When a company first hears the phrase “loyalty program,” the first thing that comes to mind is: “points.” The second is: “What good is that to me?” And although almost everyone has heard the term these days, few truly understand how it works and what real benefits it can bring to their business.
This article is precisely to answer that: what is a loyalty program and how does it work? And why might it be more powerful than you think?
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What is a loyalty program?
A loyalty program is a strategy to reward your customers for continuing to choose you. It can take many forms: accumulating points, VIP levels, instant rewards, exclusive discounts, personalized experiences, or even digital money that can be used within your own store.
But the reward isn’t the only important thing. What is truly valuable is what the customer feels: that you know them, that you value them, and that you care about maintaining the relationship.
How does a loyalty program work?
Behind every good program there are three things:
- A system for accumulating benefits : whether through points, visits, purchases, interactions, or referrals.
- A technological platform that allows you to record everything: from a CRM to tools like OCR or connected Call Center systems.
- A personalized strategy , where artificial intelligence and machine learning help predict customer behavior and offer them what they need, when they need it.
At LMS, for example, we use technology that automatically segments users and assigns them promotions that are relevant to them. This not only helps us build customer loyalty but also increases sales.
What does the customer gain?
Time, benefits, recognition, and real rewards. Simply saying “thank you for your purchase” is no longer enough. Customers expect more. And if you don’t give it to them, someone else will.
A good program creates a sense of community, of belonging. It makes shopping with you feel different.
And what does the company gain?
Valuable information. Retention. More sales. But also clarity: you know who your best customers are, why they buy from you, when they are about to leave, and how to reactivate them.
And you can scale this: from physical stores to ecommerce, from employees to distributors, from consumers to sales force.
So, how do I begin?
A loyalty program doesn’t have to be complex. But it does need to be well thought out. With clear objectives from the start: Do you want recommendations? More frequent purchases? Returns after months of inactivity?
The important thing is that it’s designed for your target customer and has the right technical and strategic support. It’s not enough to have a nice-looking card or app: you need to know what to do with the data it generates.
In summary
A loyalty program is much more than points. It’s a tool for connection, business strategy, and growth.
Now that you know what a loyalty program is, would you like to implement one? Schedule a meeting with our team here: www.lms-la.com
By Daniel Velasco Rallo, Strategic Planner
