A loyalty programme is a system that rewards a customer for repeat purchases: bonus points, cashback, a discount or a special privilege. Its purpose is simple: the next time, the customer comes to you and not to a competitor. A well-built programme also lets you get to know the customer: who buys what, and when.
Key takeaways:
- A loyalty programme does two jobs: it increases repeat purchases and it collects information about the customer.
- The main types: bonus points, cashback, discount card, tiered programme, stamp card and referral programme.
- The plastic card is increasingly being replaced by a phone number, a digital card and a mobile app.
- The cost of the programme must be calculated in advance: the bonus percentage comes out of the margin, and the programme must pay for itself with additional sales.
- A programme that is not connected to a CRM is just a discount; the value comes from using the data collected.
What is a loyalty programme?
A loyalty programme is a simple agreement between the customer and the business: the customer identifies themselves and comes back, and the business gives them a benefit in return. Its most familiar form is the bonus card: points are earned on every purchase, and the accumulated points are used to pay for part of the next purchase.
Two things set a programme apart from an ordinary discount:
- The reward is tied to a future purchase. A discount makes today's sale cheaper; a bonus encourages the customer to come back.
- The customer is identified. With a discount you do not know who is buying; in a programme every purchase is recorded in a specific customer's history.
What does a loyalty programme give a business?
A loyalty programme helps existing customers come back more often and spend more each time. Attracting a new customer requires ad spend, while bringing back an existing customer is usually cheaper.
Treat the figures with care, because the original source of the statistics most often repeated on this subject is usually not given. Two open sources: according to an article published in Harvard Business Review, acquiring a new customer can cost 5–25 times more than retaining an existing one (HBR). In the 2026 report of the loyalty platform Antavo, 92.7% of programme owners said they had earned a positive return (Antavo); note that this is the vendor company's own survey and is based on the participants' own assessments.
Four benefits of a programme:
- Repeat purchases. A customer with accumulated points chooses you for the next purchase.
- Average order value. Offers such as "Spend another 10 AZN (manat) and get double bonus points" make the basket bigger.
- Customer data. Purchase history shows what to offer to whom.
- A direct communication channel. Sending a message to a customer who has given consent requires no ad budget.
What types of loyalty programme are there?
| Type | How it works | Who it suits |
|---|---|---|
| Bonus points | Points are earned on every purchase and spent on later purchases | Retail, restaurants, pharmacies, fuel |
| Cashback | A share of the purchase amount is returned as money or points | Online stores, chains |
| Discount card | The cardholder gets a fixed discount | Small shops, service businesses |
| Tiered programme | Status and privileges grow as spending grows: silver, gold, platinum | Premium brands, airlines, hotels |
| Stamp card | "Buy 9 coffees, get the 10th free" | Cafes, barbers, car washes |
| Paid membership | The customer pays a subscription fee and gets free delivery and special prices | Online stores with frequent purchases |
| Referral programme | A customer who brings a friend, and the friend, get a bonus | Services, education, apps |
For a small business, the simplest start is a stamp card or a points system. A tiered programme makes sense only when the customer base is large and purchases are frequent.
How do loyalty programmes work in Azerbaijan?
In Azerbaijan, large chains have moved from plastic cards to apps. A few examples, as described on the companies' own pages (this is not a ranking):
| Programme | How it works | Medium |
|---|---|---|
| Bir Bonus (formerly Umico Bonus) | Bonuses are earned by showing the barcode at partner tills and by paying in the ecosystem's apps; conversion rate: 1 bonus = 0.5 AZN | App |
| Araz | 2% cashback on every purchase of 10 AZN; cashback not used for 3 months is deleted from the balance | App |
| OBA Plus | 1 "OBİ" on a purchase of at least 5 AZN; every 5 OBİ convert into 1 bonus; at most 6 bonuses per month | App |
| Bazarstore SuperKart | A phone number is registered to earn bonuses; the bonus is used instead of money on the next purchase | Plastic card, app and website |
Three lessons come out of these examples. All of them try to identify the customer: no bonus is credited without the app or a phone number. The rules fit into a single sentence. The bonus has an expiry and a limit: unused cashback is deleted and the monthly bonus is capped.
Plastic card, phone number, digital card or app?
The programme's "medium", that is, how the customer identifies themselves at the till, is a separate decision:
| Medium | Advantage | Limitation | Who it suits |
|---|---|---|---|
| Plastic card | Familiar and simple | Gets forgotten, lost, costs money to print, gives no contact channel | Older audience, simple discount |
| Phone number | No card needed: the number is said at the till | Takes time at the till, needs a verification mechanism | The cheapest start for small and medium-sized businesses |
| Digital card (in the phone's wallet) | Always on the phone, no app to download | Limited functions | Cafes, salons, small chains |
| Mobile app | Balance, personal offers, notifications and online ordering in one place | More expensive to build and support | A large base with frequent purchases |
A separate app is not required for a digital card. Apple Wallet and Google Wallet support loyalty cards (Apple, Google), and Google Wallet is officially available in Azerbaijan (Google Wallet Help). Such a card can be issued through ready-made services.
An app pays for itself when customers find reasons to open it often: to check the balance, place an order, make a reservation. Few people download an app that shows only a bonus balance. We have explained when an app is needed in the article what is a mobile app.
How do you set up a loyalty programme?
- Write the goal as a number. "Raise regular customers' average number of visits per month from 2 to 3" or "increase the average order value by 10%".
- Know your numbers. Average order value, margin, how many times a customer comes back. Without these, choosing the bonus percentage is guesswork.
- Choose the mechanic. One simple rule: "5% bonus on every purchase". The customer should understand the rule at the till within five seconds.
- Write down the rules. When the bonus is credited, when it expires, what percentage of a purchase can be paid with bonuses, whether it applies to discounted goods.
- Choose the medium and the system. A till software module, a ready-made loyalty service or your own system. The key requirement: data must flow automatically from the till into the CRM.
- Train the team. The cashier sells the programme. They must know how to offer it to every customer in one sentence.
- Measure. Share of members, repeat purchase frequency, average order value of members and non-members, percentage of bonuses spent.
Ready-made services vary in price: for example, the local LoyalX shows plans from 69 AZN per month, and the international Loopy Loyalty shows plans starting from $25 per month (LoyalX, Loopy Loyalty). If your till software has its own loyalty module, look at it first: connecting a separate system to the till takes extra work.
How is the cost of the programme calculated?
A bonus is not free: it is paid out of your margin. Before launching the programme, do a simple calculation.
Formula: monthly cost = members' turnover × bonus percentage × share of bonuses spent + the system's monthly fee.
Example. A cafe's programme members spend 20,000 AZN a month, the bonus is 5%, and 70% of the bonuses credited are spent:
- Bonus credited: 20,000 × 5% = 1,000 AZN.
- Actual cost: 1,000 × 70% = 700 AZN.
- If the margin is 40%, covering this cost requires 1,750 AZN of additional sales a month (700 ÷ 0.4).
In other words, if the programme does not raise members' turnover by about 9%, it does not pay for itself. This calculation also shows how to choose the bonus percentage: a shop with a 15% margin cannot give a 10% bonus, but a service with a 60% margin can.
Two more rules:
- Set a limit on payment with bonuses. For example, at most 30% of a purchase can be paid with bonuses.
- Give the bonus an expiry. Bonuses with no time limit pile up over the years and become a liability in the accounts. Tell the customer the expiry date in advance.
How does a loyalty programme connect with CRM and marketing?
The real value of the programme lies in using the data collected. When purchases at the till are recorded on the customer's card in the CRM, it becomes possible to divide customers into groups and send each group a different offer:
| Group | Sign | What to do |
|---|---|---|
| New | Has made their first purchase | A short-term bonus for a second purchase |
| Active | Comes regularly | News, offers that raise the average order value |
| VIP | The top 5–10% by spend | Personal offers, early access to sales |
| Lapsed | Has not visited for 60–90 days | A "We're waiting for you" message and a reminder of the bonus expiry date |
| Birthday | It is their birthday this month | A gift bonus |
These messages cannot be sent by hand; they must run automatically. We have explained how a CRM is set up in the article what is a CRM, and the automation of messages in the guide how to set up WhatsApp automation.
What should you watch out for when collecting customer data?
A loyalty programme collects name, telephone number, birthday and purchase history, that is, it works with personal data. Under the Law "On Personal Data", such data is collected and processed with the person's written consent or on the basis of information the person has provided in writing themselves; proving that consent was obtained is the duty of whoever collects the data (Articles 8.1 and 8.4). A person may object to the processing of their data, in which case processing must be stopped immediately (Article 7.2). The law also provides for state registration of personal data information systems (Article 15) (e-qanun.az).
Practical rules:
- Obtain consent openly. At registration the customer should see what their data is being collected for and should give separate consent to advertising messages.
- Collect only what you need. Do not ask for data you will not use: every extra field reduces registrations.
- Make opting out easy. Every message must show how to unsubscribe.
- Protect the data. The customer base should not be passed around from hand to hand in an Excel file.
This article is not legal advice; confirm the rules and the consent text with a lawyer.
What are the most common mistakes in loyalty programmes?
- Complicated rules. If the customer does not understand how bonus points are calculated, they do not use the programme.
- A bonus percentage without calculation. Giving 10% because a competitor gives 10% can bring your margin down to zero.
- A reward that is out of reach. A customer who makes purchases for a year and earns one coffee loses trust in the programme.
- Not using the data. The base is collected, but no personal offer is ever sent.
- The cashier not offering it. A team that does not know the programme does not sell it.
- The same message to everyone. A VIP customer and a one-time customer receive the same text.
- Not measuring. It is not known whether the programme has raised sales.
How does Advertol approach loyalty systems?
A loyalty programme is a combination of three parts: the card or app the customer sees, the CRM behind it and the messages that bring the customer back. Advertol is an agency based in Baku: website and mobile app development, Meta and Google advertising, SMM, CRM and AI (artificial intelligence) automation are handled by one team, so these three parts can be built under a single plan.
For the CRM side, an example is the Momento Travel project: enquiries coming from several WhatsApp numbers, Instagram and Facebook are collected in one dashboard, and messages and reminders tied to the travel date are sent automatically. App and personal account projects are carried out within the website and app development service.
Frequently asked questions
Does a small business need a loyalty programme?
If customers come back to you again and again, yes: a cafe, salon, pharmacy, car wash. An app is not required for this; a simple bonus system based on a phone number, or a stamp card, is enough. For products bought once a year, though, a programme works poorly.
What should the bonus percentage be?
There is no fixed answer: the percentage depends on the margin. First calculate the programme's monthly cost and the additional sales needed to cover it. Many retail programmes operate at a few percent; for high-margin services the percentage can be higher.
Bonus or discount: which is better?
A bonus ties the customer to coming back, while a discount gives a benefit immediately but gives no reason for the next visit. Part of the bonus is never spent, so it is usually more profitable for the business. A discount, however, is the easiest mechanic to understand.
Is a mobile app required for a loyalty programme?
No. You can start with a phone number or a digital card in the phone's wallet. An app pays for itself when the customer base grows and extra functions such as online ordering and reservations are needed.
Can I drop the plastic card?
Many businesses already do: the customer says their phone number at the till or shows the card on their phone. If part of your audience uses smartphones little, you can keep both options during the transition period.
How do I know whether the programme works?
Compare members with non-members: visit frequency, average order value and monthly spend. Then subtract the cost of the programme. If members' additional revenue is greater than the bonus cost and the system fee, the programme works.
Conclusion
A loyalty programme is a system that increases repeat purchases and lets you get to know the customer. Start with a simple mechanic, calculate the bonus percentage against your margin, choose the medium to suit your audience and connect the programme to a CRM. A programme that does not use data is no different from a discount; a programme that sends personal offers brings the customer back.
If you want to discuss how to set up a loyalty system, an app or a CRM for your business, book a free strategy meeting or write to the Advertol team.
Sources
- Harvard Business Review — The Value of Keeping the Right Customers, 29.10.2014
- Antavo — Global Customer Loyalty Report 2026, 03.02.2026
- Birbank — Bir Bonus
- Araz — the Araz app
- OBA — Collect OBİ, earn bonuses
- Bazarstore — SuperKart
- Apple — Wallet
- Google Wallet — Loyalty cards
- Google Wallet Help — availability by country
- LoyalX — pricing
- Loopy Loyalty — pricing
- Law "On Personal Data", 11.05.2010, No. 998-IIIQ