It's a fair question, and one worth answering honestly rather than with a sales pitch. Loyalty programs are everywhere, which doesn't automatically mean they work — plenty of businesses run one badly and see nothing from it. So what does the actual research say, separate from what loyalty software companies claim?
The short answer: yes, but conditionally
Academic research on this goes back decades, and the consistent finding is that loyalty programs do change customer behaviour — but the effect depends heavily on how the program is designed, not just whether one exists. A badly designed program can genuinely do nothing.
What a well-known study actually found
One of the most cited pieces of research here is Taylor and Neslin's 2005 study, which separated loyalty program effects into two distinct mechanisms. The first is what they called the "points pressure" effect — customers spend more as they get closer to a reward threshold, wanting to reach it. In their supermarket study, this produced a measurable storewide sales increase during the eight-week program period.
Source: Taylor & Neslin (2005), referenced in a research review by Loyalty & Reward Co.
The second finding is arguably more useful for a small business: the effect wasn't evenly spread across all customers. It was strongest among light and moderate buyers — the customers who sometimes come to your shop, not the ones who were already coming every day regardless. Your most loyal regulars don't need convincing. The person who visits every couple of weeks and could easily go somewhere else instead is exactly who a loyalty program is built to influence.
Why retention matters even before the loyalty program
Separately from loyalty program design specifically, there's well-established research on retention economics more broadly — commonly cited work from Bain & Company has found that keeping an existing customer is typically far cheaper than acquiring a new one, and that even small improvements in retention can have an outsized effect on profit. This is really the underlying reason loyalty programs exist in the first place: the fifth visit is worth more to a business than the first one, so anything that nudges a customer toward a fifth visit is doing real economic work.
When it's more likely to work
- The reward is genuinely achievable. A threshold that feels realistic within a few weeks keeps the "points pressure" effect alive. One that takes months feels abstract and gets ignored.
- The rule is simple enough to explain in one sentence. Complexity is one of the most common reasons a program quietly stops being used by staff and customers alike.
- Progress is visible. Customers who can see "3 more visits to go" respond to that in a way an invisible points balance doesn't achieve.
- It targets the right customers. A loyalty program does the most work on the customer who sometimes comes back — not the one who was never going to return anyway, or the one who was always going to be a regular.
When it probably won't
If the product or service itself isn't something people want to repeat, no reward structure fixes that. If the rule is confusing, or redemption is a hassle, the program adds friction instead of removing it. And if it's the only lever being pulled — no visible progress, no simple rule, just "sign up for points" — it tends to underperform the same idea done properly.
Where Primo fits into this
This is exactly the reasoning behind how Primo Rewards is built — a simple stamp-based reward, visible progress on the customer's phone, and a threshold a shop can set at whatever feels genuinely reachable for their business. It's designed around the conditions the research actually points to, not around looking sophisticated.