The Ultimate Guide Retailers Use To Build Customer Loyalty

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Al Safeer is a diversified organization, specializing in malls, hypermarkets, real estate, food outlets, furniture, and more. We could describe them in a line by saying they are one of the largest retailers in the Gulf region. 

Now, Al Safeer already had a customer loyalty program called Safeer Plus. But due to the following reasons, it wasn’t able to generate the results it desired.

  • Lack of real-time customer  insights 
  • Inability to segment its variety of modern market customers, and so, its marketing campaign was not targeted and was generally sent to its entire customer base
  • The large customer base imposed huge marketing costs 
  • As a hypermarket, it was difficult to enable cross-selling

At this point, Al Safeer partnered us and leveraged r AI-based customer engagement platform, Ingage

With Ingage, Al Safeer was able to garner real-time insights into its customer behavior. What’s more, Ingage rendered unique campaigns for each of Al Safeer’s customer segments, thus enabling hyper-targeting marketing intelligence & planning. 

To reduce the high capital investment in Al Safeer’s marketing efforts, Ingage came up with a mobile app for Al Safeer’s customers - thus, they were able to run their marketing campaigns at virtually no cost!

And here are the results of this savvy customer loyalty program approach:

  • 65% redemption ratio
  • 5% base points increase in loyalty sales
  • 12% yearly average increase in Average Transaction Value (ATV)
  • 13% increase in monthly loyalty sales since program inception
  • 41% of the total user base converted to app users
al safeer customer loyalty case study using ingage

If you looked at Al Safeer’s strategy, they first desired to win their customer loyalty. And for that, they deployed a customer loyalty program. And most importantly, to get those astounding results, they used Ingage - a platform meant exclusively for retailers. 

Like Al Safeer, if you’d also like to ramp up your customer loyalty game, this guide is for you. Read on as I reveal to you the secret sauce that successful retailers like Al Safeer are using to ace their customer loyalty. 

Customer loyalty definition

customer loyalty definition

In the 21st century, one could define the concept of customer loyalty in various ways. But chiefly, the recognized definition of customer loyalty is when a customer transacts with a brand on an ongoing basis. 

But loyalty can come in a multitude of shapes and forms.

For instance, some say that virtual customer loyalty is illustrated only when customers purchase from specific brands. It goes true for you and me if we buy only groceries from one store, even when it’s not the cheapest option or the most convenient one. 

On the other side of the spectrum, some say that loyalty is not totally manifested in purchases. It involves social advocacy. A case in point is how you might have bought a refrigerator from LG in your lifetime, but maybe an outspoken advocate of the quality of service to your family and friends.

So, it’s totally up to your retail business to decide on what defines loyalty. But here a few points to consider:

  • Basket value
  • Purchase frequency 
  • Enhanced brand engagement
  • Brand ambassador 

And here’s a reminder: When loyal customers need something you offer as a product or service, they will give you the first chance to earn their business. 

The Seven Rungs of the Customer Loyalty Ladder

customer loyalty ladder

Shoppers are evolving in their buying journey with your brand. On day 1, a customer might have purchased something from you, and if he likes it, he may consider buying the same item or something else from you, again. 

As he starts doing repeat purchases, you hope that over time he’ll turn into a loyal advocate. 

But to get a customer to reach that stage, you need to consistently nurture him. And with a customer loyalty ladder, you visualize the loyalty stage at which a consumer is with your brand. Then, your marketing team could launch personalized and relevant marketing campaigns for those specific rungs of the customer loyalty ladder to help them reach the highest rung.

And at this point, you might as well ask me, “What is this customer loyalty ladder you’re talking about?”

Well, by definition, the loyalty ladder is a framework that categorizes your customers according to their degree of fidelity or loyalty to your products or your brand, in itself. 

In this virtual customer loyalty ladder, there are seven rungs. Listing out what each of these rungs means from the lowermost one:

  • Leads
  • Prospects
  • Customers
  • Clients
  • Members
  • Advocates
  • Ambassadors

Let’s now look into the persona of each of these customer loyalty ladder rungs.

1. Leads

Leads are folks who are your potential buyers. They are any existing person in this world who could buy from you. Note that your leads are a wide audience. For instance, if a product you sell is available in UAE alone, then everyone in UAE is a lead.

2. Prospects

Moving up the loyalty ladder, we have prospects. Now, these are people who haven’t bought anything from you, but have shown a subtle interest and might as well buy from you shortly. 

This interest could be anything from a phone call or an inquiry - basically, an interaction that shows that a person might have an inclination in his mind to buy from you. 

At this point, I want you to understand that these are the people who you generally target through your advertising campaigns. 

3. Customers

Ah, modern market customers are peeps who buy your product. Unfortunately, most of these customers could be one-time buyers. So, you have to keep investing in customer acquisition campaigns. 

But as you probably know, the success rate of selling to a new customer is barely 5% to 25% as opposed to a success rate of 60% to 70% for selling to current customers. (Invespcro)

So, you’d do well to practice customer retention marketing strategies so that you needn’t break your bank on customer acquisition. 

4. Clients

Repeat customers. Yes, your clients are those who buy from you more than once. Keep them on your priority list, for they have found your product good enough to buy from you again!

5. Members

Just like how we feel a sense of belongingness to our alma mater, members are those of your valuable customers who make your business family. These people feel a sense of ownership of your products and services. 

And this is at least the minimum level you want to reach while building customer loyalty. 

6. Advocates

You can consider me your advocate if I recommend your brand when I’m asked. And trust me, these are again important customers. Their recommendations could greatly influence the customer decision-making process of newbies. 

Once you have your steady stream of advocates, you could minimize your spending on customer acquisition, for the word of mouth and social referrals of your advocates would do the job.

7. Ambassadors

This is the most coveted rung of the customer loyalty ladder. Your ambassadors are your walking adverts! 

There is only a subtle difference between ambassadors and advocates, but this certainly makes a whole lot of difference in terms of your revenue. And the difference, you ask? 

Well, ambassadors recommend your brand even without being asked. While this could happen over a cup of coffee or digitally on social media, where ambassadors might just shower their love for you by giving a shoutout. 

How to Move Customers to the Highest Rung of the Loyalty Ladder?

Now that you know what each of the rungs of the loyalty ladder represents, it’s time you figured out how to move your modern market customers from the lower rung to the next highest.

Here are five effective ways to do so and reap long term profits:

  • Understand that not all your customers transform into loyal ones. So, pick the right target audience and start investing in them.
  • Be honest with your customers. Be upright, and don’t nourish half-truths in your customer communication correspondence! Your transparency is the only way to win customer’s trust.
  • Create a brand image by standing up for a cause. Take TOMS’ One for One as an inspiration. 
  • Tell stories in your ads to reinstate your brand image.
  • Garner customer insights; Collect information on what drives your customers to choose one product or brand over another. 

However, remember that a customer loyalty program will likely fall when you do not plan it out meticulously. Alternatively, if you concentrate too much on the earn-burn ratio, involve tedious process to enable customer redeem their point, the CRM programs can fail you.

So, keep in mind that the loyalty program is a means of appreciating the value of your customers.

How to Build Customer Loyalty?

how to build customer loyalty

Earn. Buy.

Read those two words? Are you able to recollect something familiar?

Well, if you’d read my blog How to Build Customer Loyalty in 2021 you would recollect the four golden ways to earn and buy customer loyalty. 

In case you didn’t have a chance to give it a read, I’d suggest you go for it and get back here :)

But here’s the gist of it: The first three steps are about earning customer loyalty while the last one is about buying loyalty. And in this section of our customer loyalty guide, I’m going to give you other fresh tips to build customer loyalty.

1. Enhance the Customer Experience - Online & In-Store

3 reasons why businesses invest in customer experience

If you want to improve customer retention by 33%, better customer satisfaction by 32%, and increase cross-selling and up-selling by 42%, you must improve the customer experience and live up to customer expectations (Superoffice).

Do it for all the stores you have - irrespective of whether they are online stores or brick-and-mortar stores. 

Here are some tips to deliver a better customer experience.

Customer experience ideas for brick-and-mortar stores:

  • Implement in-store navigation and ensure the ability of customers to find their way in your big box stores and other retail outlets
  • Offer personalized incentives and loyalty programs
  • Open the door for BOPIS (Buy Online Pick-up In-store) functionality
  • Keep the store kids friendly 
  • Ensure proper arrangement of goods down the aisle

Customer experience ideas for online/eCommerce stores

  • Build an online customer community and ensure the ability of customers to get answers to their queries among folks like them
  • Ramp up your social media marketing
  • Deliver an omnichannel customer experience
  • Use personalization to email marketing mix

2. Give discounts

With advanced AI-based CRM software like Ingage, you can give customers discounts on products they buy regularly. You can segment your customers based on their interest, demographics, online customer store activity, and more, to offer individualized discounts and render a personalized experience.  

This customer loyalty strategy can trigger people to buy from you even when the market is low or slow. For instance, if on weekdays your sales are typically low, try giving a 25% discount on your products on Wednesdays. This would not only accelerate your sales during the week but also build loyalty. 

After all, 84% of shoppers choose a store by the discounts and coupons they give. Besides 86% of those surveyed say they’d try a new product when offered a discount. (Forbes)

And as customers understand they’d get value for the amount of money they spend with your brand, their loyalty automatically would soar.

3. Reward your customers

A customer rewards program can work two ways - either as something that your customers work toward or it is just a pleasant surprise. The choice is yours, but each has its own benefits. 

For instance, an offer like ‘Buy 10 sandwiches, get the 11th free’, is a great way to entice a customer into purchasing again and again from you. For they know that there is a sure reward when they keep doing business with you. 

Now, here’s an example of how you could give those sweet surprises. Say you have an eCommerce store. Consider giving free shipping for orders over a certain amount. Or, maybe, deliver a free gift along with a purchase.

But either way, ensure to make it easy for your customers to redeem their points. In addition, keep your customers’ profile updated in your point-of-sale (POS), so that you are aware of their loyalty status and available rewards. 

Here’s another important thing - put an expiration date on the rewards so that customers feel a sense of urgency to purchase before the deadline. But do put forth the information to your customers, because, if they realize that their rewards have expired, it can lead to detrimental consequences (Codebroker). 

4. Run a Referral Campaign

Running a referral campaign would be best to see an increase in customer loyalty, and also to gain new customers, economically. For instance, you can launch a ‘Refer a Friend’ program and give away an incentive for both the referral and the referee. 

It could be like a simple ‘Give $15 and Get $15’ campaign, too. Another way to do a referral campaign would be to host a social media marketing contest. 

You could ask customers to share your post, tag friends, so that in return they’d get a 10% off on their next purchase with your brand. 

At this moment, let me showcase Casper Mattress’s referral program. Here, you could get a $75 Amazon gift card when your referral makes their first purchase with them. What’s more, the referral also gets a 20% discount on his first mattress. Now, that’s a win-win for the first-time customers, the referrer, and business owners. 

You delight your loyal customer, acquire a new customer, while they both too enjoy your perks.

casper referral program

5. Get Feedback

Yes. Get customer opinions. But before you do that, set your mind to value the given customer review or feedback. So, it’s a cycle, you see - you get the customer reviews, implement changes to make happy customers. 

Now, there are multiple avenues to get customer opinions- you can send an email or maybe ask for a Net Promoter Score (NPS) right after purchase. But do keep in mind that the most effective way is to follow up immediately after a transaction.

Always keep the process simple and painless. This will encourage a customer to complete the survey and share his thoughts on how you are doing. 

And when you start valuing and working out based on the feedback received, you are sure to increase customer satisfaction - this way, you get folks who are not just content with your product or service quality but with the entire shopping experience with your brand.

If you already have a CRM, then you are good to go and collect feedback (for most of the CRMs have an option to integrate survey software like SurveyMonkey, SurveySparrow, AskNicely, and others). If you are contemplating onboarding a CRM, this blog on the best CRM for retailers can help. Otherwise, you could just use the above-mentioned feedback software disparately from a CRM. 

Adding a pro tip here: Having a feedback tool integrated with the CRM can help you get a 360-degree view of your customers. Because disparate views are passé.

What Are The Types of Customer Loyalty?

what are the types of customer loyalty

As I mentioned while defining customer loyalty, there is no one solid definition. Loyalty can mean different things for different retailers. Let me explain this with an analogy. 


The way you love your spouse is different from the way you love your child. The way you love your friend is different from the way you love your mentor. But it’s all love!

Similarly, one customer might display transactional loyalty and another advocacy loyalty. Yet another customer might show social loyalty and another behavioral loyalty. But they are all forms of loyalty! And as such there are six types of customer relationships in the loyalty world. 

1. Transactional Loyalty

Transactional loyalty is solely based on customers who remain loyal to you on the basis of offers and discounts. Using a customer loyalty program you can generate discounts and accumulate repeat customers. Similarly, you can also introduce a gamification rewards program and spice up the shopping cycle.

While this is a powerful means of building loyalty, it comes at a cost. But the good news is that the loyalty program discounts render a good return in a customer’s next purchase, and serves as a tool to bring your customers back, again and again. 

2. Advocacy Loyalty

Loyal customers who gladly recommend your brand display advocacy loyalty. And statistics reveal that the likelihood of customers purchasing from a new brand is seven times more when they are referred by a friend (Invespcro).

Therefore, with these advocacy customers, you get to acquire new customers without spending high amounts that are needed for customer acquisition. 

So, identify advocates, reward their referrals with bonus points, and increase your customer retention rates.

3. Social Loyalty

There are some customers who’ll shower their love for a brand on social media channels and would do all the social media marketing for you. They might be liking your posts or sharing them. Or, they could even be posting their experiences with your brand.

So, be socially active and listen to what your customers are saying. Be sure to reward those loyal customers who go out of their way to share your brand with their social media friends.

Send a free gift or a surprise present. Or even give them some bonus loyalty points. This will further increase their loyalty. 

4. Behavioral Loyalty

Sometimes, you run campaigns with the aim of influencing customer behavior. For instance, if you want your customers to purchase from you thrice a month, you might say that they could get 500 loyalty points which they could redeem in their next purchase. 

You can leverage machine learning algorithms and data science to gauge the behavioral loyalty of your customers. For, it would provide you insights into the buying behavior of your repeat customers. Then, by analyzing this data, you could tweak your loyalty program, so that they display a buying behavior you want them to. 

5. Emotional Loyalty

Generally, in the retail world, we speak of making an emotional connection to ensure stronger customer loyalty. And customers become emotionally loyal to you when you send them surprises or add bonus loyalty points on their anniversaries and birthdays. 

And the benefits of emotional loyalty transcends transaction loyalty. These emotionally attached customers will stay with you through the thick and the thin. So, when you identify customers who display emotional loyalty, strive to run emotional campaigns on them so that they connect deeper with your brand. 

6. Engagement Loyalty

We’ve reached the last type of loyalty - engagement loyalty. In this case, committed customers who show interest in your brand or interact with your brand and engage in word-of-mouth marketing are referred to as loyal customers. 

So, as I’ve narrated above, identify customers depicting engagement loyalty. Reward them and continue to win them. After all, this can surely improve the conversion rates of your marketing campaigns.

How Do You Start A Customer Loyalty Program?

how do you start a customer loyalty program

In the earlier chapter, we learned the different types of customer loyalty out there. And one of the most feasible and effective ways of creating loyalty is by running a customer loyalty program. But how do you get started with a customer loyalty program? 

That’s just what we’ll cover in this chapter.

1. Understand Your Customers to Give Them What They Want

You and I walk the customer’s shoes, often. And just like how you and I won’t buy products we won’t want or need, our customers as well wouldn’t buy something if they don’t want or need it. 

And this could go true for the customer loyalty program as well. So, unless and until the loyalty program you launch gives your customers what they need and want, they aren’t going to join in. So, keep in mind that your customer reward programs have to be entrancing so that they can’t possibly pass it up. 

So, how do you go about tailoring an irresistible customer loyalty program? 

Understanding your customers. And to understand your customers, you need a unified view of your customers. You could get instant access to this vital information by tracking customer behavior on your CRM. 

You could also run customer segmentation analytics to categorize the personal traits and preferences of your customers. And most importantly, encourage social engagement and build customer contact information wherever possible. 

2. Choose the Best Customer Loyalty Program Type for Your Company

The customer loyalty program is not one-size-fits-all. What works for your competitor might not work for you. And similarly, what works on one segment of your customer might not work on the other. 

So, you need to choose the type of customer loyalty program you want to run. Now, there are many different types of customer loyalty programs, but I’ve listed the four most commonly used ones below:

  • Points loyalty program
  • Tiered loyalty program
  • Cash-back loyalty program
  • Paid loyalty program
  • Punch cards loyalty program

You can learn more about these customer loyalty program types here.

As a starter, choose one type of loyalty program and see how it goes. See success? Go ahead, segment your customers, and run individualized loyalty programs for each of your customer segments. 

3. Pick The Right Actions to Reward

In a loyalty program, you are basically trying to create an influence on customer behavior. And when they fall through the hoop, you reward them. So, what kind of actions can be rewarded?

Here are a few examples.

  • Reward customers when they refer new customers
  • If customers engage with you on social media channels, go ahead and reward them
  • If their basket value crosses a certain basket value, incentivize their purchases
  • Have products that are moving slow? Offer incentives.

4. Use A Robust Customer Loyalty Software

I mentioned earlier that your customer loyalty program has to be notoriously easy and possible for your customers to participate in. Your customers aren’t going to take advantage of it if your program is hard to track, or difficult for your customers to understand or earn rewards. 

These are what we call ‘barriers to entry’. These factors prevent your customers from joining your loyalty program. As a result, it’s just going to be a waste of time and money. 

But here’s how you can make your customer loyalty programs staff and customer-friendly - a customer loyalty software. 

There are many loyalty software out there but very few that are tailored to the retail industry. However, according to the G2 Crowd Customer Review, Ingage, an AI-driven customer engagement platform is ranked as the best customer loyalty software for the retail industry. Since this is an omnichannel platform, you can use Ingage to run both your eCommerce and physical stores’ loyalty programs. 

If you'd like to consider other generic loyalty program software, here is a list for you to explore.

5. Get Your Customers Flocking In

Once you have everything in place, it’s time to get your customers to sign up for the program. 

Do understand one thing: Keep the sign-up process as simple and as fast as possible, else, it can discourage customers from joining in. And do promote your loyalty program, so that many of your target audience would participate.

The Cycle of Customer Loyalty

customer loyalty cycle

Customer loyalty isn’t just about winning loyalty. There’s a four-phased cycle to it. Let’s explore.

  • Earning customer loyalty
  • Maintaining customer loyalty 
  • Losing customer loyalty
  • Reviving customer loyalty

As you could see, a customer can slip from being loyal to disloyal. But there’s still hope to win a once-loyal customer.

And here’s a key takeaway for you: Do not think that your job is over once you’ve won customer loyalty. You need to maintain loyalty over time so that you get a tangible customer lifetime value.

And in the worst-case event, should you ever lose customer loyalty, remember, you have a chance to win them back. Just follow the tips below.

  • Launch a We Fixed It campaign. Remember, loyal customer defection happens for a reason. So, fix the issue and reach out to them and win customer trust and business. 
  • Offer impeccable customer service while addressing customer complaints.
  • Say Sorry if you need to. You have no idea what wonders an apology can do!
  • Always play a customer-centric role. Do check if you’ve pivoted your priority. If so, change gears and course correct.

Important Customer Loyalty Program Metrics to Measure

important customer loyalty program metrics to measure

Say you’ve launched your loyalty program and it’s up and running. But how would you ever know if it’s performing great, or mediocre, or bad unless you measure customer loyalty Key Performance Indicators (KPIs)?

So, here are seven customer loyalty program KPIs I want you to start measuring.

1. Average Order value (AOV)

average order value

With the Average Order Value, you track the average dollar amount that customers spend each time they purchase from you. 

Average Order Value = Total Revenue / Total Number of Orders 

(Time frame: 365 days)

2. Customer Churn Rate (CCR)

customer churn rate

By calculating the Customer Churn Rate, you understand the percentage of customers you have lost over a time period. 

Customer Churn Rate = (No. of customers at the beginning of time period - No. of customers at the end of the time period) / No. of customers at the beginning of time period

3. Purchase Frequency (PF)

purchase frequency

The Purchase Frequency is a measure of the number of times your average customer purchases from you in a given period. 

Purchase Frequency = Total number of orders / No. of unique customers 

(Timeline: 365 days)

4. Loyal Customer Rate (LCR)

loyal customer rate

The Loyal Customer Rate is the direct calculation of the percentage of loyal customers that your business has. You can measure this metric in terms of the number of times a customer has purchased with you. 

Loyal Customer Rate = No. of customers who have purchased more than four times / Number of unique customers [Note that the frequency could differ depending on your retail niche]

(Timeline: 365 days)

5. Repeat Purchase Rate (RPR)

repeat purchase rate

The Customer Retention Rate defines the percentage of customers your business has retained over a period of time. 

Customer Retention Rate = (No. of customers at the end of the time period - No. of acquired customers over the time period) / Total no. of customers at the beginning of the time period

6. Customer Retention Rate (CRR)

customer retention rate

The Customer Retention Rate defines the percentage of customers your business has retained over a period of time.

Customer Retention Rate = (No. of customers at the end of the time period - No. of acquired customers over the time period) / Total no. of customers at the beginning of the time period

7. Profitability Per Order (PPO)

profitability per order

The Profitability Per Order shows the amount of profit your business makes on every purchase. 

Profitability Per Order = (Total Revenue x Average Profit Margin) / Total no. of orders

(Timeline: 365 days)

While these loyalty marketing analytics would be hard to calculate manually, an AI-based customer engagement platform like Ingage would do all the analysis so that you can infer the insights and streamline your program.

Are You Confident To Build Your Fort Of Loyal Customers?

In this comprehensive guide on customer loyalty, we’ve seen the various aspects of what it takes to earn customer loyalty, launch a customer loyalty program, and measure its success. 

Now, what are you going to do next? It’s time to put your knowledge into practice, isn’t it?

Prioritize building a relationship with existing customers - rather than a mere business. Then, onboard a customer loyalty program software like Ingage. Besides loyalty programs and rewards redemption modules, it can help you with marketing intelligence & planning, automation, and customer segmentation, so that all your customer engagement activities can happen under a unified platform. Don't spend more money on disparate platforms when you have Ingage!

You can schedule your personalized demo for Ingage here. This first stepping stone will give you all the success you need :)

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