According to Harvard Business Review, acquiring a new customer can be 5 to 25 times more expensive than retaining a current one. What’s more, increasing your customer retention by only 5% can lead to a profit boost of anywhere between 25% to 95%. The moral of the story? Keeping your current customers happy should be a top priority, no matter your industry.
That’s where loyalty programs come in. With a loyalty program, you can retain more customers and in turn, increase revenue. Plus, you’ll build stronger relationships with your customers while showing your appreciation, encourage word-of-mouth marketing, and stand out from others in your industry.
Fortunately, you don’t have to start a loyalty program from scratch. A reputable software can walk you through the process and simplify the way you implement and manage it. It may also automate many of the tedious, manual tasks that you may not have the time or resources to handle on your own.
Whether you’re a startup, a growing venture, an established biz, this guide will help you choose the right loyalty software and create the ideal loyalty program for your unique audience and goals.
How Do Loyalty Programs Work?
Loyalty programs incentivize repeat purchases from current customers through a variety of rewards, such as free items, special discounts, invites to exclusive events, early product access, and more. While each loyalty program has its own set of rules and conditions, most of them follow the same general process.
First, a new customer makes a purchase from a business or provides them with their personal information. Then, the business encourages the customer to sign up for its loyalty program. Once the customer enrolls, they’ll begin to earn rewards every time they make a purchase. The more they use the loyalty program, the better rewards they’ll receive.
So, do loyalty programs actually work? These results from well-known companies prove that they do, as long as you implement and execute them strategically while keeping your customer’s unique buying behaviors and preferences in mind.
Starbucks: 41% of all Starbucks sales now come from its Rewards program, which derived in 2009. Users can swap stars for coffee, cake pops, and anything else they desire at most Starbucks locations.
Sephora: Sephora’s Beauty Insider tiered loyalty program contributes to 80% of its sales. Those who join get access to the Beauty Insider Community plus free birthday gifts, exclusive access to promos, free shipping, invites to private shopping events, and more.
Types of Loyalty Programs
Loyalty programs vary greatly from business to business. In general, however, most of them follow one or more of these structures:
Points-Based
Points-based loyalty programs tend to be the most popular. When a customer makes a purchase, writes a review, refers a friend, or performs another designated action, they’ll receive points. The points may be redeemed for credits toward their next purchase, discounted services, or giveaways. Customers usually monitor their points through a loyalty card, online portal, or mobile app.
Who Is It Best For: Businesses with smaller, frequent transactions, those with average order value (AOV) challenges
Tier-Based
Tier-based programs offer different rewards based on spending levels. For example, a customer may receive the best discounts if they spend $1,000 or more per year. Those who spend less will still secure rewards but they won’t be as significant. The goal is to motivate your customers to continue spending so they can reach the next tier.
Who Is It Best For: Businesses who want to improve purchase frequency and program engagement, those with more expensive products and services
Subscription-Based
Subscription-based programs require customers to subscribe and pay an upfront fee to receive certain products or services. Then, they’ll earn rewards, which they may put toward future purchases. For instance, if you’re a fashion retailer, customers can subscribe to a monthly box where they get three items in their size every 30 days.
Who Is It Best For: Businesses who want to offer consistent value to their customers and prioritize predictable revenue streams
Referral-Based
Referral-based loyalty programs reward customers for referring others, promoting word-of-mouth marketing. For example, every time a customer refers a friend to your business, they may receive a discount or free product.
Who Is It Best For: All businesses can benefit from referral-based programs
What is Loyalty Software?
Now that we’ve gone over what loyalty programs are and how they work, let’s dive deep into loyalty software. At its core, loyalty software is designed to help all types of businesses implement, manage, and measure loyalty programs. Factors like your size, budget, goals, and preferences will all help determine the best option for your particular business.
These days, most loyalty platforms allow you to customize your program to meet your specific requirements and business model. These tools may also offer marketing features so you can promote your program and analytics so you understand its impact on your bottom line. In addition, many of them integrate with email marketing software, CRMs, and other solutions your business may already be using.
Best Loyalty Software: 5 Solutions to Steer You Toward Success
As you shop around, you’ll notice countless loyalty platforms on the market. To help take the guesswork out of your search, we’ve done the heavy lifting and compiled this list of the top loyalty software. Keep in mind that each option has its own strengths and weaknesses so it’s up to you to decide what’s most important to your business.
1. LoyaltyLion: Best for personalized support
Starting Price: $199 per month
Key Features: Custom loyalty landing page, pre-built on-site and offsite earning rules
Why We Like It:
With LoyaltyLion, you can create a Shopify rewards program that encourages your customers to return through double point days, exclusive content, and other perks. You’ll work with an onboarding manager to build a loyalty page, control custom rules that prompt rewards, design new incentives, and use real-time buying behavior analytics to optimize your program. LoyaltyLion also supports a tiered loyalty program to help maximize your profits.
Pros
Every plan comes with an experienced onboarding specialist
Available in 7 languages to accommodate international businesses
Unlimited integrations with email, SMS, and review platforms
Cons
No free trial
Limited customization options on the customer dashboard
Doesn’t offer a chat function for real-time customer support
2. Kangaroo: Best for customization
Starting Price: $79 per month
Key Features: Third-party rewards, convertible coupons, contests and giveaways
Why We Like It:
Kangaroo gives you plenty of reward options for your customers. From store credit and cashback to gift cards, free shipping rewards, and points, you can choose the best ways to encourage customer loyalty. If you have a brick-and-mortar business, Kangaroo’s customizable loyalty tablet is the ideal way to increase sales and foot traffic from your counter. Plus, the platform integrates seamlessly with Shopify, Mailchimp, Uber Eats, gorgias, and a variety of other tools.
Pros
Three core plans plus an Enterprise plan
Impressive marketing features like customer segmentation, a drag-and-drop editor, and promo engine
Many reviews about excellent customer service
Cons
No free plan or trial
Interface may feel clunky
App lacks customization options
3. SumUp Connect: Best for automation
Starting Price: $49 per month
Key Features: Cloud-based POS, customer database, customer rewards
Why We Like It:
Formerly known as Fivestars, SumUp Connect makes it a breeze for customers to join your loyalty program. They can sign up instantly when they checkout on the customer touchscreen or send a text to join anytime. Every time they make a purchase, the platform will automatically add points to their account that they can redeem for rewards. Plus, there’s AutoPilot, an AI-powered assistant you can count on for 24/7 customer outreach, personalized campaigns, strategic follow-ups, and promotion analysis.
Pros
Easy setup process
Three affordable plans
AutoPilot uses AI to maximize your loyalty efforts
Cons
No free trial
Fewer features and less customization than other loyalty programs
Complaints of poor customer support
4. Yotpo: Best for a free plan
Starting Price: $199 per month
Key Features: Rewards page builder, points for photo and video reviews, rewards for specific products
Why We Like It:
YotPo is one of the only loyalty tools with a free version. The free plan is loaded with a variety of tools to help you build engagement with your customers and drive them to spend more. You’ll get access to the referral program, points and redemption reminders, referral email flows, and even the loyalty performance dashboard so you can quickly make sense of what’s working and what needs to be improved. If you upgrade to the paid plans, you unlock advanced features like birthday and anniversary rewards, punch cards, and VIP tiers.
Pros
Robust free plan available
Higher-level plans come with onboarding and customer success managers
Variety of dashboards for easy insights: ROI, loyalty performance, and VIP tiers
Cons
Only paid plans integrate with Klaviyo and Recharge
Paid plans can be expensive for startups and newer small businesses
Reports of slow loading times and bugs
5. Zinrelo: Best for scalability
Starting Price: Contact Zinrelo directly for pricing info
Key Features: Loyalty microsites, incentive engine/rewards catalog, email and SMS engine
Why We Like It:
Zinrelo is an AI-powered loyalty software with no shortage of loyalty programs. Whether you’re looking for a basic option or something more custom to your brand, it can meet your needs. Zinrelo specializes in a variety of loyalty programs, such as those that are points-based, tiered, behavior-based, multibrand, cashback, and subscription-based. Plus, it lets you optimize your program with add-on services, such as loyalty market research, data and analytics, financial modeling, and strategic counseling.
Pros
Highly customizable plans
Specific features for different industries, such as beauty, automotive, food and beverage
Easily scalable
Cons
Many features and add-ons that can be overwhelming
Must contact sales for a demo and pricing
May be too advanced for startups
Dos and Don’ts of a Successful Loyalty Program
The right loyalty software can make your life easier but ultimately, the success of your loyalty program comes down to understanding these dos and don’t and keeping them in mind as you structure and implement it.
Dos
Keep It Simple: Let’s be honest. Nobody wants to join a loyalty program with a million rules. Most customers in today’s day and age lead busy lives and don’t have time to figure out the ins and outs of your program. Make sure it’s easy for them to understand and participate in.
Ensure Frictionless Sign Up: Customers should be able to enroll in your loyalty program quickly and easily while they’re shopping in your store, online, or using your mobile app. If they have to fill out a long questionnaire and go through too many prompts, they may determine it’s not worth their time.
Prioritize Personalization: Every customer has their own unique shopping habits. As a result, it’s a good idea to tailor your loyalty program to meet varying demographics. If someone only shops online, for example, rewarding them with a coupon that must be used in-person doesn’t make sense.
Get Your Employees on Board: Make sure your employees understand your loyalty program and are excited to promote it to customers. You may even want to start a contest or rewards system for employees who encourage the most sign-ups.
Ask for Customer Feedback: Your loyalty program is not a set-it-and-forget-it kind of deal. In fact, it will likely evolve in time. To increase its success rate, don’t be afraid to ask your customers how they like it and what you can do to improve. Customer feedback is invaluable, even if you have access to analytics data.
Don’ts
Poor Promotion: You could have the best loyalty program in the world but it won’t do you any favors if nobody knows about it. Fortunately, most platforms include marketing tools to help you spread the word but it’s your job to determine the best way to encourage your customers to join.
Confusing Redemption Process: Your customers should be able to redeem their rewards without the hassle. Make it easy for them to view their current rewards and trade them in for what they want. Otherwise, they may jump ship and abandon your program.
Meaningless Rewards: Speaking of rewards, your customers should get excited about what you offer them. For example, if you’re offering free shipping to those who spend more than $500, ask yourself if these higher-end customers really care about that perk. Maybe they’d prefer early access to new products as shipping costs aren’t really a big deal to them.
Unattainable Rewards: Unattainable rewards are just as bad as meaningless rewards. If you’re a coffee company, don’t offer a free cup of Joe to those who spend $1,000 with you. It may take them years to get to that point and they’ll probably forgo your loyalty program altogether. Ensure your rewards are realistic for your specific customers to meet.
Ignore the Data: It’s not uncommon for businesses to implement a loyalty program and simply assume it’s driving revenue and delivering a positive ROI. Rather than guessing, use dashboards and analytics in your software to make sense of your program and adjust it as needed.
Real-Life Examples of Businesses Who Use Loyalty Software to Retain Customers
We could go on and on about why loyalty software is worthwhile but we’d rather you see what it’s done for these three businesses.
Moving Company Increases Repeat Customers by 16%
BoxStar Movers, a moving company in Arlington, Virginia would occasionally offer small discounts or priority scheduling to repeat customers. However, there was no real consistency or way to track engagement or reward loyalty across the board.
Once they adopted a loyalty software, BoxStar Movers noticed a measurable uptick in both repeat bookings and referral-based inquiries. Repeat customers now account for approximately 36% of their monthly bookings, compared to around 20% before they implemented the system.
What’s more, their Google reviews jumped by 28% in the first three months after launching their software-based loyalty program. They believe this is partly because satisfied repeat clients were being prompted through the system.
Words of Wisdom: “My advice for any small business owner who is shopping for loyalty software would be to look for something that is easy to use, offers mobile support, and that your team can implement quickly. If it's too complicated, no one will use it. Also, link the rewards to products and services that real people care about rather than just generic gift cards,” -Duman Zhumagulov, co-owner of BoxStar Movers
Digital Agency Helps a Beauty Brand Boost Repeat Purchases by 34%
Versys Media offers website design and digital marketing services across the globe, with offices in New York, London, Cape Town and Johannesburg. The agency was working with a beauty brand that struggled with retention but didn’t want to increase ad spend.
They recommended a loyalty software and the beauty brand saw a 34% increase in second purchases within three months of launching a referral points system through the software. They found that the loyalty program seriously stretched the lifetime value of each customer.
Words of Wisdom: “If you're shopping for loyalty software, pick one that integrates neatly with your existing checkout, email, or POS. Also, start small. Don't build a massive rewards catalog. Just reward the actions that bring actual revenue: repeat purchases, referrals, reviews. Simplicity scales better,” -Leah Miller, marketing strategist at Versys Media
SMS Marketing Platform Builds Long-Term Customer Relationships
Textdrip, an automated SMS marketing platform, didn't have a formal loyalty program in place. They occasionally followed up with discounts for returning customers but nothing was structured or scalable.
Eventually, they decided to invest in loyalty software because they realized how much repeat business drives long-term growth. It’s not just about making a sale but about creating a relationship that brings people back. A loyalty software allowed Textdrip to automate the loyalty experience and make customers feel like they matter without manual effort every time.
Words of Wisdom: “Start with your goal in mind. Is it retention, referrals, increased purchase frequency? Then, look for software that supports that goal with minimal friction. Simplicity is key. Avoid tools that require too many steps to engage your customers. Also, choose something that lets you communicate through channels your audience already uses. And don’t forget to test everything—run small loyalty campaigns, gather feedback, and tweak often,” -Phil Portman, CEO of Textdrip
Looking for Loyalty Software? Business Heroes Can Help
If you’re ready to jump on the loyalty software bandwagon, Business Heroes is an invaluable resource. Simply fill out our short questionnaire and receive personalized recommendations for a loyalty platform and any software you might have. Find the right loyalty software today!
Frequently Asked Questions
What is the best loyalty software?
The best loyalty software depends on your particular budget, business model, and goals. LoyaltyLion, Kangaroo, SumUp Connect, Yotpo, and Zinrelo are several solid options to explore.
How much does loyalty software cost?
Loyalty software ranges in price. You may find a platform with a free version or pay anywhere from $49 to $199 or more per month for a paid plan. Some loyalty software providers will require you to reach out to them directly for a quote but most of them advertise their pricing online.
Is loyalty software expensive?
Some loyalty platforms may be pricey, especially for startups or newer businesses. The good news is you can find a free option like Yotpo or an affordable plan from a provider like SumUp Connect that starts at $49 per month.
How do I choose the right loyalty software?
To zero in on the ideal loyalty platform, take the time to evaluate your needs, budget, and goals. From there, research providers that meet your criteria and schedule free demos or trials to get an idea of which software makes the most sense for your particular business.
What types of industries is loyalty software for?
Loyalty software can benefit just about any business in any industry. Whether you’re a small retailer, restaurant, service-based business, or anywhere in between, a loyalty software can simplify the way you implement and manage your loyalty efforts.
