continued engagement.

2. Higher revenue and repeat purchases

Apart from pricing and quality, it is important to give your customers a reason to make repeat purchases and build a lasting relationship. When you reward your loyal customers with discounts and special offers, they become frequent patrons, consistently choosing your products or services.

Their repeated purchases significantly boost your business revenue, ultimately contributing to your financial growth and success.

3. Increases your customer lifetime value (CLV)

​​Your best customers aren’t just the ones who buy from you today—they’re the ones who keep coming back, which increases the customer lifetime value (CLV). Although a well-structured customer loyalty program would do, it isn’t automatic–you must earn it. With meaningful perks, personalized rewards, and VIP treatment, turn casual buyers into devoted customers.

4. Turn your customers into brand advocates

With businesses constantly thriving and looking for ways to drive success, word-of-mouth is one of the most effective ways to attract new customers. When customers feel valued, they don’t just stay loyal—they become your advocates, sharing their positive experiences with others.

For example, Sephora’s Beauty Insider program offers referral perks and incentives. This not only drives repeat sales but also turns loyal customers into brand ambassadors.

5. Helps to gather more customer data

When customer data is the key to any successful business. Then, customer loyalty programs serve as powerful tools for gathering valuable insights. By tracking preferences, purchase behavior, and engagement patterns, businesses understand what their customers truly want to create personalized offers, rewards and experiences.

However, collecting customer data comes with the responsibility of protecting customer data, which is just as important as using it wisely.

How to build customer loyalty?

1. Provide exceptional customer support

Often, your customers are not just seeking incentives—they’re looking for genuine help and attention.

When your customers reach out to you, it isn’t about a fast response; it’s about responding thoughtfully and strategically, so encourage your support team to listen and understand their needs actively—whether they are reaching out for a problem, support or guidance.

2. Adopt an omnichannel customer support

Good communication is key to turning a negative experience into a positive one, ultimately boosting customer loyalty. Make it easy for customers to connect with you at their convenience with omnichannel customer support software.

For example, when a customer interacts with your support team via live chat for a solution and later sends an email, your support team can easily pick up from there instead of repetitive questions, which builds customer satisfaction and customer loyalty.

3. Put your focus on customers, not competitors

With competition and competitors rising, it is natural to keep an eye on them–but not at the cost of losing your potential customers. So, instead of worrying about the competition, focus on and invest in customer support software. That helps your support team truly understand and serve your customers by listening to their needs, addressing their pain points, and improving your offerings to improve their experience.

4. Consistency breeds confidence

Your customers know what to expect from the businesses they engage with. Whether it’s the support experience or the quality of your products, consistency makes your customers feel secure, ultimately building customer loyalty.

For example, if a customer has a positive experience with your support team, they’ll expect that same level of support the next time they reach out. When customers feel confident in your business, they are more likely to stay loyal, recommend your brand to others, and make repeat purchases.

5. Build credibility with every interaction

Brands focusing on earning customer trust and loyalty see long-term benefits, including higher lifetime value (CLV). Forbes reports that top-performing loyalty programs drive 15% to 25% more revenue annually from their most loyal customers.

So, it is essential to equip your support team with the right tools, like a support CRM with omnichannel capabilities, so they can access past conversations and provide seamless, personalized support.

6. Provide value to your customers

You’re not the only one competing for your customers’ attention—your competitors are, too. In a highly competitive market, every brand is trying to prove they’re the best. So, how do you stay ahead of the race?

A loyalty program alone won’t do the trick. You must pair it with exceptional customer support that creates a memorable experience. For example, while most legacy support systems provide instant responses and redirect customers to a knowledge base, you can take it further by summarizing help guides directly within the chat. This is a small move yet impactful for building customer loyalty.

5 Steps to build customer loyalty programs for your business

With customers more driven to achieve their goals, giving them a way to do so is more important. Even though they can be positive influencers for a long time, your competitors with better customer loyalty program strategies can still win over them.

Know these easy steps to retain your loyal customers and build an effective loyalty program.

1. Define your loyalty program strategy

The first step in building a customer loyalty program is to define and determine well-thought-out customer engagement strategies. Always start by setting clear objectives, like why you need this loyalty program and what you want to achieve–retaining loyal customers, boosting customer satisfaction, or increasing customer engagement.

For example, if your objective is to remain associated with your customers for longer, you can plan a subscription-based loyalty program.

2. Know your target audience

Gone are the days of generic, one-size-fits-all customer loyalty programs. With rising competition and customer expectations for personalized experiences, a tailored approach is the key to success. Instead of casting a wide net, focus on what truly matters to your customers—identify their needs, preferences, and pain points.

• What makes your customer feel rewarded?
• Are your customers fond of personalized experiences?
• Are your customers price-sensitive?
• What rewards make your customers come back for more?

The more the loyalty program resonates with their needs and desires, the more it will be effective.

3. Plan your specifics and rewards

Once you’ve outlined your customer loyalty program strategy, it’s important to fine-tune the details. You will need to find and decide who qualifies, how rewards are earned and redeemed, and the best structure for your business and audience.

Rewards can range from points and discounts to free products, exclusive access, or personalized perks. The key is to ensure these incentives provide genuine value—enticing enough to keep customers engaged and encourage repeat purchases.

4. Use the right supporting software

A well-structured loyalty program can quickly attract a large number of customers, but without the right tools, managing customer data, rewards, and engagement can become overwhelming.

Investing in supporting software like CRM systems, email automation, and loyalty management platforms will help you stay organized and efficient. By tracking customer activity, sending personalized rewards, and ensuring a smooth experience for both your business and your customers.

5. Measure, modify, and reiterate your loyalty program

A loyalty program isn’t a set-it-and-forget-it strategy—it needs regular tracking, refining, and optimizing to stay effective. To measure success, you must define a clear KPIs such as:

• Net Promoter Score (NPS) – Are customers satisfied and likely to recommend your brand?
• Return on Investment (ROI) – Is your program generating profitable returns?
• Monthly & Annual Recurring Revenue (MRR & ARR) – How is it impacting long-term revenue?
• Customer Lifetime Value (CLV) – Are loyal customers spending more over time?

By regularly analyzing these metrics, you can identify what’s working, spot areas for improvement, and fine-tune your program to maximize engagement and business growth.

3 Best examples of customer loyalty programs

1. Spintly’s path to efficiency and lasting loyalty

Spintly, a leader in cloud-based access control faced a significant challenge in connecting customer issues with developers. Even after trying multiple tools, such as CRM, ticketing, and issue tracking, it only created inefficiencies and slowed down their issue resolution.

To solve this problem, Spintly looked for a solution and chose DevRev, thinking it would just serve as a ticketing tool. Soon, they realized its greater benefits. DevRev’s product-focused approach helped them link customer tickets directly to specific product components. This allowed for automatic issue routing, which replaced manual work, speeding up fixes and enhancing customer satisfaction.

As Spintly explored DevRev further, they found the PLuG feature, which gave them a clear view of their product architecture and worked well with their website.

Now, DevRev has become Spintly’s go-to solution, driving efficiency, faster issue resolution, and stronger customer loyalty—making it an integral part of their success.

2. Starbucks: Brewing customer loyalty

For many, a Starbucks visit is more than just coffee. With the increase in customers coming back, Starbucks created a customer loyalty program to turn everyday purchases into rewards.

That is, for every dollar spent, customers earn stars, unlocking discounts and perks like free syrups, bakery treats, and even exclusive merchandise. The more they spend, the more they earn—creating a cycle of repeat purchases and deeper brand attachment.

By making loyalty rewarding and effortless, Starbucks now doesn’t just sell coffee—it has built lasting relationships, ensuring customers always choose them for their next cup.

3. American Express: A gateway for loyalty

We all know that American Express is one of the most widely accepted payment methods, with over 18% of the U.S. market share. With the increase in card usage, American Express wants to make its cards even more valuable. So, Amex partners with popular brands to offer exclusive statement credits, turning every purchase into a rewarding experience.

For example, if you spend $100 or more at NFLShop, you’ll get a $20 statement credit (up to two times).

These perks give customers a reason to choose Amex over other cards, reinforcing loyalty with every transaction. The more they use it, the more they benefit, keeping Amex at the top of their wallets and minds.

Build a strong customer loyalty program with exceptional customer support tools

Customer loyalty programs have evolved from simple rewards systems into powerful tools to enhance customer relationships, drive repeat purchases, and increase lifetime value. Adding exceptional customer support that offers omnichannel support and AI-driven insights would be a real game-changer to stand out from the competition.

This is where DevRev Support steps in and offers AI-driven customer support, unlike other legacy systems. Your customers can get everything they look for–from personalized, proactive contextual support to scalable self-service support for faster resolution. That ultimately drives customer satisfaction and builds customer loyalty.

Start building a customer loyalty program with DevRev’s exceptional customer support. Book a demo today!