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Home»Blog»Development » Loyalty apps for retail businesses- Why do they need one?
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Loyalty apps for retail businesses- Why do they need one?

By Manish Barthwal
September 3, 2021. 4 min read
Last update on: September 3, 2021

Customers are the mainstay of a business and make a major contribution to its success. But businesses don’t just look for customers, they quest for loyal ones. Loyal customers prefer your brand (its products and services) over your competitors and aren’t easily influenced by price and offers.

A one-time sale doesn’t guarantee customer loyalty, it is achieved when they become your regular customers. That is why most businesses introduce loyalty programs or look for different ways to improve customer loyalty so that their customers keep coming back to them.

Customer loyalty is of paramount importance for retailers. But loyalty comes with trust; people prefer purchasing only from the brands they trust. So the first step towards making your customers loyal to your business is gaining their trust. Once you build that credibility, it is only a matter of time that they become frequent buyers. Many other things go into customer loyalty such as the quality of your products and services (said by 77% of people in Semrush’s report), customer service (believed by 69% of US customers), the ease of using the application, etc. Ensure that all these things are addressed properly.

Businesses need loyal customers to earn a perpetual profit. You might be surprised to know that almost 65% of a company’s business comes from them. This leaves us with only one question for you- Do you have a loyalty app or do you run loyalty programs? If not, it’s high time that you build a loyalty app and work towards building customer loyalty. This will eventually improve your customer retention rate.

A loyalty app provides you with an opportunity to approach buyers and keep them hooked to your business. It not only focuses on improving customer loyalty but also helps in meeting the changing customer needs and expectations.

Loyalty App for the Retail Industry

The retail industry is arguably the biggest of all industries where countless transactions take place every single day. The competitive landscape is such that having repeat customers or loyal ones is a tough thing to ask for. The significance of loyalty apps in the retail market thus becomes immense. 

Remember that customers have a multitude of options to choose from but you have only a finite number of customers to target, so you need to stand out and be better than the rest. Invest in loyalty programs and make a special bond with your recurring buyers. These programs act as a motivator for customers to buy more. Moreover, loyal customers are more likely to share their experience with your brand in their friend circle or family, and word-of-mouth gives a great boost to any brand or business, not just retail.

Studies suggest that a 5% increase in customer retention programs can increase the profit margin by 25-100%. Furthermore, 64% of retailers say loyalty programs are the best way to connect with their customers while 69% of customers pick a retailer based on where they can earn loyalty or reward points.

Types of Loyalty Programs

There are different types of customer loyalty programs sponsored by retailers or businesses to attract or retain customers. So select the ones that are most suitable for your business. These can be in the form of rewards, discounts, coupons, or some other incentives.

1. Points Program

This is one of the most common and widely used loyalty programs where customers receive loyalty or reward points on their purchases or on performing certain tasks, such as user registration. The points stored in the wallet can be used for future purchases although not every app allows redeeming all points at once. It forms a continuous cycle as customers can earn and redeem some points on every purchase, thus persuading them to return to your business application to shop next time.

2. Spend-based Program

In this type of loyalty program, customers are offered loyalty points on making a purchase above the threshold amount set by the retailer. This is a very effective way to increase your average order value. For instance, if the threshold set is at $25 and the customer’s order value is around $20-22, he or she may be tempted to take it beyond the threshold mark and earn some points on it.

3. Tier-based

Under this set of customer loyalty programs, customers are placed in a particular tier among the different tier levels, based on their spending history. The level progresses with the increase in their spending limit. The higher the level, the better the rewards. So, this program indirectly asks customers to purchase more and unlock the next tier.

4. Paid Programs

This refers to allowing those customers with exclusive benefits who purchase your membership. Amazon Prime is the best example of this where you get several benefits for being a prime member of Amazon, such as free or one-day delivery, access to prime video and prime music, additional reward points, etc.

Points to consider when creating a loyalty app

Before you proceed with the loyalty app development process for your retail business, consider these few points-

1. Personalized Rewards

Unlike the standard reward schemes that are meant for everyone, personalized rewards are created and offered to each individual based on their taste and preferences. For that, you need to obtain information such as their interests, buying behavior, geolocation, gender, age, etc., and then segment those customers based on the data.

This way, you will better know what rewards should be curated and targeted for what kind of customers.

2. Easy Redeeming

Make sure that the loyalty app offers an easy way for customers to redeem their loyalty points. They should be automatically applied on the checkout page on top of the customer’s order value. Moreover, all the information related to the loyalty points such as their current status, points history, etc. should be in one place.

3. Geolocation

Make the best out of your loyalty app by reaching out to customers when they are nearby your brand stores. This is what we call location-based push notifications which make use of a customer’s location and send them offers if the store is located around that zone.

Final Word

Loyalty programs are undoubtedly a great way for retail businesses to improve their churn rate and shoot up their sales at the same time. Collect customer data such as their birthdays, anniversary (the day they signed up for your brand), spending habits, etc., as it will allow you to create offers accordingly. Ultimately, you will have customers who are loyal to your business and are keen to stick with it in the long run. This is what any business would wish for- customers who are less likely to switch.

A loyalty app for retailers will help achieve so but ensure that you have integrated the right set of features into it and implemented the best practices.
You can get in touch with us regarding your loyalty app project and our experts will recommend you an ideal solution.


Loyalty App DevelopmentLoyalty PointsLoyalty ProgramsRetail IndustryRetailers

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