Do Loyalty Programs Increase Sales?
Feb 8, 2025
You've seen them everywhere. The coffee shop stamp card promising a free drink after nine purchases. The clothing store rewards program offering points toward discounts. The salon loyalty card working toward a free treatment.
But if you're a business owner considering implementing a loyalty program, you're probably asking a harder question: do these programs actually increase sales? Or do they simply give away free products to customers who would have purchased anyway?
It's a fair concern. A loyalty program costs time and money to run. If it's not generating returns, it's just an expense that rewards existing behaviour without changing it.
So let's answer the question directly: do loyalty programs increase sales?
The Short Answer: Yes, But...
Research consistently shows that loyalty programs can increase sales. Studies have found that:
Consumers are significantly more likely to recommend brands with good loyalty programs
The majority of consumers say they're more likely to stay with brands that have loyalty programs
Many consumers report they'll modify their spending habits to maximise loyalty program benefits
These findings suggest that loyalty programs do influence purchasing behaviour—not just reward existing patterns.
But here's the crucial caveat: a loyalty program can increase sales. Whether it will increase sales depends entirely on how it's designed and implemented.
Simply having a loyalty program isn't enough. Plenty of businesses launch programs that generate signups but don't meaningfully change customer behaviour. Cards accumulate in wallets (digital or physical), points go unredeemed, and the program becomes overhead without return.
The difference between programs that increase sales and programs that don't comes down to execution.
Beyond Transactions: The Emotional Connection
The most successful loyalty programs don't just reward purchases—they build emotional connection between customers and brands.
Research on consumer behaviour has found that customers who feel emotionally connected to a brand have dramatically higher lifetime value—potentially 300% or more compared to satisfied but unconnected customers. They stay committed longer, spend more over time, and actively recommend the brand to others. In fact, businesses that systematically nurture these emotional bonds through strategies to increase customer lifetime value often find that loyalty program members generate three to five times more revenue over their relationship than non-members.
This is the real power of loyalty programs: not the stamps or points themselves, but the relationship they help create.
Think about what happens when a loyalty program works well:
Recognition: The customer feels known and valued. Their visits are acknowledged. Their preferences are remembered.
Appreciation: The rewards themselves communicate "we value your business." Birthday treats and milestone celebrations say "you matter to us."
Belonging: The customer feels part of something—a community, a club, a relationship that extends beyond individual transactions.
Anticipation: Progress toward rewards creates positive anticipation, making visits more meaningful than simple purchases.
These emotional elements transform transactional relationships into genuine loyalty. And genuine loyalty—not just reward-seeking behaviour—is what drives sustainable sales increases.
How Sephora Gets It Right
Sephora's Beauty Insider program is often cited as a loyalty success story, and for good reason.
The structure: Three tiers (Beauty Insider, VIB, VIB Rouge) create clear progression. Most customers start at the entry level; relatively few reach the top tier. This exclusivity makes advancement desirable while ensuring everyone gets meaningful benefits.
The personalisation: From the first purchase, recommendations are tailored to individual preferences and buying patterns. The customer feels understood, not just tracked.
The cross-selling: When members redeem points, they receive products rather than discounts. This introduces customers to new products they might not have tried otherwise—expanding their relationship with the brand rather than just discounting their existing purchases.
The experience: The program creates ongoing engagement through exclusive events, early access, and member-only perks that extend beyond simple transactions.
The result: millions of active members, increased purchase frequency, higher average transactions, and strong customer retention.
The lesson for small businesses: you don't need Sephora's scale. You need their principles—clear value, personalisation, emotional connection, and rewards that expand the relationship rather than just discount existing behaviour.
Four Techniques for Programs That Actually Increase Sales
If you want your loyalty program to genuinely increase sales (rather than just reward purchases that would happen anyway), focus on these four elements:
1. Keep It Simple
Complexity kills engagement. Research shows that more than half of consumers will choose one loyalty program over another simply because it's easier to use.
What simple looks like:
Signup takes seconds, not minutes
The earning mechanism is immediately understood ("buy 9, get 1 free")
Rewards are clear and desirable
Redemption requires no explanation
What complex looks like:
Multi-page signup forms
Confusing point calculations
Terms and conditions that require reading
Redemption processes that need staff explanation
Perkstar's wallet integration exemplifies simplicity: customers scan a QR code, and their card saves to Apple Wallet or Google Wallet. No app download, no account creation, no password to remember. They're earning in seconds.
Simple programs get higher participation. Higher participation means more customers influenced by the program. More influenced customers means more sales impact.
2. Personalise the Experience
Generic rewards are forgettable. Personalised recognition is memorable.
Personalisation opportunities:
Welcome communication: A message acknowledging someone's first visit or signup makes them feel seen from the beginning.
Name usage: Addressing customers by name in notifications and communications creates connection.
Birthday recognition: Celebrating customers on their birthday shows you see them as individuals, not just transactions.
Preference awareness: Recommendations based on purchase history demonstrate that you're paying attention.
Progress communication: Personalised updates ("You're just 2 stamps away from your free coffee, Sarah!") combine personalisation with motivation.
These touches don't require complex technology. Perkstar's Birthday Club automates birthday rewards. Push notifications can be personalised with names. The platform tracks preferences automatically.
Personalisation creates emotional connection. Emotional connection creates genuine loyalty. Genuine loyalty increases sales.
3. Add Elements of Delight and Surprise
Predictable rewards motivate behaviour. Unexpected rewards create memorable experiences.
Ways to add delight:
Surprise rewards: Random free items or bonuses for no particular reason create stories customers share.
Milestone celebrations: Acknowledging 50th visits, one-year anniversaries, or stamp milestones makes customers feel their history is valued.
Exclusive access: First looks at new products, early booking for busy periods, or members-only events create genuine exclusivity.
Random upgrades: Occasionally upgrading a regular order "just because" creates positive surprise.
These elements transform a program from mechanical stamp-collecting into an engaging experience. Engaged customers visit more often and spend more when they do.
4. Train and Engage Your Staff
Your staff are the human face of your loyalty program. Their enthusiasm (or lack thereof) directly impacts customer participation.
What staff need to know:
How the program works (15-second explanation)
How to sign customers up (practical mechanics)
Why it benefits customers (compelling reasons to join)
How to answer common questions
What staff need to feel:
That the program matters to the business
That promoting it is part of their role
That there's recognition for driving signups
Businesses that invest in staff training see dramatically higher program participation. Higher participation translates directly to greater sales impact.
Consider internal incentives: recognition for staff who sign up the most members, small rewards for hitting enrollment targets, team goals with collective celebrations.
The Math Behind Sales Increases
Let's be specific about how loyalty programs increase sales:
Increased Visit Frequency
A customer who visits your café twice a week might visit three times if they're working toward a reward. That's a 50% increase in visit frequency from one customer. For cafés specifically, where daily habits drive the bulk of revenue, even modest improvements to customer loyalty can compound rapidly—turning a twice-a-week visitor into a daily regular represents a 150% frequency increase from a single customer.
Multiply across your customer base: if your program increases average visit frequency by even 10-20%, the sales impact is substantial.
Higher Per-Visit Spending
Loyalty members often spend more per transaction:
They might add items to reach a threshold ("I'm close to my reward—I'll add a pastry")
They're more receptive to suggestions from staff who know them
They feel connected enough to try new offerings This behaviour mirrors exactly what drives McDonald's billion-dollar loyalty strategy—every program element is designed to nudge customers toward adding one more item, increasing average transaction value across millions of daily orders.
They see the relationship as worth investing in
Longer Customer Lifespans
Without a loyalty program, customers drift based on convenience, price, or simple forgetting. With one, they have something to lose by leaving—accumulated progress, established relationship, earned status.
This retention directly impacts sales. A customer who stays for three years generates more revenue than one who stays for three months.
Referral Generation
Loyal customers recommend businesses they love. A good loyalty program gives them additional reasons to recommend—and sometimes explicit incentives through referral rewards.
Each referral is effectively free customer acquisition, with higher likelihood of the new customer also becoming loyal.
When Loyalty Programs Don't Increase Sales
To be balanced: not every loyalty program succeeds. Programs fail to increase sales when:
The product or service disappoints: No program compensates for poor core offering. If the coffee is bad, stamps won't matter.
Rewards aren't desirable: If customers don't want what you're offering as rewards, they won't change behaviour to earn them.
Thresholds are unrealistic: If typical customers can never realistically reach rewards, the program motivates no one.
Communication is absent: Programs that go silent after signup get forgotten. Out of sight, out of mind.
Friction is too high: Programs that are difficult to join, use, or redeem create frustration rather than loyalty.
Staff don't promote it: Programs that exist but aren't actively mentioned to customers achieve minimal participation. Before launching, it's worth honestly assessing whether a loyalty program fits your business—factors like purchase frequency, customer type, and competitive landscape all determine whether a program will generate returns or simply add overhead.
The common thread: failed programs are poorly designed, poorly implemented, or poorly maintained. Success requires attention to all three.
The Bottom Line
Do loyalty programs increase sales? Yes—when done properly.
A well-designed program that's easy to use, creates emotional connection, delivers genuine value, and is actively promoted will increase:
Visit frequency
Per-visit spending
Customer lifespan
Referral generation
A poorly designed program that's complicated, impersonal, unrewarding, or neglected will generate signups without changing behaviour—all cost, no return.
The difference isn't luck. It's design and execution.
Getting Started
Ready to implement a loyalty program that actually increases sales?
Focus on:
Simplicity: Easy signup, clear earning, desirable rewards
Personalisation: Welcome messages, birthday rewards, progress updates
Communication: Stay present between visits through push notifications
Staff engagement: Train your team to promote the program enthusiastically
Measurement: Track whether the program is changing customer behaviour
Perkstar provides the foundation: wallet integration for frictionless signup, push notifications for ongoing communication, Birthday Club for automatic personalisation, and analytics to track program performance.
The 14-day free trial lets you build and launch your program with real customers before committing.
Start your free trial at Perkstar →
The question isn't whether loyalty programs can increase sales. They can. The question is whether you'll design and run one that does.
