How to Start a Loyalty Program to retain Customers


Customer retention is a vital aspect that forms an integral part of any online business process. The ability of online merchants to retain customers through repeated engagements is the major factor that results in an enhanced profit as well. Also, it is a proven fact that businesses that excel in the retention of their customers are ensured of not only long-term success but also have a greater edge over their competitors. The egrove systems corporation has come out with a host of modules to the benefit of online businesses that contribute high levels of customer retention. No matter how a customer service is created, but if it is designed to offer a positive and pleasant experience for the customer to increase customer loyalty, then customer retention will become an automated process.

Magento Reward Points & Loyalty Program Extension helps you to retain existing customers and to invite new customers to your site. Reward them will loyalty points.

What is loyalty program?

A loyalty program is a rewards program offered by an online merchant to customers who frequently make purchases. A loyalty program may offer a customer free merchandise, rewards, coupons, or even advance released products. It’s time for marketers to look beyond complicated rewards systems and offer actual value to customers using their loyalty program.

In order to get started, given below are some tips for creating customer loyalty programs that might work for your business.

  • Using a simple point system.

This is the most commonly applied loyalty program methodology. Frequent customers earn points when they make a purchase which gets translated into some type of reward. While opting for a points-based loyalty program, you need to keep the conversions simple and intuitive. For example, you can offer 10 points for every 100 Dollar worth purchase. The points system is perhaps the most common form of loyalty programs and works best for businesses that encourage frequent and short-term purchases.

  • Using a tiered point system

Striking a balance between attainable and desirable rewards is a challenge for most businesses designing loyalty programs. One way to resolve this issue is to implement a tiered system that rewards initial loyalty and encourages customers to buy more.

The tiered system involves offering small rewards as a base offering for taking part in the loyalty program, and then encourage repeat customers by enhancing the value of the rewards as the customer goes up the loyalty ladder. In the tiered point system, it is better to offer points which gets enhanced as customers across different levels of purchase value as follows.

Upton 100 Dollar worth purchase- 1 point for every 10 Dollar purchase

110 to 500 Dollar worth purchase- 2 points for every 10 Dollar purchase

510 to 1000 Dollar worth purchase-3 points for every 10 Dollar purchase

Above 1010 Dollar with purchase- 5 points for every 10 Dollar purchase

This facilitates to solve the issue of members forgetting about their points and never redeeming them, in case the time between purchase and gratification is too long.

The main distinction between the points system and the tiered system is that customers extract short-term versus long-term value from the loyalty program. The tiered programs work better for high commitment, higher price-point businesses such as airlines, hospitality businesses etc.


Customer loyalty programs function, based on the well-founded concept that it is less expensive to keep a current customer than to find a new one. Providing rewards in the form of points on merchandise can facilitate in attaining that goal. There are innovative loyalty programs extensions that can be integrated by online store owners to offer rewards points to customers that will make customers remain completely loyal to you and thus assist you with customer retention. Moreover, the egrove customer reviews on the loyalty program extension can offer helpful insight to online store merchants on the diverse features of this extension.

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