How to Build Customer Loyalty & Grow Business in UK USA (Business Plan)

No matter the size of the business, customer loyalty plays an important role. First, it is an essential strategy to retain customers. 


It is a lasting bond between you & your customer.


Retaining your customers sustains your business up to 65-67%. New customers might take time to be consistent & give regular orders.


These days customers prefer those brands which can support them even after purchase. Any company which does not have good customer service cannot thrive.



If you are using any company’s services-they have boring, dull staff & nobody is addressing your queries, what kind of impression will you have in mind?


Obviously! You would prefer to give time to something other than such a company, which is not interested in giving you time. 


Retaining your customers is a challenge, as the customers have multiple choices to switch over. Always go out of the box to solve queries of your old & new customers.

What is Customer Loyalty?

Customer loyalty is a positive commitment by consumers to buy one company’s products repeatedly.

Loyal customers always purchase from your company over your competitors. So if any customer consistently buys goods from you, you are on the right track. 


Customer & brand makes a beautiful commitment that lasts long. It is a positive experience for a customer, which develops trust & emotional connection with the brand.


As an entrepreneur, you must create reasons to make your customers loyal. But unfortunately, this trust only develops in a few days. 


You have to invest in quality to make the customer’s experience delightful. So always make your products & services match customers’ expectations.


A happy & satisfied customer will be glued to your brand just because you met their expectations.


It has been observed that a satisfied customer will buy your product even at a higher cost, thinking it is a trusted & tested product. But unfortunately, consumers sometimes think that even though another brand offers the lowest price, it might be a trick & will lead to the wrong product. 


Customer Lifetime Value (CLV) measures the total amount of money a customer is expected to spend on your business. It is an elemental analysis that gives you an idea of how much to spend on new & existing customers. 


It will also help you decide what kinds of products can be offered to consumers of higher CLV and also let you know about the consumers who give higher profits; you will see a rise in business profitability.


Why is Customer Loyalty Important?

    • Repeat customers spend more money on buying your products.
    • Improves customer lifetime value (CLV).
    • Repeat customers also like to try your other products.
    • It’s easy to cross-sell & upsell products to loyal customers.
    • Loyal customers always give you good suggestions & honest feedback., which can help you improve your services.
    • Your brand will get an advantage over the competitors.
    • Your loyal customers will buy your product, even at a higher cost, because they believe in it.
    • The cost of retaining existing customers is less expensive than acquiring new ones.
    • Loyal customers buy more than others, which leads to good turnover & profitability.
    • Emotional connection with customers reduces the volatility of customers.
    • If you have positive-minded & stable customers, it will also retain your staff. Employees will think they are in the right place to work.
    • You get free mouth publicity, and happy customer automatically recommends you to their relatives, neighbors & friends. Hence, you get the benefit of word-of-mouth marketing.
    • Dealing with existing customers is less time taking. You don’t need to explain much, even if you offer a new product. They trust you by your words.
    • You can deal with the customer efficiently, knowing their purchasing power.
    • Once you have your top customers, you can easily reach out to them with new products & trends.


Benefits of Customer Loyalty Programs

    • Loyalty programs cut down on costs, unlike marketing strategies which incur huge expenses.
    • Offering a loyalty program to customers can quickly be done by segregating top customers from the database.
    • Offering loyalty programs or reward points is a way to keep customers attracted to schemes and sell your product.
    • If you have introduced a new product, customers can purchase it by redeeming points, which can lead to quick sales of the new product.
    • Loyalty programs motivate customers to stick to your business & use special promotions for their benefit.
    • Delighted customers always wait for the regular promotions & they bring in new customers also.
    • It is an indirect way of investing in customer relationships & goodwill. 
    • It is much easier to retain a customer with a lucrative loyalty program.
    • Having a solid loyalty program gives you more customers to serve. 


Customer Loyalty Program worth checking out

  • Starbucks Loyalty Program
  • Amazon Prime Loyalty Program
  • Sephora’s Loyalty Program
  • Expedia Loyalty Program
  • Virgin Atlantic Loyalty Program
  • The North Face Loyalty Program
  • Chick-fil Loyalty Program
  • Dunkin Donuts Loyalty Program
  • Loyalty Program
  • Costa Coffee Loyalty Program

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Common types of Customer Loyalty Programs

1. Points Program

In this customer earns points & then redeems them for ‘in-store’ or ‘online’ purchases.


2. Tiered Loyalty Programs

Tiered Loyalty programs target affluent customers; whose spending amount is high. In this super premium benefits & commitments are given to high-class customers.


3. Perks Program

In the Perks Program, you encourage customers by offering a free lounge, free shipping, and goodies.


4. Coalition Loyalty Programs

The Coalition Loyalty Program allows customers to earn points at one retailer & redeem them with another, with specific terms & conditions.


5. Paid Loyalty Programs

In Paid Loyalty Programs, members purchase subscriptions & get various benefits.


6. Referral Loyalty Programs

As the name suggests, once you refer services of a brand to your family & friends, it is known as Referral Loyalty Plan.


7. Hybrid Loyalty Programs

The Hybrid Loyalty Program combines more than one type of loyalty program.


8. Cash-back Loyalty Programs

You get money back from your purchase in a Cash-back Loyalty Program.


How to measure Customer Loyalty?

1. NPS (Net Promoter Score)

Through the NPS tool, you can measure customer satisfaction & loyalty. It does not ask a list of questions but just an important question; 


How likely would you recommend our company to your family & friends?

On a scale of 0 to 10, the customer has to rate you on that question. 


These scores are categorized as follows-

Promotors 9-10

Passives 7-8

Detractors 0-6


NPS = % of Promoters – % of Detractors

Score < 50%= Great

Score < 70% =Excellent


It is a good practice as we can take feedback from detractors, take necessary action & convert them to promoters.


NPS is only sometimes accurate. For example, a customer might say they will refer but don’t. NPS is mainly to figure out how to increase your number of promoters.



2. RPR (Repeat Purchase Rate)

Through the RPR, you can increase revenue from existing customers and invest less cost in acquiring new customers. We will still focus on new customers.


The idea is to strategize; so that you don’t waste money on non-repeat customers. For example, you can calculate RPR by dividing the number of repeat customers by the total number of customers in a given period.


RPR = Repeat Customer / Total Customers


3. Upsell Ratio

Loyal customers will most likely purchase additional items from you in a given period. Therefore, Upsell ratio will help you measure the loyalty of a customer.


Upsell Ratio = Customers who bought more than one type of item/ Customers who bought one item


4. CLV (Customer Lifetime Value)

CLV is an estimated revenue that can be earned from future purchases by the customer. Therefore, a high CLV will give your good returns & relations.


Let’s find the lifetime value first to make it easy to calculate.

5. CLI (Customer Loyalty Index)

The CLI tool can help you track customer loyalty for extended periods. A survey is conducted considering NPS, upselling & repurchase also. 


The three essential questions to be addressed are-

  • How much would you recommend our company to your family & friends?
  • How likely are you open to buying from us again?
  • How comfortable are you trying our new products & services?


On a scale of 1 to 6, the customer has to rate you on these questions. 

1 means ‘very likely”, and 6 means ‘not possible.


Now to calculate CLI, you need to find an average of all 3 scores

CLI= Average of all 3 scores



6. CES (Customer Engagement Score)

Through CES, you get an indication of how engaged your customers are with your brand. In addition, each customer receives a score based on the usage of your products & services. 


To calculate the customer engagement score, you need to measure inputs like:


  • Activity time
  • Frequency of usage
  • Number of actions taken
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Few reasons why a Loyalty Program might fail?

  • The terms & conditions need to be clarified, restricting customers from using loyalty programs even if they want to.
  • The loyalty program is very complicated & time taking while redeeming.
  • The value of a loyalty program is unattractive.
  • Lack of awareness of loyalty programs is one of the reasons for its downfall.
  • Staff sometimes must explain the loyalty program to the customer correctly, and the customer hesitates to ask again.
  • It is missed to remind customers to use loyalty points or programs they are already eligible for.
  • Building an emotional connection is essential when offering any loyalty program by providing tangible goods.

How to design a Customer Loyalty Program?

1. Analyze your existing customers & find your target customers

  • How much does a particular customer purchase in a year?
  • What is the tenure of being our customer?
  • How much profit do we earn on their investment?
  • Can we upsell & cross-sell our products to these customers?
  • What is the frequency of customer purchases?
  • What kind of products do these customers buy?
  • Is the customer satisfied with our services?
  • Is there scope to improve business relations?



2. Develop your Customer Loyalty Program

Always analyze if launching a Loyalty Program will be successful or not. You can identify that by running surveys & feedback. 


It’s a good idea to train those employees who have patience & are good at handling customers. It is necessary to understand the target customers, frequent buyers.


Similarly, it is necessary to approach such customers who can make this loyalty program successful.



3. Measure & Manage through CRM

To make it more manageable & measure your goals use CRM to handle the program.



4. Decide a budget

You need to decide on a budget for customer acquisition. If putting on more money will retain your customers, you can slightly increase your budget.



5. Choose Loyalty encouraging tactics

Offer premium services to customers to increase their Loyalty to your brand. For example, you can offer reasonable discounts, and special services.



We’ve just discussed the benefits of Customer Loyalty Programs; it helps you understand how customers engage with your brand.

If you have happy and satisfied customers, they continue to buy from you, spend more than others, are less likely to leave, and are more likely to turn into effective marketers. 

They often become brand advocates without being paid for your company. 

While acquiring new customers costs more, they spend less money than loyal customers, so always keep Customer Loyalty on Priority.

Want to Save Time in your Business Launch?

  • How to Create a Business Plan
  • What is Market Research, USP, Niche & Positioning
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Handpicked inspirational Youtube videos for you

Customer loyalty programmes… why bother! : Lance Walker at TEDxTeAro – YT Channel ‘TEDx Talks’

10 Innovative Customer Loyalty Programs (And How To Start Yours) – YT Channel ‘Learn With Shopify’

Launch great products consistently.
Make a Customers Community.
Listen to Customer Feedback.
From time to time, offer little goodies or merchandise.
Personalize your Customer Service.

Whether the business is small or large, customer loyalty plays an important role. First, it is an essential strategy to retain customers. It is a lasting bond between you & your customer.

Rewards, Relevance, and Recognition are the 3 R’s of customer loyalty.

Customer Lifetime Value (CLV) measures the total amount of money a customer is expected to spend on your business. It is an elemental analysis that gives you an idea of how much to spend on new & existing customers.

Retaining your customers sustains your business up to 65-67%. New customers might take time to be consistent & give regular orders.

These days customers prefer those brands which can support them even after purchase. Therefore, any company with poor customer service cannot thrive.

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