There is no shortage of retail stores that are offering customer loyalty programs that claim to save consumers significant amounts of money on future purchases. Do customer loyalty programs really save consumers money? The answer to that question depends on the retailer, and often, the amount of effort the consumer is willing to put in for the sake of saving money on future purchases. Here is a look at whether or not customer loyalty programs are really worth the effort, and how much money one can expect to save by participating.

SEE: Maximize Your Rewards With A Few Credit Cards

How Are You Rewarded?
Customer loyalty programs reward consumers in a number of different ways. From accumulating points to earning dollars off future purchases, loyalty programs are put in place to increase customer loyalty to a specific store and encourage shoppers to shop more often.

How Often Are You Rewarded?
How often you are rewarded by a customer loyalty program varies depending on the store's policy and how much effort you put into the program. Most loyalty programs provide rewards that are "earned." Essentially your purchases will earn you points or discounts towards future purchases. If you frequent the store, you may be able to cash out rewards fairly quickly. However, if you only shop at this particular store every one in a while, it may not be worth signing up for a customer loyalty program.

Not All Customer Loyalty Programs Are Created Equal
While many retailers and restaurants offer customer loyalty programs, each one is as unique as the store that offers it. To truly understand what you are signing up for, it is advisable to read the fine print of the loyalty program contract. This document will explain how you are rewarded, how often you can cash out and whether there are program limitations. Prior to signing up, make sure you know what the program entails.

How Much Do You Really Save?

The amount of money you save depends on the store, and how frequently you shop at the store. One example of a popular customer reward program is CVS's Extra Care Rewards Program. This program offers a variety of savings and rewards including 2% rewards on general purchases, $1 back for every prescription you fill with CVS, coupons towards future products and more. Depending on how frequently you shop at the store, you can earn money back to use on future purchases. The question of how much depends on your shopping habits.

Is It Worth the Effort?
Whether or not a customer loyalty program is worth the effort is up for debate. If you sign up for a customer loyalty program at a store you shop at frequently, it is likely to be worth your while. However, if you sign up for a customer loyalty at a store you rarely frequent, it is more likely than not to be a waste of time and effort. Additionally, it's not advised that you sign up for a program where you have to spend more to save more. Sign up for a program that allows you to save money on your everyday essential items.

SEE: Reasons To Steer Clear Of Rewards Cards

The Bottom Line
Customer loyalty programs can save consumers a considerable amount of money if they are willing to put in the extra effort. It is beneficial for consumers to enroll in a customer loyalty program at stores they frequent, such as their local grocery stores. Keep in mind that many stores try to lure you into spending more money by promising high levels of consumer rewards. Don't fall prey. Enroll in customer loyalty programs at stores where you are likely to spend money on things you actually need. The only time loyalty programs will truly benefit your bottom line is if you are getting discounts on items you already buy, as opposed to frivolous items you may not have purchased otherwise.
Photo Courtesy of Ron Cogswell

Related Articles
  1. Credit & Loans

    Explaining Equated Monthly Installments

    An equated monthly installment is a fixed payment a borrower makes to a lender on the same date of each month.
  2. Professionals

    Prevent Employees From Hacking You Computer System

    Cyber security attacks from a current or ex-employee can cause a lot of pain. Here is how to avoid such attacks.
  3. Economics

    What Does a Relationship Manager Do?

    A firm’s relationship manager works to maintain positive relationships with its customers and partner firms.
  4. Professionals

    Small Business: Minimize Your Credit Card Fees

    Accepting credit cards is a must these days, but small business owners can take steps to minimize profit-eating credit card fees.
  5. Personal Finance

    How Sending Money on Gmail Works

    Learn how sending money via Gmail works, and understand how Google makes money from offering this service despite it being free to use.
  6. Credit & Loans

    Does a Lost or Stolen Credit Card Hurt Your Credit Score?

    Learn the ways in which a lost or stolen credit card can hurt your credit, and understand the steps you can take to protect yourself if this happens.
  7. Personal Finance

    Mobile Payments in 2015: When Will Cash Be Obsolete?

    A wave of new mobile payment technology is setting the stage for a revolution in how we buy in stores.
  8. Investing

    Debit or Credit Card: Which to Use for Car Rentals

    Before you rent your next car, think twice about purchasing the added insurance if you're using a credit card.
  9. Credit & Loans

    5 Surprising Things That Will Hurt Your Credit Score

    Here are five ways that you can damage your credit score without even knowing it.
  10. Economics

    What Happens in a Default?

    Borrowers are in default when they don’t honor a debt, whether their failure is intentional or not.
  1. What is the difference between "closed end credit" and a "line of credit?"

    Depending on the need, an individual or business may take out a form of credit that is either open- or closed-ended. While ... Read Full Answer >>
  2. What are key factors that are generally considered in demographic studies conducted ...

    Key demographic factors that a company might examine to assess a potential market and more effectively target potential customers ... Read Full Answer >>
  3. What is the best way to start to rebuild your credit after a bankruptcy?

    Bankruptcies can be devastating to your credit score. Even worse, a bankruptcy will be listed on your credit report for between ... Read Full Answer >>
  4. Is good customer service something to look for in a company in which I am considering ...

    Investors should consider good customer service before buying a stock especially in consumer-oriented sectors. Customer service ... Read Full Answer >>
  5. What were the primary financial crimes involved in the ZZZZ Best case?

    ZZZZ Best was a company started by Barry Jay Minkow that claimed to be a carpet cleaning business. In fact, it was a Ponzi ... Read Full Answer >>
  6. Can a creditor sue me for a delinquent account?

    If a credit card account becomes delinquent, the creditor can sue the debtor for the balance as soon as the delinquency occurs. ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!