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Loyalty Rewards Program: Key Learning from 5 Industry Giants with Case Studies and Examples

Loyalty rewards program incentivizes repeat purchases. The program translates to increased sales and a more predictable revenue stream.

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Ever wondered how a company like LEGO , the world's largest toy manufacturer, came out on top in the era of the internet and the time when virtual recreational activities have taken over?

One answer: Customer loyalty reward program. In the early 2000s, LEGO faced financial difficulty due to video games and the internet which pushed the company to the brink of bankruptcy . However, LEGO staged a remarkable comeback, as it surpassed Mattel to become the world's leading toymaker by embracing its customer base.

For over 75 years, the company designed toys with minimal customer input. This approach needed an overhaul. Over the past decade, LEGO learned the value of collaboration and began building a strong relationship with its fan community. The traditional model of companies controlling customer interactions was fading. Today, interactions happen in a variety of online spaces: Twitch streams, social media groups, and online forums. LEGO recognized that this shift was crucial to LEGO's success. 

In 2008, LEGO launched a revolutionary platform called "LEGO Ideas." This platform empowered fans by allowing them to submit concepts for new LEGO sets. Other fans could then vote on these ideas, with the most popular ones receiving a review by LEGO staff. Winning concepts were transformed into official LEGO sets, with the fan designer receiving 1% royalty. 

"LEGO Ideas" has seen tremendous growth. The platform boasts over a million users, with a staggering 26,000 submitted ideas. This collaboration has resulted in the creation of 28 unique sets, including a set honoring the "Women of NASA" and a playable LEGO piano. Through "LEGO Ideas," the company transitioned from simply building toys for customers to building them with an engaged and passionate community. 

One can say that by fostering genuine connections and empowering passionate individuals, companies can build thriving communities that will contribute to their long-term success. Therefore, in this blog, we will share our tips on how to build customer loyalty by learning from the biggest enterprises. 

What is a loyalty rewards program? 

A customer loyalty program refers to a marketing approach that recognizes the efforts of customers and rewards their continuous preference for their brand over competitors. This strategy encourages customers to keep coming back as these programs typically dole out points, discounts, or other special perks to customers for making repeat purchases.  

The more a customer spends or the more frequently they shop, the more rewards they earn. Although this strategy might make many wary, there is a psychological allure that rewards have which makes such programs worth the investment.  

With psychologist Norbert Schwarz revealing that even a small gesture, like a 10-cent reward, can create a sense of obligation (reciprocity) between people, a company can implement these programs without significant expense. To corroborate this, an Accenture study has revealed that customers enrolled in loyalty programs tend to spend up to 18% more compared to non-members. 

If done right, a customer reward loyalty program can easily: 

• Retain customers as these shoppers make purchases based not on just the price points, but the shared values, engagement, and the overall experience they have had of your brand. 
• Gain more referrals. If your customers are enjoying your brand, they will talk about you to their friends and family.  
• Be cost-effective. According to Harvard Business Review , it is 5 to 25 times more expensive to acquire a new customer. However, 65% of the business is driven by repeat customers. 
• Get authentic content that works as your products' testimonials and instill trust. They will ultimately be the ambassadors for your brand. 

Let’s go through some mind-blowing facts about customer loyalty programs. 

Doing your due diligence for customers incorporating a customer reward loyalty program will determine multiple aspects of your business, including the retention rate, and CAC. However, to gauge the loyalty of a customer, you can choose to implement multiple ways. Let's discuss the different types of customer reward loyalty programs that you can run. 

Types of loyalty reward programs

Loyalty rewards programs encourage customers to return and make repeat purchases. These programs offer various rewards for customer engagement and generate brand loyalty. Here's a breakdown of some popular loyalty program structures: 

1. Points-based programs

Customers earn points for actions like purchases, reviews, or referrals. These points can be redeemed for discounts, free products, or exclusive experiences.  

2. Value-based programs

Rewards are personalized based on a customer's past purchases and preferences. This fosters a sense of exclusivity and caters to individual needs.  

3. Tiered programs

Customers progress through tiers based on their spending or engagement. Higher tiers unlock increased benefits like exclusive discounts, priority access to new products, or personalized customer service.  

4. Subscription-based programs

Customers pay a subscription fee for ongoing benefits. This can include free shipping, access to exclusive products, or early access to sales.  

These programs are important because they: 

• Increase customer retention. 
• Boost customer engagement. 
• Gather valuable customer data.  

Let us share with you five case studies to showcase how a customer loyalty rewards program has the mettle to alter the course of your business.  

Case studies

Following are five case studies on which we will base our key findings on customer loyalty rewards programs.

1. Starbucks reported a substantial 7% increase in sales with three major loyalty programs 

Starbucks is a well-known and successful beverage brand around the world. While their delicious drinks are a factor, a major reason for their popularity is their loyalty program. However, Starbucks, amidst stark competition, wanted to drive customer loyalty and spending. Moreover, Starbucks aimed to create a more engaging experience that goes beyond just a cup of coffee. So, the beverage mammoth implemented three customer loyalty rewards programs to enhance the overall Starbucks experience. 

The Starbucks loyalty programs began on December 26th, 2009. There were three loyalty programs driven toward one single aim: to increase sales, improve retention rate, and significantly redefine the customer experience at every given touch point. Let's stretch more on how each type of retention tactic worked out for Starbucks.  

Earning Stars: Starbucks Rewards used a tiered system to award Stars, their points currency. Members earn Stars for purchases made with a registered Starbucks Card or the mobile app. The program encourages different ways to participate, creating a more rewarding experience for customers. Through this campaign, you, 

• Earn 1 Star for every $1 spent when paying with cash, credit, or debit cards. 
• Earn 2 Stars for every $1 spent when using a preloaded digital Starbucks Card. 
• Earn bonus Stars through special promotions and offers. 
• Earn double Stars on certain travel days and promotional days.

Redeeming Stars: Stars can be redeemed for various rewards at different levels. This structure caters to individual preferences, allowing customers to choose between smaller, immediate rewards or save Stars for more valuable items. This program allowed its customers to:

• Redeem 25 Stars for a free drink customization, like an extra shot of espresso or a different type of milk. 
• Redeem 50 Stars for a complimentary hot beverage, tea, or a bakery item. 
• Redeem 150 Stars for a handcrafted drink, hot breakfast sandwich, or parfait. 
• Redeem 200 Stars for a lunch item, such as a salad, sandwich, or protein box. 
• Redeem 400 Stars for packaged coffee beans or select Starbucks merchandise.

Coalition Loyalty: Starbucks and Delta Airlines partnered to offer combined benefits for frequent flyers and coffee lovers. It was a rather strategic yet refreshing take on loyalty schemes as they linked the Delta SkyMiles® and Starbucks® Rewards accounts of the customers. This allowed them to earn Stars and miles simultaneously and unlock exclusive perks. The Coalition loyalty allowed the customers to:

• Earn double Stars on days you travel with Delta. 
• Earn 1 mile per $1 spent at Starbucks when you link your accounts. 
• Gain access to special offers for earning additional Stars and miles.

It was a wide-out customer loyalty program designed by Starbucks to gather customer data and leverage that data to turn it into a strategy. As a result,  

• These customer loyalty programs amassed over 30 million active members 
• The reward loyalty rewards program contributed to nearly 60% of the brand's total revenue.  
• Starbucks reported a substantial 7% increase in sales primarily attributed to the efficacy of its rewards program.

2. Costco’s net sales increased by 9.7% to $138.4 billion owing to its revolutionary membership program 

Costco is one of the most influential multinational retailers which has a record of 94 million Costco membership cards worldwide. However, the wide network of people preferring Costco over other retailers isn't the reason why it is influential. It is because of its unique business model and operational philosophy.  

The company operates an international chain of membership warehouses under the "Costco Wholesale" name. What is more scintillating is that it offers quality, brand-name merchandise at lower prices than conventional retail sources. This factor has led many to turn to Costco.

The membership plan turns enthusiasts into fans

To ensure that Costco remains a fan-favorite amidst the growing competition, Costco implemented a unique membership loyalty model. Costco's membership-based approach fosters customer loyalty and repeat business. The company offers three types of memberships - Executive, Business, and Gold Star. Each membership has various benefits and discounts. 

This strategy focuses on retaining members and driving sales through exclusive offers and services. Moreover, this membership enthusiasm extended to social media platforms which Costco leverages fully to keep the customers hooked. It has dedicated Instagram accounts like @costcodeals and websites like CostcoInsider.com. 

The reach of Costco's influence goes beyond shopping, becoming a travel destination for some fans, with one visiting 70 stores, and even a wedding venue for at least one couple.  This level of devotion to a grocery store might seem unusual to some, but not to Costco shoppers.

Costco Membership is 'THE STRATEGIC PLAN' your company needs

Costco creates a deliberate strategy to cultivate loyal customers. One key element is the membership fee.  Costco requires customers to pay an annual membership fee to shop at their stores. This fee creates a sense of exclusivity. Customers feel they are part of a special group with access to unique benefits.

There's also a psychological aspect at play.  Since the membership fee is already paid which is a sunk cost, members feel motivated to get their money's worth by shopping at Costco frequently and buying more items each time.

This is according to a study on club shopping by Kusum Ailawadi. Costco's strategy is effective.  The company boasts a high membership renewal rate and many paying members. So, as a result, it has a very loyal customer base.

Costco offers the best value to members by selling high-quality items at low prices and providing excellent service. They carefully select top-notch products and negotiate with suppliers for savings passed on to members.

Popular examples include their $4.99 rotisserie chicken and $29.99 sheet cake. Costco prioritizes low prices over maximizing profits, and its generous return policy reflects its commitment to customer satisfaction.

The commitment pays off

Several factors contribute to Costco's success. 

• Customers appreciate the enjoyable shopping experience, the value they receive for their money, and the bulk-buying options.   
• Membership fees became another source of revenue for Costco 
• Costco's financial performance in fiscal year 2018 was strong.  
• Net sales increased by 9.7% to $138.4 billion. 
• Membership fee revenue grew by 10.1% to $3.1 billion, and profits rose by 17% to $3.1 billion, according to the company's annual report . 

 3. Lego records a staggering 3,280% rise in loyalty transactions after implementing its own loyalty program

Lego , a well-known and beloved toy company, has always found success with its innovative and fun products for all ages. However, in today's competitive business environment, having strong customer relationships is essential.  According to a Salesforce study , many customers appreciate personalized offers and rewards programs. 

LEGO not only understood that it had to change its retention tactics but required new ways to significantly increase revenue and strengthen customer relationships. So, to cultivate lasting customer loyalty in a competitive marketplace, Lego decided to create its own loyalty program. 

A tailored loyalty program drawn carefully to drive results

Lego decided to create a loyalty program to encourage customers to keep coming back. They partnered with ZAP, a company that specializes in creating loyalty programs for other businesses. The tailored LEGO loyalty rewards program offered benefits such as points and exclusive discounts for members. 

The program was easy to integrate with LEGO's existing operations and provided full control over branding and customer experience. This allowed Lego to maintain control over the program's design and keep its brand at the forefront of all customer interactions.

ZAP also helped Lego integrate the program with their existing systems quickly and efficiently, reducing costs and ensuring a speedy launch. This resulted in a program that customers were excited to join. 

  Astonishing results

LEGO's loyalty program achieved remarkable results within its first year. 

• The number of customer visits increased by 3,691% 
• New members joined at a rate of 2,310% higher 
• The value of loyalty transactions rose by a staggering 3,280%.

4. The Prime Effect: Amazon converts 72% of trial users to paid users using a unique loyalty program 

Introduced in 2005 as a paid subscription service offered by Amazon, Amazon Prime has become one of the most sought-after services worldwide. It has reached over 200 million subscribers worldwide by 2021, with its constantly expanding features. Prime members get to access a range of perks that cater to different needs and preferences of the consumer. 

Their benefits start from free and fast shipping, and access to streaming services like Prime Video and Prime Music, to exclusive deals, and more. Amazon Prime has become a highly successful loyalty program in recent years, even without relying on points or basic predictions of customer behavior. This case study explores how Amazon Prime has managed to garner the attention of millions, and exceptionally, retained its consumers through the market shift. 

The Problem

Although a favorite in the market, Amazon recognized significant hurdles for customers completing purchases. Their analysis revealed the slow shipping speeds and minimum order amounts for free shipping to be the source of the problem. Understanding the impact of the loyalty program, they set out to implement one without including the traditional approach. As there are already too many customer loyalty reward programs with points and rewards, Amazon knew people wanted real benefits now, not something they had to wait for, so they looked for a different solution.

So, they developed a paid yearly membership, Amazon Prime, which directly addressed customer pain points by providing fast and free shipping on eligible items. This eliminated the need to worry about minimum order amounts or waiting for deliveries. In essence, Prime offered immediate and tangible value to customers, bypassing the drawbacks of programs that relied on points and delayed gratification.

Solution Amazon sought

Amazon Prime understands that customers want fast and convenient shopping.  To address this, they created a membership program that offers fast, free shipping and exclusive benefits like early access to deals and new products. Prime members benefit from fast, free shipping on their purchases. It eliminates a major hurdle in the online shopping process.  This focus on convenience extends beyond delivery speeds, as Prime also grants exclusive access to deals and new products before they hit the general market.

Prime membership also allows the consumer a library of streaming videos as it provides entertainment for members while simultaneously generating valuable data for Amazon to use in future content development. This creates a win-win scenario: members gain access to a vast content library, and Amazon gathers insights to refine its offerings.

Astonishing results

Unlike programs that rely on cash-back rewards, Prime focuses on providing a better customer experience. This strategy has paid off in spades as Amazon noticed:

• Rapid adoption rate, with 40% in subscriptions year on year even though the loyalty program is nearly 12 years old.  
• In 2020, Amazon reported that its global Prime membership base had grown to 200 million , up from 150 million at the end of 2019. 
• There were about 167 million Amazon Prime subscribers in the United States in 2023, and around 71% of U.S. Amazon shoppers were Prime members that year.  
• In Q1 2023, 72% of Amazon Prime trial users converted to paid subscribers, up from 67% in Q1 2022.  
• The same study shows, 97% and 99% of members renewed their memberships for the first and second years, respectively.

This shows that many people find Amazon Prime to be a valuable service. 

5. Sephora records industry-leading 6% rise in the Client Loyalty Index with new CLI in place 

Sephora is a widely recognized cosmetics retailer. It is renowned for its cutting-edge products and unwavering commitment to customer satisfaction. However, to stand apart from its competitors, Sephora implemented a customer feedback program. This initiative reflects Sephora's dedication to continuous improvement. Moreover, it ensures that their already exceptional customer experience remains at the forefront of the industry.

Problem with the existing system

Management required a clear view of customer experiences at individual stores to pinpoint areas for improvement.  However, the lack of a user-friendly system led to employee disengagement with customer feedback. Additionally, there was no existing system to gather customer insights on new products and initiatives.

CLI as a Solution

Sephora uses a metric called the Client Loyalty Index (CLI) to gauge customer loyalty. To improve this score, Sephora implemented a comprehensive customer feedback program. This program aimed to give managers a clearer understanding of customer experiences at individual stores, pinpoint areas needing improvement, and train employees more effectively. Sephora sought a flexible solution that would not only uncover potential new products and retail strategies but also allow them to track the effectiveness of their innovations. As a result: 

• They enabled a user-friendly interface with customizable dashboards.  
• Access real-time data analysis that allows Sephora to swiftly test and implement initiatives and products. 

Result tracked

Sephora's focused on enhancing the customer experience and it paid off tremendously:

• Since its launch in 2008, the company has observed continuous improvement across nearly all customer experience metrics.  
• They noticed a significant increase in customer loyalty, a 6% rise in the Client Loyalty Index. 
• The average user logs in two to three times more compared to before. 
• Sephora now rapidly evaluates new ideas by gathering customer feedback in real-time. 

Key Learning on how to hack the loyalty reward program

Based on our review of successful loyalty programs from various industries, let's explore the key learnings that we can incorporate into our program design. 

1. From Starbucks, we learned to 

• Incentivize the customers via rewards and loyalty points 
• Leverage multiple communication channels including a dedicated landing page, mobile app, emails, blogs, and social media to ensure widespread awareness and engagement. 
• Maintain consistent updates and transparency in front of the consumers 
• Consider going into a coalition loyalty program to expand the program's reach. It creates a more integrated customer experience. 

2. From Costco, we learned to 

• Offer high-quality products at low prices would prompt customers to choose Costco over other retailers. 
• Consider including an enjoyable shopping experience, bulk-buying options, and a generous return policy. 

3.  From Lego, we learned to 

• Offer tailored loyalty programs that offer rewards tailored to individual customer preferences can be even more effective. For such an instance, you can choose Giift's GiiftStudio empowers businesses to create personalized and interactive experiences that keep customers actively engaged and loyal. 
• Have control over brand experience. Ensure a consistent customer experience that aligns with their brand identity. 
• Keep tracking the metrics to measure the success of your loyalty programs. Analyse, adapt, and change accordingly. 

4. From Amazon, we learned to 

• Understand the customer's pain points and provide immediate and tangible value. 
• Leverage the data curated from the analysis to optimize the search engine for a better customer experience. 
• Provide a better customer experience by offering what the customers desire to enhance the overall shopping process. 
• Provide solutions that offer immediate value and convenience. 

5. From Sephora, we learned to 

• Consider implementing a well-designed customer feedback program as it can go a long way.  
• Get valuable insights into customer needs and pain points to identify areas for improvement and develop ideas.  
• Have a user-friendly system.  When customers find it easy to collect and analyze feedback, they're more likely to be engaged in the process. 
• Have an agile system in place. Sephora implemented their personal CLI to get real-time data. Getting real-time data analysis allows businesses to quickly adapt and implement changes based on customer feedback. This agility is crucial for staying ahead of the competition. Consider Giift for real-time data analysis. Giift's loyalty software provides comprehensive data analytics and reporting capabilities. Businesses can gain insights into customer behavior, purchase patterns, and program effectiveness.  

These data-driven insights help refine strategies, optimize the customer experience, and make informed decisions to boost sales and brand value. 

Customer loyalty rewards programs can encourage repeat business and boost customer engagement. By rewarding customers, businesses incentivize them to return and become more invested in the brand. This can lead to increased sales, customer lifetime value, and valuable data collection for marketing purposes. Implement a loyalty reward program to differentiate your business from competitors and show appreciation to customers.

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21 examples of successful loyalty programs — and what makes them work

Done right, loyalty programs are a uniquely effective way to improve customer retention. Research from Accenture found that loyalty program members drive between 12 and 18% revenue growth each year.

There are countless examples of brands that have seen big results. Although many of them make it look easy, their success is down to a keen understanding of what makes their customer tick, and, by extension, what kind of loyalty program will resonate.

It’s not a one-size-fits-all approach, and the options for structuring loyalty offerings are ever more varied. The humble loyalty card is still often effective, but online loyalty programs present innovative and intricate ways to encourage and track loyal customer behavior.

So let’s dig beneath the shiny numbers of some of the world’s most successful loyalty programs and see what makes them work.

Examples we’ve used:

1. Sephora’s “Beauty Insider Program” 2. “LEGO Insiders” 3. Barnes & Noble 4. TheCHIVE 5. Astrid & Miyu’s “Astrid & You” 6. Amazon Prime 7. Lively 8. Pulse Boutique’s “Pulse Perks” 9. Annmarie’s “Wild and Beautiful Collective” 10. Pacifica Beauty 11. Mirenesse 12. REI’s “Co-op membership” 13. The North Face’s “XPLR Pass” 14. Lucy and Yak 15. Waterdrop 16. Nicce Clothing 17. Eat Bobo’s 18. MoxieLash Insider 19. 100% Pure 20. Spoiled Mama 21. Dr. Axe

The four main types of loyalty program (and examples of each)

There are four main kinds of loyalty program:

– Points-based – Value-based – Tiered – Subscription-based

Each has been used to great effect. Here’s why the best have succeeded (and why others might fail).

Points-based (“earn and burn”)

Points-based loyalty programs reward customers with points for purchases, which can be redeemed for discounts, exclusive products or other rewards.

One of the most lauded points-based loyalty programs is Sephora’s Beauty Insider Program .

Using their points, members have the chance to test a range of “trial-sized” products and unique experiences – such as full-face makeovers. 

This works particularly well in the beauty industry , where creativity and experimentation are so fundamental.

Sephora also capitalizes on the community-driven nature of the beauty industry — Reddit’s r/makeupaddiction community alone has over 4 million members — with its “ Beauty Insider Community ”, a space that lets beauty lovers find their inspiration and seek advice from other members.

The French brand stays ahead of the curve by getting one vital thing right: it continues to transform and tweak the loyalty program to best meet the ever-changing needs of its customers. And that’s a great way to stop them from losing interest.

Another classic example of a points-based loyalty program is the loyalty card. You buy your items in a store, scan your card, and receive points based on the total value of your purchase. It’s a simple, clear reward that plays especially well in those industries where purchases are frequent and increasing average order value is a priority.

Value-based loyalty programs

Value-based loyalty programs are a bit like points-based ones, but points can be earned in other ways than just making purchases.

The LEGO Insiders program , for example, rewards customers not just for purchases, but also for registering LEGO sets and getting involved in the customer community.

It works because LEGO enjoys such a strong emotional connection with its customers. People love their LEGO, and the company maintains this sense of reciprocity through initiatives like LEGO Ideas, through which customers’ original designs can be turned into official products via a voting process.

Building this kind of loyalty is incredibly valuable for a brand that sells high-ticket items, and for which increasing purchase frequency is essential.

The MoxieLash Insider program is another excellent example of a value-based loyalty program. Like Sephora, they understand the value of building a community of advocates, especially on social media , where a highly visual product like theirs plays particularly well.

That’s why they offer points not just for purchases, but for social media engagement and app downloads. They know that, in their case, the downside of giving product discounts for non-transactional activities is more than offset by the benefits of social media engagement.

Tiered loyalty programs

Tiered loyalty programs involve levels of membership that offer increasing rewards and benefits based on customer spending or engagement.

They’re usually more complex to manage, but they can be more effective at creating customer loyalty.

Tiered loyalty programs are particularly well-suited to high-end, luxurious products, where the feeling of exclusivity can heighten the sense of luxury.

Astrid & Miyu’s loyalty program Astrid & You is a great example. At the silver and gold tiers, customers get early access to sales and promotions. At gold, they get £20 off on their birthday.

Hospitality companies tend to use tiered loyalty programs, too. Hilton Honors is a notable example.

Tiered loyalty programs are particularly effective in industries with fluctuating demand. Where purchases are frequent and consistent, and average order values low, exclusive tiered benefits can be less of an incentive to make repeat purchases. 

What makes these tiered loyalty programs so effective is that they understand their status as “luxury” purchases in the eyes of potential customers , and that therefore they might have to work harder to incentivize repeat custom. At the same time, they recognise that it’s exactly this luxury status that makes exclusivity an enticing benefit.

Subscription-based loyalty programs

With subscription-based loyalty programs, customers pay an ongoing fee to get access to perks, products or exclusive events.

Because customers have to pay up-front — rather than passively accruing points as they shop — it’s more difficult to enroll customers onto your loyalty program . The benefits have to be significant.

Subscription-based loyalty programs are best suited to frequent, less-considered purchases — such as books. Barnes & Noble Membership involves an annual fee for exclusive discounts, free shipping and special offers.

Similarly, Amazon Prime gives customers unlimited to extremely fast delivery for a set fee.

In commoditized markets like bookselling, where it’s difficult to compete without a race to the bottom on price, these bonuses tend to have a “lock-in” effect on customers. Once they’ve paid their membership fee, it’s a sunk cost, and they can choose between your next-day delivery or your competitor’s comparatively slow delivery.

Compare these industries to some of the luxury brands adopting tier-based loyalty programs. You’d have a hard time convincing someone to pay $10 a month for a subscription for a brand they purchase from a few times per year at most.

In Amazon’s case especially, subscription-based loyalty programs can also smooth the move into new markets. When Amazon launched Prime Video, they had a ready-made audience of Prime customers ready to adopt it, and they could strengthen the loyalty program by adding it as an additional feature.

The results can be huge. A 2015 report by the Consumer Intelligence Research Partners (CIPR) found that Amazon Prime members were spending an average of $1,500 per year on Amazon.com , compared to $625 per year spent by non-Prime Amazon customers.

Gamification in loyalty programs

It’s not exactly a type of loyalty program, but lots of brands use gamification to boost engagement with their programs. One notable example is TheCHIVE .

Walker Information’s 2020 customer study predicted back in 2013 that “customer sentiment, or feelings that customers have about their interactions, will increase in value as companies look to differentiate based on the experience they deliver.”

To offer this superior experience, customer loyalty programs provide a great platform for brands. And photo entertainment website TheCHIVE is doing exactly this. By rewarding their customers for photo uploads and social sharing, community is being put at the heart of their gamified blog.

As a result, the brand has gained an active community of highly engaged customers. They now attribute 6% of their annual revenue to their loyalty strategy – generating 6,800 referred visits per month.

By giving customers a reason to return to the site, they are more likely to shop again and again.

TheCHIVE leaderboard

Examples by industry

Fashion and apparel ecommerce: crafting style-centric loyalty in online fashion.

The fashion and apparel ecommerce sector thrives on the allure of exclusivity and the joy of personal expression. Loyalty programs in this space are uniquely positioned to tap into these consumer sentiments. Here, loyalty isn’t just about transactions: it’s about becoming part of a fashion-forward community and enjoying the perks that come with it.

Fashion brand Lively is an example of a loyalty program that makes its most loyal customers feel special. It rewards members with points on their birthday, when they refer a friend and if they follow Lively on social media.

It’s easy for members to see the perks because benefits are clearly explained across their site.

Not only is it an effective loyalty strategy for a fashion brand, but customers also see the value of joining straight away. They’ll get 100 “Lively points” just for signing up. And that translates into $10 off their next purchase.

So, it’s a customer loyalty program that offers instant gratification. It also creates a strong and lasting emotional bond with the customer early on.

The results are impressive: the loyalty led to an increase in average customer lifetime value of 39%, and average spend increased by 36%.

Women’s fashion store Pulse Boutique offers customers a better chance to engage with their brand by inviting them to be part of a trusted fashion community.

This customer loyalty program is called Pulse Perks . It aims to encourage customer engagement on social media. At the same time though, it also helps increase user-generated content (UGC), customer reviews and photo submissions.

UGC and reviews are vital to brands because research has found that at least 9 2% of people trust word-of-mouth recommendations from friends or family. Meanwhile, people are four times more likely to buy a product if a friend or family member recommends it.

Since its launch, this example of a loyalty program generated a 39% uplift in returning shoppers. It also drove a 19% growth in average order value (AOV).

These programs work because fashion is a highly visual and shareable industry. Encouraging customers to share their fashion hauls, style tips, or outfit of the day (#OOTD) posts with brand-centric hashtags can amplify a brand’s presence on social media. Brands like Zara and H&M have effectively used user-generated content to engage their community, creating a ripple effect of brand visibility and customer engagement.

The key for fashion ecommerce brands is to tailor loyalty programs that not only reward purchases but also encourage brand interaction and social sharing. This approach resonates well with fashion consumers who value both the product and the experience surrounding it.

Beauty and cosmetics brands

In the beauty and cosmetics ecommerce industry, loyalty programs play a pivotal role in enhancing customer experience and brand loyalty. This sector, characterized by its emphasis on personal care, self-expression, and frequent product launches, finds unique value in loyalty programs that offer personalized rewards and exclusive experiences.

The aim of Annmarie Skin Care was to develop a loyalty program where members felt part of a community that shared similar beliefs and values. So, they created the “ Wild and Beautiful Collective ” to bring their members together.

It’s so important to create a sense of community – especially in the beauty industry. Beauty shoppers are more vocal on social media, for example. They’ll share tips, recommendations and look to learn and thrive from each other.

The “Wild and Beautiful Collective” is a membership program example that nurtures this sense of inclusion through its name and mission. And Annmarie Skin Care’s approach speaks volumes. Members spend (on average) 140% more than non-members. The brand generated more than 1000 reviews too. 

Meanwhile, they enjoy high levels of engagement with members, with 40% of points being redeemed within three months of being awarded.

Pacifica Beauty ’s customer loyalty offering seeks to engage customers through the whole buyer journey . It has a branded, easy-to-use loyalty page . And there’s a pop-up display that will show you how many points you can redeem in the cart. At each stage of the process, the brand aims to make it easy for the customer.

As you near the end of your buyer journey, Pacifica Beauty shows a checkout slider. This lets you claim the rewards you’ve earned towards your purchase.

Now, thanks to this example of a customer loyalty strategy, Pacifica Beauty’s members spend 130% more on average than non-members. 

Beauty brand Mirenesse elevated their loyalty program by introducing a special paid member tier. This is known as the “Gold” tier.

In exchange for a $10 monthly membership, customers of this VIP tier get extra perks on top of the basic rewards. This includes two points for every dollar spent, access to secret sales and the chance to trial new products as part of a tester panel.

Sports and outdoor ecommerce: elevating adventures with rewarding experiences

Outdoor brands have long done more than most to connect with their customers based on shared values. Patagonia set the standard with their “Don’t buy this jacket” PR campaign . The ad, which encouraged potential customers to buy a used Patagonia jacket rather than a new one, detailed the environmental impact in the creation of each new jacket.

A number of other big outdoor brands have incorporated this apparently-genuine, values-based customer connection into their loyalty programs.

The North Face’s XPLR Pass membership program, which offers rewards ranging from discounts to competitions and early product access, gives loyal customers 20% off their next order for completing a course on racial diversity.

REI’s Co-op Membership program , along with the more standard benefits of discounts and free delivery , builds on the connection between customer and brand by giving cashback on purchases based on business profits. They’re also invited to elect candidates to the board.

So why does it work? Because the products customers buy from these brands are used towards a hobby they care about. They’re not necessary purchases, they’re purchases that reflect these customers’ values . And brands share those values in an authentic way — through their transparency, ethical business structures and focus on sustainability.

It’s not something you can fake. And it’s harder — but not impossible — to build this kind of connection when you sell an everyday commodity.

Loyalty program branding: 4 brands that get it right

Loyalty programs succeed and fail by the attractiveness of their rewards — but how you design and brand your loyalty program can make a big difference too.

Lucy and Yak , a sustainable dungarees brand, is notable for its visually appealing integrated loyalty page. Using UGC photos of customers wearing their products and lifestyle imagery to showcase how customers can earn points, it is fun and on-brand.

Lucy and Yak describes its customer loyalty platform in their own tone of voice . You don’t just earn points, you earn “Yak points”. You don’t get “tier 1”, “tier 2” and “tier 3”, you get “Comfort Lover” “Yak Enthusiast” and “Dungaree Devotee”.

Lucy and Yak makes the most of its strong brand personality to boost its loyalty program. And that, in turn, strengthens the brand further.

Waterdrop – a “micro drinks” company – are paying careful attention to the look and feel of their loyalty program page. It means the Waterdrop Club is synonymous with the overall branding .

It uses fresh colors, light imagery and inclusive language. 

On the page itself, everything is signposted clearly – from actions that customers must take to earn points, to information on the free gifts they can acquire.

Waterdrop’s loyalty program helpedg the brand to generate more than €58,000 from referrals . It’s one of the most effective health and wellness loyalty programs out there .

But if you’re looking for good examples of loyalty programs, sometimes the clue is in the name.

Nicce Clothing paid special attention to the name of their program and how they named their points system. “N Coin” is a simple, yet memorable term. It’s a customer loyalty program that clearly has its own brand. But Nicce Clothing also ensures it works with their overall contemporary and minimalist identity.

A family-run oat bar company, Eat Bobo’s got creative in naming their loyalty program example. Bobo’s Love Mitts is the name, while the points are called “Love Mitts”. Like Lucy and Yak, Eat Bobo’s loyalty program leverages and strengthens their down-to-earth, crafted-by-hand image.

6 examples of effective loyalty program marketing

If you want people to sign up to your loyalty program, you need to tell them about it. Here are a few brands that are particularly good at marketing their loyalty program.

Email marketing

MoxieLash get their loyalty emails right. They’re visually appealing, to-the-point, and the value proposition is crystal clear.

Loyalty pages

Encourage your customers to enroll in your loyalty program by building it a standalone page.

100% PURE built a beautifully designed loyalty page to explain the benefits of the loyalty program and to encourage customers to enroll.

Time-limited promotions

“Short-time only” promotions encourage loyalty program sign-ups by creating a sense of scarcity. You could try “double points week”, or offering money off a product to loyalty program members for a month.

Dr. Axe has run promotions like triple point weeks, seasonal offers and higher rewards for referrals.

They also incorporate the loyalty program into all their email marketing and across their website.

Refer-a-friend

Word-of-mouth referrals are often the best way to acquire high-value customers at low cost. Building specific rewards for referrals into your loyalty program is a good way to increase its value.

Banners and popups

Like Pulse Boutique , you can use website banners to announce the launch of your loyalty program. It’s a solid, concise way to explain the benefits and include a strong call-to-action.

Contests and leaderboards

An often-effective way to scale up your loyalty program is to introduce a competitive element — for example, by creating a kind of “leaderboard” of referrals, and rewarding those customers who are most prolific.

And by having an effective loyalty program marketing plan for those newly referred customers, this can turn into a virtuous cycle.

Ready to use loyalty marketing to your advantage?

These examples show us just how powerful loyalty programs can be, how great brands are making the most out of theirs, and how you can use your understanding of your own audience to design your own successful loyalty program.

But for many smaller ecommerce businesses, the biggest challenge is implementation. How do you set up, optimize and analyze your loyalty program without significant investment of both time and money?

With this, LoyaltyLion can help. When you’re ready to get started, book a demo .

About the author

Mollie woolnough-rai.

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Customer loyalty: The new generation

Loyalty programs are a part of the ever-expanding movement to digital for consumers and businesses alike. McKinsey partner Jess Huang discusses the most important aspects and components of successful loyalty programs, from putting consumers first, to learning what companies want to gain from loyalty programs, to the data gathered from such programs. The following is an edited transcript of an extended video interview with Jess conducted by Thomas O’Toole, associate dean of executive education and clinical professor of marketing at the Kellogg School of Management, senior adviser to McKinsey, and the former CMO of United Airlines and president of its loyalty program, MileagePlus.

What is driving the new generation of loyalty programs

Thomas O’Toole: It’s my pleasure to speak with Jess Huang, a partner at McKinsey & Company who coleads their loyalty work. Welcome Jess, and let me jump right in with the first question. Many companies have been introducing loyalty programs in the last few years, and a series of major companies are relaunching established programs. Why is this happening, and what’s driving it?

Jess Huang: At the root of it is the fact that consumers are changing, and consumer trends are driving this. With the move to digital over the last ten years, consumers are spending more and more time on their phones and various digital channels. This makes it much easier to access the consumer, but there is also a lot more noise. Brands are trying to figure out the right way to break through that noise and develop a relationship with the consumer.

For example, you see new direct-to-consumer brands popping up all over the place. Because there’s a very low barrier to establishing yourself as a brand, they’re willing to spend on customer acquisition. So it’s not that consumers are necessarily becoming less loyal, it’s just so much easier to access them and so much easier for them to try something new. So brands are really trying to figure out a way to develop and maintain that relationship with the consumer.

The second thing is that digital produces a ton of data, but how do you collect it and make sure you own it? How do you figure out what data is routed to a given consumer across a given channel? A lot of companies are realizing this, and if they can’t figure it out, they’re going to fall behind.

The relationship between loyalty and predictive analytics

Thomas O’Toole: How are companies using predictive analytics to improve the effectiveness of their loyalty programs, and how do you anticipate they’ll do so going forward? More broadly, what is the relationship between loyalty programs and predictive analytics?

Jess Huang: This is a big, trending topic for companies. Predictive analytics can definitely help you refine and fine-tune the design of your loyalty program. It helps you better understand your different types of consumers, how much they’re spending, and how valuable they are to you. So it allows you to start thinking about how to migrate them up in value and decide which ones you are willing to spend more on.

Predictive analytics also helps companies better understand what behaviors actually drive the high-value customers. For example, if you’re a retailer that sells in multiple categories, you may realize that if you can get customers to buy X category, then they’ll also shop three adjacent categories. If you know that, then you can design incentives into your loyalty program to drive that very specific behavior. More companies are trying to identify specific things that they want to do through their loyalty program by understanding the analytics, which is really important, so that they don’t give too much away to the consumer.

Designing a loyalty strategy

Thomas O’Toole: What are the keys to a successful loyalty program?

Jess Huang: The first thing you need to do is define success, so you have objectives to measure your effectiveness. It cannot be as loosey-goosey as just wanting to drive loyalty with all consumers. You have to know which consumers you’re targeting and what type of loyalty you’re driving. What is it that you actually want them to do? Do you want them to spend on more profitable products or services? The next thing is to make sure that whatever you’re trying to accomplish with the loyalty program is consistent with your overall company strategy and brand messaging.

You also want to design something that’s flexible enough to remain viable as your company and strategy evolve. Finally, loyalty programs can get expensive very fast and don’t always create value for companies. So you have to go in with eyes wide open and design a program that creates value for the consumer and for you. That often involves finding a way to leverage the gap between a consumer’s perceived value of something and your cost to provide it.

Preparing for loyalty’s next frontier: Ecosystems

Balancing the customer value proposition with business economics and value creation.

Thomas O’Toole: When designing a loyalty program, how do you balance the customer value proposition with the business economics and value creation for the company?

Jess Huang: That’s the holy grail of loyalty-program design and lies at the heart of every loyalty-program problem. It’s tough, because you have to spend to offer something compelling that creates value for consumers. But if you spend too much on the business-economics side, you can quickly lose a ton of money. There are a couple things that can help you avoid this. The first is making sure that your consumer value proposition strictly reinforces your objectives. Don’t put in any additional value that you don’t need to drive the specific objective.

Secondly, you want to identify features and benefits that consumers value but cost you very little. The last piece is having a good internal understanding of what value you’re willing to give away and to whom. We tend to speak broadly about loyalty programs and value propositions, but you also need to think internally about how that value proposition differs for each type of consumer. You can do this explicitly by designing tiers in your program, or you can do it implicitly by how you design the broader program and how you think about what to offer each of those consumers. Having a clear internal understanding of what you’re willing to give away to whom and making sure you’re not giving away everything to everyone will help you balance that equation.

Typical business-objective and marketing considerations when relaunching a loyalty program

Thomas O’Toole: What business objectives, marketing aims, and concerns do you hear from clients who are considering relaunching an existing loyalty program?

Jess Huang: When companies think they need to relaunch a loyalty program, the biggest reason is usually that they’re not seeing the performance they expected. The most common problem is a lack of engagement. Maybe a lot of customers are enrolled, but they’re not actively engaging with a program or brand, and they’re not buying much. So the companies ask, “How do we actually drive active users, drive their engagement, with the loyalty program?”

Another very common problem is a program that feels stale, doesn’t feel innovative, or doesn’t feel like you are offering anything different from your competitors. So clients will ask, “What can we actually do to stand out and differentiate ourselves? How do I use the data to give me direction on how my loyalty program should be designed and look?” They also ask how to use their data to personalize communications with consumers outside of the loyalty program.

Identifying the most effective features and benefits when designing a loyalty program

Thomas O’Toole: How do you identify the specific features and benefits that will have the greatest impact when designing a loyalty program?

Jess Huang: When you’re designing the program, it’s all about the value proposition that you’re offering to your customers. So you need to understand them first. What’s their experience when they’re interacting with your particular category or with you as a company? Do they have unmet needs? Would meeting them help develop a better relationship, make them spend more, or whatever it is that you’re trying to drive with them? So you need a good understanding of the problem you can solve for your customers. Otherwise, you’re just throwing stuff at them and hoping they spend more. You need to figure out what you can offer them and what it will cost you, which is the gap between the perceived value and the cost of offering it.

If there’s something you can offer to meet those needs and solve those pain points, and it comes at very little marginal cost, you’ve hit the sweet spot.

Emerging loyalty-program areas

Thomas O’Toole: Travel, retail, and financial services have been at the forefront of loyalty programs since their inception, but we now see them expanding into other categories, such as healthcare. Why is this happening, and what other categories do you see adopting loyalty programs?

Jess Huang: We’re hearing more and more healthcare clients asking us about loyalty, as well as insurance clients. Some B2B clients are asking about it, too, which is a little bit unusual, because there are fewer programs to point to. I think this goes back to the trend of increasing access to the consumer and consumerization. So now everyone is thinking, “I’m expected to take advantage of all of these consumer touchpoints that I can access, but how should I be doing it?”

The bar for the customer experience and how you develop a relationship with the consumer has been raised by digital and other trends. So companies in industries that traditionally didn’t build one-to-one relationships with the consumer now feel like they need to. Healthcare providers are thinking, “How do I actually continue to engage with my consumer in between visits and make sure that they come back to me?” That’s something they’re not used to wrestling with. It’s the same with B2B companies. There’s more consumerization in terms of access, so it’s no longer just about the salesperson’s relationship with the person on the other side. There’s a lot more access and more ways to get in touch with them. So I think loyalty naturally pops up as a topic they start thinking about.

New loyalty-program considerations

Thomas O’Toole: You’ve worked on lots of major loyalty programs in a wide range of categories. For companies who are considering introducing a new loyalty program or relaunching an existing one, what guidance do you have for them?

Jess Huang: I think the number-one thing is to ask yourself is why you want to do this. If you cannot clearly articulate why you want to launch a loyalty program for a given customer or business objective, there’s really no point, because you don’t even know what you’re designing. But if you have a clear idea of who you want to drive specific business objectives with, go and understand that customer. Don’t just design a program you think you or your consumers would like. Look at your customers’ transaction-and-engagement data and understand how they’re interacting with you. Do the consumer research to learn what they want and what you can offer them before you even start thinking, “Well, I want my loyalty program to look like X.”

Jess Huang is a partner in McKinsey’s Silicon Valley office; Thomas O’Toole is a senior adviser to McKinsey and associate dean of the Kellogg School of Management at Northwestern University.

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Case Study | Building an Effective Loyalty Programme

Key insights

• The importance of loyalty programmes that help drive repeat purchases and provide customer data is growing as brands and retailer face a competitive market and rising costs to acquire new shoppers.
• Effective loyalty programmes combine both tangible and emotional incentives to keep shoppers engaged, and brands need to find the right balance of rewards for their unique customer base.
• Popular loyalty programmes with unique perks have become a subject of online buzz for consumers, driving user-generated content about free gifts and optimising points.

Ulta Beauty ’s loyalty programme is practically synonymous with the retailer’s success .

Today, 96 percent of the company’s sales run through the programme, which has 43.3 million active members — 10.5 million more than the active members of awards-programme pioneer Starbucks. Ulta Beauty credits it with regularly drawing shoppers back to its stores , and with generating valuable data to help it recommend products and target its marketing .

The points-based programme is Ulta Beauty’s “heartbeat,” said Kelly Mahoney, the retailer’s vice president of customer marketing. It “really is the engine that drives our business. You will always hear it mentioned on our earnings call because it is seen truly as that strategic.”

Once seen as simple rewards systems designed to offer customers added incentive for making repeat purchases, loyalty programmes have become central to business models not just for airlines, credit cards and coffee but for beauty and fashion as well. These programmes, which almost always combine a system of points awarded for dollars spent and a hierarchy of tiers, are geared toward creating financial incentives through discounts and cash as well as forging emotional connections with consumers through special gifts and VIP perks.

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They might be more necessary than ever. As customer acquisition costs fluctuate wildly due to changes to social media algorithms and advertising markets, companies are placing a premium on repeat purchases and the concept of “customer lifetime value.”

Loyalty programmes can be a useful tool in mitigating these pressures. According to a 2021 survey by McKinsey & Company, 65 percent of customers are more likely to up their frequency of purchases from a brand or retailer when they are a member of its loyalty programme . Brands can also use loyalty members’ data to target them with more personalised messaging, ranging from simple email campaigns to AI-driven product displays on a brand or retailer’s app.

Of course, not every brand can count on the same scale of membership as Ulta Beauty, described as an example of “best-in-class loyalty programme execution” by TD Cowen analyst Oliver Chen; by definition, they tend to attract a subset of particularly engaged customers.

But brands of all sizes are turning to loyalty systems as a way to keep their existing customers shopping or attract new ones. They’re becoming easier to set up than ever for direct-to-consumer start-ups as a range of new tech platforms have sprung up to integrate them into online checkout systems.

Accessories label Brandon Blackwood New York had signed up 300,000 members to its loyalty programme as of May 2024 after introducing it for Black Friday in 2023. Since the launch, purchases by loyalty members have increased overall sales by 15 percent, while the average order value of members has been 10 percent higher than non-members over that period.

“These are the people who are committed,” said Brandyce Pechillo, digital marketing manager at Brandon Blackwood New York. “They’re willing to spend a little more and to spend a little more time on the store in general.” But running a loyalty programme isn’t as simple as signing up members and offering them discounts. Different programmes can have different advantages, and brands need to be careful not to go overboard on discounts and have to rescind benefits later as the costs mount. They also need to keep customers engaged while preserving brand equity. Luxury brands averse to discounts might look for more VIP-focused incentives.

This case study will cover how to launch, run and grow a loyalty programme in beauty and fashion, looking at what drives sales, online buzz, membership growth and repeat customers. In addition to Ulta Beauty, the report features interviews with executives from independent brands that have launched their own successful loyalty programmes, including Merit Beauty and Brandon Blackwood New York.

This report aims to be useful to brands at all points in the process, whether they’re still considering launching one or have already founded a programme and are searching for best practices, success stories and unique features to help them stand out. The most effective programmes don’t just boost repeat purchases and order sizes. They can become the subject of conversations online, turning members into a brand’s biggest evangelists.

Liz Flora is a Beauty Correspondent at Business of Fashion. She is based in Los Angeles and covers beauty and wellness.

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CUSTOMER EXPERIENCE

• 10 Effective Real-World Customer Loyalty Programs Examples 

• Customer Experience

In today’s competitive marketplace, businesses are constantly striving to retain customers and cultivate loyalty. Customer loyalty programs have become an essential tool for achieving this goal. These programs are designed to reward customers for their repeat business and foster a long-term relationship between the brand and the consumer.  

But what makes a customer loyalty program truly effective?  

In this article, we’ll explore various examples of successful customer loyalty programs, and highlight the benefits they bring.

What are Customer Loyalty Programs?  

Customer loyalty programs are structured marketing strategies designed to encourage customers to continue to shop at or use the services of a business associated with each program. These programs reward customers for their repeat business and can include various incentives such as points, discounts, exclusive offers, and other perks. The main goal is to enhance customer retention, increase engagement, and ultimately drive higher sales. 

The Importance of Customer Loyalty Programs  

• Increased Customer Retention: Loyalty programs provide customers with reasons to return, thereby increasing retention rates. 
• Boosted Sales: Rewarding customers encourages repeat purchases, leading to increased sales. 
• Customer Engagement: These programs create more touchpoints with customers, fostering engagement and brand loyalty. 
• Competitive Advantage: A well-designed loyalty program can differentiate a brand from its competitors. 

Types of Customer Loyalty Programs  

1. point-based programs  .

Point-based loyalty programs are among the most common. Customers earn points for each purchase, which can then be redeemed as a reward. 

Example:  

Best buy rewards : Customers earn points for every purchase, which can be redeemed for Best Buy gift certificates and discounts on future purchases. 

2. Tiered loyalty programs  

Tiered programs reward customers based on different levels of loyalty. The more a customer spends or interacts with the brand, the higher the tier they achieve, unlocking more significant rewards. 

Marriott bonvoy : This program has several tiers – Member, Silver Elite, Gold Elite, Platinum Elite, and Titanium Elite – each offering increasing benefits like free Wi-Fi, room upgrades, and lounge access. 

3. Paid membership programs  

Customers pay a fee to join these programs and receive exclusive benefits in return. 

Costco membership : Members pay an annual fee to access Costco’s warehouses and benefit from lower prices on bulk goods, exclusive deals, and services. 

4. Cashback programs  

These programs offer customers a percentage of their purchase back as cash rewards. 

Discover cashback bonus : Discover cardholders earn cashback on every purchase, with rotating categories offering higher cashback rates each quarter. 

5. Coalition programs  

Coalition programs involve multiple businesses coming together to offer a unified loyalty program, allowing customers to earn and redeem points across different brands. 

Nectar : UK-based Nectar allows customers to earn points at a variety of retailers, including Sainsbury’s, Argos, and eBay, which can be redeemed for discounts and special offers. 

6. Hybrid loyalty programs  

Hybrid programs combine two or more types of loyalty programs to offer a broader range of benefits. 

Macy’s star rewards : This program combines points-based rewards with tiered benefits. Members earn points on purchases and enjoy perks like birthday surprises, special savings, and free shipping based on their tier. 

7. Value-based loyalty programs  

These programs focus on aligning with customers’ values, such as sustainability or social causes, offering rewards for behaviors that support these values. 

TOMS One for One : TOMS rewards customers by donating a pair of shoes to a child in need for every pair purchased, aligning with social responsibility and customer values. 

Examples of Successful Customer Loyalty Programs  

1. starbucks rewards  .

Starbucks Rewards is one of the most well-known and successful loyalty programs in the world. The program is designed to reward customers for every purchase they make, with points that can be redeemed for free drinks, food, and other perks. 

Key features:  

• Point-Based System: Customers earn “Stars” for every purchase made using the Starbucks app or a registered Starbucks card. 
• Tiered Rewards: As customers accumulate more Stars, they unlock higher tiers of rewards, such as free refills, birthday treats, and personalized offers. 
• Exclusive Offers: Members receive exclusive promotions and discounts, encouraging them to return more frequently. 

2. Amazon Prime  

Amazon Prime is a subscription-based loyalty program that offers a range of benefits to its members. While it requires an annual fee, the perks provided often outweigh the cost for frequent Amazon shoppers. 

• Free Shipping: Unlimited free two-day shipping on eligible items. 
• Exclusive Access: Early access to deals, Prime-exclusive products, and sales. 
• Additional Services: Access to streaming services like Prime Video, Prime Music, and more. 

3. Sephora Beauty Insider  

The Sephora Beauty Insider program is a tiered loyalty program that rewards customers based on their annual spending at Sephora. 

• Point Accumulation: Members earn points for every dollar spent, which can be redeemed for deluxe samples, experiences, and more. 
• Tiered Levels: The program has three tiers – Beauty Insider, VIB, and Rouge – each offering increasing benefits. 
• Exclusive Perks: Members enjoy birthday gifts, exclusive events, and early access to new products. 

4. Rakuten (formerly Ebates)  

Rakuten offers a cashback program where customers earn a percentage of their purchase back as cash rewards when they shop through the Rakuten portal. 

• Cashback: Earn cashback at various retailers by shopping through Rakuten. 
• Seasonal Promotions: Special promotions and higher cashback rates during sales events. 
• Referral Bonuses: Earn bonuses for referring friends to join Rakuten. 

5. Air Miles  

Air Miles is a coalition loyalty program that allows customers to earn points from a variety of partners and redeem them for travel, merchandise, and more. 

• Point Accumulation: Earn miles from purchases at participating partners. 
• Redemption Options: Redeem miles for flights, hotel stays, merchandise, and gift cards. 
• Exclusive Offers: Special promotions and bonus miles events. 

6. Walgreens Balance Rewards  

Walgreens Balance Rewards combines points-based rewards with personalized offers and discounts to drive customer loyalty. 

• Point-Based Rewards: Earn points for purchases and healthy behaviors, like walking. 
• Personalized Offers: Tailored discounts and promotions based on shopping habits. 
• Health Incentives: Extra points for health-related activities, such as filling prescriptions and participating in health challenges. 

7. Patagonia’s Common Threads Initiative  

Patagonia’s Common Threads Initiative aligns with the company’s sustainability values, encouraging customers to reduce, reuse, and recycle. 

• Sustainability Rewards: Rewards for trading in used Patagonia gear for store credit. 
• Repair Services: Encourages repairing over replacing, with rewards for sustainable practices. 
• Community Engagement: Fosters a community focused on environmental responsibility. 

8. Nordstrom’s The Nordy Club  

Nordstrom’s The Nordy Club combines point-based rewards with personalized experiences to enhance customer loyalty. 

• Point Accumulation: Earn points for every purchase, which can be redeemed for Nordstrom Notes (store credit). 
• Exclusive Access: Early access to sales, personal styling services, and other VIP experiences. 
• Tiered Rewards: Higher tiers unlock more significant rewards and benefits.

9. REI Co-op Membership  

REI Co-op Membership is a paid program that offers members a range of benefits, including annual dividends, discounts, and access to exclusive events. 

• Annual Dividend: Members receive a share of REI’s profits based on their purchases. 
• Member Discounts: Exclusive discounts on gear, rentals, and classes. 
• Community and Events: Access to members-only events, adventure trips, and educational workshops. 

10. Hilton Honors  

Hilton Honors is a hotel loyalty program that rewards members with points for stays, which can be redeemed for free nights, upgrades, and other benefits. 

• Point Accumulation: Earn points for every stay at Hilton properties. 
• Tiered Benefits: Higher membership tiers offer perks like free breakfast, room upgrades, and late check-out. 
• Partnership Rewards: Earn points through partner offers, including airlines, car rentals, and credit cards. 

Benefits of Implementing Customer Loyalty Programs  

1. enhanced customer engagement  .

Loyalty programs keep customers engaged by providing them with continuous incentives to interact with the brand. This engagement often translates to higher brand affinity and more word-of-mouth referrals. 

2. Data collection and insights  

These programs provide businesses with valuable customer data and insights, helping them understand purchasing behaviors, preferences, and trends. This data can be used to tailor marketing efforts and improve product offerings. 

3. Improved customer retention  

Loyalty programs are highly effective in improving customer retention. When customers feel valued and rewarded, they are more likely to stay loyal to the brand and make repeat purchases. 

4. Increased revenue  

By encouraging repeat purchases and higher spending, loyalty programs can significantly boost a company’s revenue. Customers who are part of a loyalty program tend to spend more than non-members. 

Creating an Effective Customer Loyalty Program  

1. understand your customers  .

The first step in creating a successful loyalty program is to understand your customers’ needs, preferences, and behaviors. This involves collecting and analyzing customer data to gain insights into what motivates them. 

2. Choose the right type of program  

There are several types of loyalty programs, including point-based systems, tiered programs, and paid memberships. Choose the type that aligns best with your business model and customer base. 

3. Offer valuable rewards  

Ensure that the rewards you offer are valuable and appealing to your customers. This can include discounts, exclusive products, early access to sales, and personalized offers. 

4. Promote your program  

Effectively promote your loyalty program through various marketing channels to ensure that customers are aware of it. Use email marketing, social media, and in-store promotions to spread the word. 

5. Continuously improve  

Regularly review and analyze the performance of your loyalty program. Use customer feedback and data insights to make necessary improvements and keep the program fresh and engaging. 

Conclusion  

Customer loyalty programs are a powerful tool for businesses looking to enhance customer retention, engagement, and revenue. By implementing well-designed loyalty programs, companies can create lasting relationships with their customers and stand out in a competitive market. Platforms like LeadSquared provide the tools and insights needed to create and manage these programs effectively.  

The key elements include understanding customer needs, offering valuable rewards, using the right type of program, promoting it effectively, and continuously improving based on customer feedback and data insights. 

Loyalty programs are important because they increase customer retention, boost sales, enhance engagement, provide valuable customer insights, and offer a competitive advantage in the market. 

They should communicate clearly, keep programs simple and accessible, personalize rewards, engage consistently, and track results for optimization. Implementing these strategies helps small businesses leverage loyalty programs to enhance customer retention, drive sales, and build lasting customer loyalty. 

Shruti is a skilled editor and content marketer at LeadSquared. With her combined passion for storytelling and adept editorial eye, she is also an avid reader.

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13 Brilliant Customer Loyalty Program Examples

• Published on November 29, 2023
• Reading time 12 min read
• Views 90.86k

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Loyal customers are arguably one of the most valuable assets any brand can have. Not only are current customers more affordable than acquiring new ones, but loyal customers typically spend more and generate larger transactions. In fact, 57% of consumers spend more on brands to which they are loyal. * Operating a successful customer loyalty program isn’t always easy, but it’s one of the best ways to attract, engage, and satisfy your customers.

Continue reading to discover the importance of customer loyalty, see what customers look for in loyalty programs, and learn from brands that are doing it right. Or, skip to our infographic to learn the best practices of customer loyalty programs.

What Are Customer Loyalty Programs?

A customer loyalty program is a strategy designed to encourage repeat business, where a brand offers its customers rewards, discounts, and other incentives in order to attract and retain their business. These programs are designed to build loyalty, and it pays off when done well.

Points Programs

A points-based program is the most common type of loyalty program. They let customers accumulate points with their purchases which they can redeem for free products and other perks. Some points programs even allow customers to earn points through other ways like leaving reviews, sharing posts on social media, having a birthday, and so on.

Tier Programs

A tier-based loyalty program is where a customer will get different benefits depending on their rank. The higher a customer is ranked, the better their rewards will be. To get to a higher tier and earn exclusive rewards, customers need to buy and engage more with a brand. Businesses will then rank their customers based on sales metrics and engagement.

Paid Programs

A paid loyalty program is when a customer receives immediate and continuous benefits once they pay a recurring or one-time fee. If a company can convince consumers of the value of their program, it can build higher customer value. A 2020 survey reported that consumers are 60% more likely to spend more on a brand after subscribing to a paid loyalty program. * If a customer is paying for a loyalty membership, they’ll want to get as much out of the program as possible.

Value Programs

What Do Customers Want From a Loyalty Program?

While loyalty programs are a great way to retain loyal customers, they are also a great way to acquire new ones . In fact, 75% of consumers say they would switch brands for a better loyalty program. * With that being said, it begs the question: What do customers really want from a loyalty program?

• Enticing rewards : Customers want offerings like free products and discounts as rewards for their loyalty.
• Exclusive deals : Consumers want offerings like free shipping or exclusive access to sales, making them an honored customer.
• Hassle-free usage : Customers want hassle-free programs with limited maintenance to make it easy to sign up and use.

Customer Loyalty Points Program Examples

1. starbucks: starbucks rewards.

For most people, coffee and other caffeinated beverages are a part of the morning commute, so they may as well get in on a loyalty program that’ll reward their caffeine cravings. The Starbucks Rewards program does just that by bringing customers closer to free drinks and food with every purchase. To earn loyalty points (or, in Starbucks’ case, loyalty stars), customers need to order or pay using the Starbucks app. They can then redeem those stars to get free drinks, food, and even Starbucks merchandise.

2. The North Face: XPLR Pass

In the outdoor apparel and gear industry, it’s fair to say that most of their customers value experiences over material items.

The North Face allows their loyal XPLR Pass members to earn points by purchasing merchandise or attending special events, whichever works for the specific customer’s lifestyle.

When it comes to redeeming their points, customers can use their points towards unique travel experiences such as a mountain climbing trip in Nepal.

Customer Loyalty Tier Program Examples

3. designer shoe warehouse: dsw vip.

While earning points in exchange for discounts and free products is effective, adding in a tier program helps gamify the experience by allowing customers to unlock new levels of higher-value benefits for spending more on the brand.

Designer Shoe Warehouse’s (DSW) loyalty program is the perfect example of a successful tier-based program. By spending more, customers access higher tiers that offer exclusivity to different products and services.

This motivates their customers in lower tiers to spend more so that they can attain these higher tiers of exclusivity.

4. Sephora: Beauty Insider

With Sephora’s Beauty Insider program, customers can earn points for every purchase they make and redeem those points for rewards of their choosing — usually in the form of samples or exclusive merchandise — via the Rewards Bazaar.

Not only do members get to choose their own rewards, but they also receive access to the Beauty Insider Community, where beauty lovers can share tips, advice, and all the new products that they love.

With its tier structure, customers can earn better and better rewards for their loyalty, even gaining access to exclusive events at the highest tier. Plus, higher-tiered customers receive bigger discounts during sales events.

5. Uber: Uber Rewards

Although the ridesharing industry is fairly new, Uber has gone above and beyond taking over the industry. They offer a variety of services that cater to just about any individual’s specific needs as well as a loyalty program that’s very valuable.

When you become an Uber Rewards member, you earn points with every eligible dollar spent on rides and UberEats orders. These points can then add up to Uber Cash Rewards and other benefits like priority pickup and flexible cancellation.

6. Alaska Airlines: Mileage Plan

Whether you are a frequent business flyer or have a love for traveling, joining an airline’s customer loyalty program is a must. While basically every airline has a rewards program, Alaska Airlines’ award-winning Mileage Plan does it best.

Alaska’s Mileage Plan is a tier-based program that lets customers earn miles, experience award travel, and gain their top-tier MVP elite status faster than any other airline.

7. Expedia: Expedia Rewards

From flights to hotel rooms, Expedia offers a way to save money while traveling. With their rewards program, Expedia Rewards, members save an average of $35 per booking with the points they earn.

The more you travel, the more points and rewards you get with their three-tier program. From 10% savings with Blue member status to free upgrades and spa credits with Gold status, customers can achieve luxurious travel perks at an affordable price.

8. Chick-fil-A: Chick-fil-A One

If there’s one fast food restaurant that knows how to rack up the sales, it’s Chick-fil-A. With $13.7 billion in system-wide sales in 2020 * , other brands may wonder how they do it.

A big part of their success can be attributed to their loyalty program, Chick-fil-A One, which boasts 13 million active users. * With its enticing benefits like free treats, convenient drive-thru experiences, and opportunities to gain exclusive rewards, customers keep coming back for more.

Customer Loyalty Paid Program Examples

9. amazon: amazon prime.

A well-known paid membership program that completely changed the game is Amazon Prime. By paying an annual fee, Prime members get access to free two-day shipping on millions of products as well as access to their video streaming service.

While big retailers like Walmart and Target are main competitors, Prime memberships are how Amazon differentiates themselves from other similar brands.

Online shopping offers the convenience of shopping directly from your device in the comfort of home. Free shipping makes it just as affordable as traditional in-store shopping.

10. REI Co-op: Co-op Membership

Although the main point of a customer loyalty program is to convince customers to spend more money on a brand, the best customer loyalty programs drive real value to their customers.

REI’s Co-op Membership program does just that by allowing customers to gain access to rewards from 10% back on all purchases to discounts on experiences like adventure trips and classes — all for a $20 lifetime membership.

11. GrubHub: GrubHub+

The convenience of getting food delivered straight to your door is unmatched, but the delivery fees tend to add up pretty quickly if done too often.

GrubHub recognized that and now offers their monthly subscription called GrubHub+, where users get unlimited free delivery on eligible orders and exclusive rewards. They even offer a donation match program where customers can opt to donate their change to charity and GrubHub will match every cent.

Customer Loyalty Value Program Examples

12. ben & jerry’s: flavor fanatics.

There’s nothing sweeter than an ice cream loyalty program, but Ben & Jerry’s adds the cherry on top with a strong social mission. By signing up for their Flavor Fanatics rewards program, customers can get 10% off every purchase along with extra perks like free cones and insider scoop.

Along with rewards like discounts and free birthday cones, Ben & Jerry’s also advocates for social justice with special flavors like Save Our Swirled! for the global climate movement and I Dough, I Dough for marriage equality.

Not only do they have social justice-themed flavors, but they also donate sales to charities that support the environment, social programs, animal welfare, and other causes.

13. The Body Shop: Love Your Body Club

The ethical beauty brand The Body Shop believes that business can be a force for good. So when they developed their loyalty program, they made it easy for customers to gain rewards while also having the option to donate.

As a member of their Love Your Body Club, customers earn a point for every dollar spent. Once they’ve reached 100 points, they’ll get a $10 reward to spend. However, customers have the option to donate their $10 reward to one of their charity partners.

Make it Personal With Your Loyal Customers

A customer loyalty program is a great way to attract and retain repeat customers as it encourages engagement, increases customer retention rates, and helps brands gain valuable insights on their customers.

To help build your relationship even more, make each interaction personal and valuable, starting with individualized emails and product recommendations so customers get exactly what they are looking for.

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How to Make Your Loyalty Program Pay Off

• Brett Hollenbeck
• Wayne Taylor

A study of 2 million transactions at one retailer shows how companies often chase the wrong customers.

Do loyalty programs actually create more-loyal customers? In a recent study, researchers analyzed two years of purchase data from more than 10,000 customers at a top U.S. retailer to explore how spending did (or didn’t) change after customers became loyalty members. They found that loyalty programs do increase profitability — but only for some customers, and not the ones you might think. Specifically, while the retailer had been targeting loyalty program promotions at customers with high levels of past spending, the researchers found that joining the program actually had no impact on those customers’ spending. On the other hand, joining the loyalty program increased spending by close to 50% for customers who were highly vulnerable to competitors. The researchers used a machine learning model to gain insight into who exactly these customers were, and found that the best predictor of changes in spending was actually customers’ locations relative to both the retailer’s stores and competing stores. Based on this surprising finding, the authors argue that marketers should target their promotions based not on historical spending, but on location, and that they should further consider investing in simple machine learning tools that can help them to identify the non-obvious traits that may correlate with profitability in their unique industry and market.

Ninety percent of leisure and hospitality companies (and more than 60% of all companies) offer some type of loyalty program — and yet, it’s not at all clear that these programs actually work. One report found that the average consumer belongs to more than 14 loyalty programs, often with multiple competing brands , suggesting that these programs hardly create loyal customers.

• BH Brett Hollenbeck is an assistant professor of marketing at the UCLA Anderson School of Management.
• WT Wayne Taylor is an assistant professor of marketing at the Cox School of Business at Southern Methodist University.

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CUSTOMER LOYALTY

13 Customer Loyalty Program Examples: A Complete Breakdown

by Emma Kimmerly

August 21, 2023

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A well-designed loyalty program can have a big impact on your brand. 

From enhancing customer engagement and retention to maximizing sales and revenue, loyalty programs are a valuable investment. But creating a strong program that brings results can be easier said than done. 

Read on to discover everything you need to know about loyalty programs and why they’re important. You’ll also find 13 innovative examples to inspire your next steps. 

What is a Loyalty Program?

Loyalty programs offer rewards, incentives , or special benefits for customers who regularly make purchases. These initiatives increase customer retention and make existing customers more valuable. 

Loyalty programs are increasingly popular because, well, they work! 

They are mutually beneficial to you and your customer. While you get their repeat purchases, they get a free coffee or ten dollars off their next purchase. 

Why Loyalty Programs are Important for Brands

A well-designed loyalty program can be a game-changer for your retail brand, driving customer retention, increasing revenue, and setting you apart from the competition. Loyalty programs offer many key benefits , including: 

• Increased customer retention: Loyalty programs incentivize repeat purchases, ensuring that customers return to the brand more frequently. This not only boosts sales but also strengthens the bond between the brand and its customers.
• Higher customer lifetime value: By encouraging repeated interactions and purchases, loyalty programs increase the total amount a customer is likely to spend with the brand over their lifetime, maximizing profitability from each customer.
• The ability to drive valuable customer actions: Through rewards and incentives, loyalty programs can motivate customers to take specific actions, such as writing reviews, referring friends, or making frequent purchases, all of which benefit the brand.
• Personalized customer experiences: Loyalty programs often gather data on customer preferences and purchasing habits, allowing brands to tailor offers and communications to individual customers, enhancing their overall shopping experience.
• Enhanced brand loyalty : By offering exclusive rewards and benefits, loyalty programs make customers feel valued, fostering a deeper emotional connection to the brand and increasing the likelihood of them choosing the brand over competitors.
• Competitive advantage : In a saturated market, having a robust loyalty program can set a brand apart, making it more appealing to customers and giving it an edge over competitors.
• Brand advocacy: Satisfied members of loyalty programs are more likely to recommend the brand to friends and family, turning them into brand ambassadors and expanding the brand's reach organically.
• Data collection & insights: Loyalty programs provide a platform for collecting valuable customer data, which can be analyzed to gain insights into customer behavior, preferences, and trends, helping brands make informed business decisions.

Different Types of Loyalty Programs

Now you’ve decided you need a loyalty program, you need to decide on what type will work best for your brand. Here are a few types of loyalty programs and why brands use them:

• Points-based : This type of loyalty program allows customers to earn points for every purchase or specific actions they take. Once they accumulate a certain number of points, they can redeem them for rewards or discounts. Brands use this system as it encourages repeat purchases and engages customers by giving them a tangible goal to reach.
• Tier-based: Tier-based programs categorize members into different levels or tiers based on their purchase history or engagement. As customers move up the tiers, they receive better rewards or exclusive benefits. This system motivates customers to spend more to reach higher tiers and enjoy premium benefits, fostering long-term loyalty.
• Paid membership: In a paid membership loyalty program, customers pay an upfront fee to become a member and in return, they receive exclusive benefits, discounts, or access to premium services. Brands use this model to generate immediate revenue and offer exclusive perks to their most loyal and invested customers.
• Stamp cards: Stamp card programs are a traditional form of loyalty scheme where customers receive a stamp for every purchase. Once the card is filled with stamps, the customer can redeem it for a free product or a discount. Brands use stamp cards as they are simple to implement and offer a tangible way for customers to track their progress towards a reward.

What Makes a Good Loyalty Program?

Not all loyalty programs are created equal, which is why it pays to design yours carefully. Pay attention to the following loyalty program best practices :

• Designs fully integrated with brand: Your brand consistency is important and your loyalty program should be an extension of that brand. This reinforces your brand’s values, personality and positioning to create a cohesive experience. 
• Mobile friendly and omnichannel: Loyalty programs must provide a seamless mobile experience. They should also be accessible across all channels, whether the customer shops in-store, online, or on your mobile app, for example.
• Deep integration with other marketing tools: It is essential to maximize your program’s effectiveness to achieve a higher return on investment (ROI). Integrating your program with your marketing tools allows for data synchronization which in turn helps you improve the personalization and targeting of your marketing campaigns. 
• Valuable & compelling rewards: Rewards, points, discounts, or perks shouldn’t be too difficult to obtain. Customers will be more compelled to spend if the reward is within arms reach.
• Transparency and communication:  The rules of the program, as well as any changes, should be communicated to your customer promptly and clearly. 
• Personalization: The more personalized your loyalty program, the more your customers will engage with it. You could offer a personalized member dashboard that shows your customers’ activity, points balance, and available awards. Friendbuy’s loyalty program software , for example, provides easy-to-use templates so you can get live fast while maintaining brand consistency.

13 Successful Loyalty Program Examples

So what does all of this look like in action? Here are 13 real-world examples from brands who are running robust loyalty programs. Let’s start with a few brands that use Friendbuy’s loyalty software to run their programs.

OLLY Smile Miles

Vitamin and supplement brand, Olly , turned to Friendbuy to better communicate their customers’ progression within the loyalty program. 

Customers earn points by spending money, interacting with the brand, and even on their birthday. When a customer earns 100 points, they get $5 off their next purchase. 

“We had literally no way to personalize any communications, or to even indicate to a customer that they were on a loyalty journey. One of the things that was so cool about Friendbuy was seeing all the communications capabilities, and the best practices and learnings from other brands that are in the same space.” — Jennifer Peters, Senior DTC Manager, OLLY

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Saalt Period Perks

Sustainable health and beauty brand, Saalt , uses Friendbuy to tailor their reward strategies to customer behavior. Customers earn 100 points for just signing up to their loyalty program, Period Perks. They can then redeem the points on purchases over $40. 

“Seeing that 41% of members who have earned a loyalty reward then come back and make a purchase was a wonderful surprise - that's definitely higher than what we see looking at just repeat rate for our customers.” - Ian Mahanes, Technology Partner Manager, Klaviyo

Annmarie Skin Care’s Wild & Beautiful Collective

The " Wild & Beautiful Collective " is a loyalty program by Annmarie Skin Care. By creating a customer account, individuals automatically become a part of this community and start earning points for their purchases and other specified actions. For every dollar spent, members earn one point. Benefits of the program vary based on membership tiers. 

The basic tier offers redeemable rewards and exclusive discounts, while the "Collective Insider" tier, which is attained by subscribing to a product(s), provides additional perks such as educational resources, exclusive discounts, early access to new products, and more.

Insiders also enjoy special events like double or triple points days and receive surprise gifts as part of their membership.

MZ Wallace Rewards

The MZ Wallace loyalty rewards program is designed to offer its members a range of benefits based on their spending. By creating an account and ensuring they are logged in during checkout, members can earn points on their purchases. 

Specifically, for every $1 spent, a member earns 1 point. These points can then be redeemed, with every 10 points equating to $1 off. 

The program also categorizes members into different tiers based on their spending: Silver (for spending $0 - $199), Gold (for spending $200-$1199), and Platinum (for spending $1,200+). Additional perks of the program include early access to product launches, surprise double points days, VIP events, free shipping and returns, birthday surprises, and exclusive gifts.

REI Co-op Member Reward

REI Co-op, an outdoor adventure gear and clothing brand, operates a paid membership loyalty program. Customers pay a $30 one off fee to enjoy membership for life and get up to 10% back annually on eligible purchases. 

Find out more  

Best Western Rewards

Best Western Hotels and Resorts’ loyalty program allows customers to collect points when they stay at their properties. Guests can then use these points to redeem free nights, exclusive member rates, and other rewards and incentives like early check-in and late check-out.  

Kohl’s Rewards

American department store retail chain, Kohl's, allows customers to earn rewards on every purchase with their loyalty program. For every $1 spent at Kohl's, members earn 5 points. Additionally, Kohl's frequently offers special promotions and bonus points events, allowing customers to earn even more rewards on certain purchases.

Barnes & Noble Rewards and Premium Membership

Bookseller Barnes & Noble has two reward tiers, Rewards, and Premium. Both programs offer one stamp for every ten dollars spent. When ten stamps are collected, customers can redeem a five dollar reward. 

The Premium Membership costs $39.99 a year and includes perks like 10% off selected items, free shipping, and many more. 

Customers can track their stamps and rewards electronically through the B&N app. 

Cinemark Movie Rewards

Movie theater chain, Cinemark, offers a tiered loyalty program called Cinemark Movie Rewards. Customers earn points for every purchase made at Cinemark theaters, including tickets, concessions, and more. 

Loyalty tiers include “Movie Fan”, “Movie Club”, and “Movie Club Premiere”. Rewards and benefits include special offers, promotions, advanced screenings, and priority booking. 

Dick’s Sporting Goods

Dick’s Sporting Goods offers another tiered loyalty program called ScoreCard Rewards. Members earn points for every qualifying purchase made in-store or online. Tiers include “ScoreCard”, “ScoreCardSilver”, and “ScoreCard Visa”. 

The program occasionally hosts special events and member-only experiences, offering a unique way for members to engage with the brand. 

Office Depot OfficeMax Rewards

Office Depot’s OfficeMax Rewards allows customers to earn rewards on purchases made in-store, online, or via phone. They offer two tiers: “Basic” and “VIP”. 

Office Depot has been known to offer recycling rewards, allowing members to earn bonus rewards for recycling used ink and toner cartridges.

GameStop Pro

For $25 per year, GameStop customers can sign up to GameStop Pro, their loyalty program that promises $70 in annual value. Members earn points with every purchase and receive perks such as a $10 welcome reward, exclusive deals, magazine access, and more. 

Petco offers a tiered loyalty program based on your pet type. Tiers include the free version, “Vital Care Core” and “Vital Care Premier” for $19.99 per month. 

Both tiers offer member-only pricing and offers, personalized care notifications, and Vital Care points back on every purchase, every 8th groom free, and every 10th bag of nutrition free. 

Loyalty programs are one of the best ways for brands to drive business growth. The best programs are mutually beneficial and help you understand your buyers the more they shop with you. 

However, the strength of your loyalty program depends on how well it’s designed. What data and insights does it collect? How integrated is it with the rest of your marketing technology? And are the rewards compelling enough? 

Keep your customers coming back with Friendbuy’s Loyalty Platform

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Best customer loyalty scheme examples (and what makes them awesome)

More than 90% of companies choose to roll out customer loyalty schemes   and we've shortlisted some of the best examples of customer loyalty programmes in action below.

Loyalty programmes like these have proven themselves as invaluable tools, not only for boosting revenue but also for fostering positive brand affinity. So it's no surprise that a whopping 84% of consumers say they're more likely to stick with a brand that offers a customer loyalty scheme .  In fact, 66% reveal that the chance to earn rewards actually influences how they spend their money .

It’s no secret that it’s far more cost-effective to sell to existing customers than to constantly chase after new ones. That's why brands have jumped on the loyalty programme bandwagon.  However, there are a number of different scheme types which fit into different categories, depending on the business profile and of course, the target audience.  Skip to a section:

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The best loyalty scheme examples from leading brands we all love

Below, we’re going to explore the best loyalty schemes offered by industry-leading brands.  These examples are a great source of inspiration and insight into how some of the best UK and global businesses effectively engage and retain their customer base through innovative strategies.

Retail loyalty programmes

IKEA Family is IKEA’s very own loyalty club, boasting over 110 million members globally.  The great news is that IKEA Family is open to everyone, and it comes at no cost – with zero membership fees to worry about. As an IKEA Family member, customers unlock a variety of perks, including discounts on select home furnishing products, food items, and services. Plus, on weekdays, customers can savour complimentary tea or coffee while they shop.  But there's more. IKEA hosts exclusive member-only events within its stores, featuring free home furnishing workshops and early previews of upcoming product ranges. To keep customers inspired and informed, they’ll also receive regular newsletters with the latest news and updates. Customers also benefit from the all-important ‘Oops-assurance’. This means that in case something doesn't quite go as planned during your journey from the store to home or while assembling your purchases, IKEA has you covered.

The North Face

The North Face, known for its outdoor gear and clothing, has a unique way of keeping customers loyal with its XPLR Pass programme . This isn't your typical rewards programme – it's all about giving you choices to fit around your lifestyle. Here's how it works:  When you shop, you earn points, just like any other rewards programme. But what makes it special are the extra ways you can earn points. You can get points for going to special events hosted by The North Face, checking in at specific places, or even just downloading their app. When it's time to use those points, The North Face offers you more than just discounts. They offer experiences. Imagine using your points to go on a mountain climbing adventure in Nepal – it’s not all about buying things, but making lifelong memories. Now, not every business can send people on fancy trips like hiking in Alaska. But the idea is the same: make a loyalty programme that fits your customers and makes them feel closer to your brand. Give them rewards that match their lives and dreams.

Waterstones Plus

Waterstones, a prominent bookseller celebrated for its vast selection of literary treasures, introduced "Waterstones Plus" as an exclusive offering for book enthusiasts. This loyalty scheme is a literary haven for avid readers, offering a delightful way to enhance their book-buying experience. Here’s what you can expect:

• Earning and redeeming points: As part of the Waterstones Plus programme, members have the opportunity to earn points with every purchase. These points can then be thoughtfully redeemed, allowing readers to indulge in more of their favourite books without stretching their budget.
• Access to special events : Waterstones understands that reading isn't just a solitary endeavor—it's a communal passion. That's why Waterstones Plus members receive exclusive invitations to special events. These gatherings might include book launches, author signings, or literary discussions, providing a unique opportunity to engage with the literary community.
• Exclusive discounts : In addition to earning points, members are treated to exclusive discounts that cater to their love of reading. These discounts may apply to new releases, bestsellers, or even niche genres, making it easier for book lovers to explore their literary interests.

Card-based loyalty programmes

The Boots Advantage Card is one of the most well-known and widely used loyalty programmes in the UK. Let's take a closer look at the Boots Advantage Card and its key features:

• Earn points : Customers who sign up for the Boots Advantage Card earn points on their purchases. Typically, they earn four points for every £1 spent, making it easy for members to accumulate points quickly. The accumulated points can be redeemed for discounts on future purchases. Customers can use their points to get money off their shopping, effectively making their next purchase more affordable.
• Personalised offers : Boots uses customer data to personalise offers and promotions. Advantage Card holders often receive special offers tailored to their shopping habits, helping them save money on products they frequently buy.
• Birthday treat : Advantage Card holders typically receive a special birthday treat from Boots, which can range from bonus points to discounts on specific products.

The John Lewis Partnership Card is a unique and customer-centric credit card that goes beyond the conventional credit card offerings.  Tailored to enhance the shopping experience at John Lewis and Waitrose stores, it provides cardholders with an array of benefits that add value to their everyday purchases, including:

• Reward points : Cardholders earn points on their card for every eligible purchase they make, both within and outside of John Lewis and Waitrose. These points can be redeemed while shopping at either store.
• Flexible redemption . Rather than limiting rewards to specific products or categories, cardholders can use their points to shop for a wide range of items, from home furnishings to gourmet groceries. This flexibility empowers customers to choose how they want to enjoy the rewards they've earned.
• Exclusive offers : Cardholders also gain access to exclusive offers and promotions. These offers may include discounts, special deals, or limited-time sales events that cater specifically to cardholders.
• Early access to sales : Timing can be everything when it comes to snagging the best deals. Cardholders benefit from early access to sales at John Lewis and Waitrose, ensuring they have the first pick of discounted items. This early access can be especially advantageous during peak shopping seasons and major sale events.

Nando's, may be best known for its delicious peri-peri chicken, but it also offers a card-based loyalty programme called ‘Nando's Rewards’ .  Nando's Rewards members earn points with every purchase they make at Nando's restaurants. Points are typically earned based on the total spend, encouraging customers to visit Nando's repeatedly and gain more and more points. Points can be used to claim a variety of tempting treats, from their legendary chicken dishes to sides, desserts, and even drinks – and Nando's even knows how to celebrate birthdays in style. Rewards members receive a special birthday treat, which often includes a complimentary meal or dessert, making your special day even more memorable. What’s more, you’ll also have access to exclusive offers and promotions. These offers can include one-off discounts, limited-time menu items, or special combo deals that are only available exclusively to program members. It’s super easy to manage points by downloading an app, where participants can view available rewards, and stay updated on the latest Nando's news and promotions.

Online loyalty schemes

Amazon prime.

Amazon Prime is a subscription-based loyalty scheme offered by Amazon.  While it may not seem obvious as a loyalty programme, due to having to pay a monthly fee, there are a number of benefits that customers are treated to which cannot be overlooked. These include:

• Fast and free shipping : Amazon Prime members enjoy free and expedited shipping on millions of eligible items sold on Amazon. This includes free two-day shipping, same-day or one-day delivery in select areas, and even ultra-fast delivery options like Amazon Prime Now.
• Amazon Prime Video : Members gain access to Amazon Prime Video, a streaming service that offers a vast library of movies, TV shows, and original content produced by Amazon.
• Amazon Music : Subscribers have access to Amazon Music, Amazon's music streaming service, which provides ad-free listening to a vast library of songs and playlists.
• Amazon Prime Reading : Members can borrow e-books, magazines, comics, and more from the Amazon Prime Reading catalogue and read them on their Kindle devices or the Kindle app.
• Amazon First Reads : Prime members have early access to new books from popular authors, allowing them to download one free e-book each month from a selection of titles.
• Amazon Family : Prime members with families can access exclusive family-oriented offers, such as diaper discounts and family-friendly content.
• Amazon Photos : Subscribers get unlimited photo storage with Amazon Photos, as well as 5 GB of additional storage for videos and documents.
• Prime early access : Members often receive early access to new product launches and releases, allowing them to be among the first to try out new items.

Gymshark Family

E-commerce membership programmes diverge from traditional loyalty rewards by not relying on spending-based incentives.  Online workout fashion retailer, Gymshark is just one example of this. The brand provides modest perks in exchange for valuable data, such as email addresses, while promoting its products in the process.  Here are some of the loyalty perks customers can expect in this programme:

• Exclusive content : Gymshark offers exclusive workout routines, nutrition plans, and fitness tips to Gymshark Family members through its app or newsletter.
• Early access : Members can gain early access to new product releases or limited-edition collections.
• Personalised recommendations : By collecting data on members' fitness preferences and goals, Gymshark can provide personalised product recommendations and fitness resources, enhancing the overall member experience.
• Community engagement : Gymshark can facilitate member-to-member interactions through its app or online community. This can include forums, challenges, and discussions where members can connect, share their progress, and motivate each other.

NikePlus , Nike's innovative online loyalty programme, stands out from the traditional rewards and discounts approach.  It offers a comprehensive ecosystem designed to enhance the overall experience for its members, that is completely unique to any other fitness or fashion brand in the global market. Its innovative customer perks include:

• Early Access to product releases : One of the standout features of NikePlus is the privilege of early access to new product releases. Members get a sneak peek and the opportunity to purchase the latest Nike footwear, apparel, and accessories before they become widely available.
• Rewards for physical activity : Beyond being a ‘standard’ loyalty scheme, NikePlus is also geared towards promoting an active lifestyle. Members can earn rewards by engaging in physical activities, whether it's tracking a run, participating in fitness challenges, or completing workout sessions. These rewards can be in the form of exclusive badges, virtual trophies, or even discounts on future purchases.
• Events and challenges : NikePlus frequently hosts events and challenges that encourage members to push their limits, whether it's a virtual race, a community challenge, or a local Nike-sponsored event.
• Nike Training Club (NTC) Access : Members can access the Nike Training Club app, which offers a vast library of workouts and training plans led by world-class trainers. This provides additional value and helps members achieve their fitness goals.

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Tiered loyalty programmes

Starbucks, a global coffeehouse chain, has implemented a tiered loyalty system called "Starbucks Rewards" – and it’s free to sign up.  This system is designed to cater to a diverse range of customers, from occasional coffee drinkers to die-hard Starbucks enthusiasts. Here's an overview of what the program consists of:

Green Level (Welcome Level): This is where all members start. Members at this level earn 2 "Stars" (loyalty points) for every dollar spent.

• They receive a free birthday reward, which can be used to redeem a complimentary drink or food item.
• Access to order ahead and pay using the Starbucks mobile app, which enhances convenience.

Gold Level: To reach the Gold Level, a member needs to earn 300 Stars within a year. This encourages more frequent visits and spending. At this level, members continue to earn 2 Stars for every dollar spent.

• They receive a personalised Gold Card, symbolising their status.
• After reaching Gold status, members can redeem 125 Stars for a free drink or food item.
• Exclusive access to double-star days, which enable members to earn rewards faster.

Platinum Level (Starbucks Reserve® Card): Starbucks Rewards' Platinum Level is designed for the most dedicated coffee aficionados.

• To reach Platinum status, a member needs to earn 600 Stars within a year.
• Platinum members earn 2 Stars for every dollar spent.
• They can redeem 150 Stars for a free drink or food item.
• Exclusive access to monthly double-star days and access to premium Starbucks Reserve® coffee.

In-App Challenges and Bonus Stars: Starbucks also runs in-app challenges and promotions where members can earn bonus Stars for specific actions, such as trying new menu items or making multiple visits within a certain timeframe.

Sephora, the renowned beauty retailer, has implemented a highly successful tiered loyalty system called "Sephora Beauty Insider" . This multi-tiered programme caters to beauty enthusiasts and shoppers who seek personalised experiences and exclusive perks for their loyalty.  In addition to their spending benefits, the brand offers customers the opportunity to indulge in exclusive privileges, including access to special events, meet-and-greet opportunities, early product access, and gift cards, collectively referred to as "Experiences." Here's a brief overview of what customers can expect:

Beauty Insider (Entry Level): This is the starting point for all Sephora customers. Members earn 1 point for every dollar spent on purchases.

• A birthday gift is provided during the member's birthday month.
• Access to free beauty classes and in-store beauty services.
• Members can redeem points for rewards from the Beauty Insider Rewards Bazaar.

Very Important Beauty Insider (VIB): To reach VIB status, members need to spend a specific amount within a calendar year, typically around $350.

• VIB members earn 1.25 points for every dollar spent.
• All Beauty Insider benefits are included.
• Exclusive access to VIB-only product launches, collections, and events.
• Sephora offers seasonal savings events with higher discounts for VIB members.

Rouge (Top Tier): To achieve Rouge status, members must spend a substantial amount within a calendar year, typically around $1,000.

• Rouge members earn 1.5 points for every dollar spent.
• All Beauty Insider and VIB benefits are included.
• Access to even more exclusive products and experiences.
• Free standard shipping with no minimum purchase required.
• Unlimited access to the Sephora Beauty Studio for makeovers and personalised sessions.

How specific industries harness loyalty programmes

Streaming services.

Subscribers earn points or badges for streaming content regularly. These rewards could unlock access to exclusive content, ad-free streaming, or early releases. Did you know that by using a rewards credit card, you’ll receive a cashback benefit of up to 6% on a vast number of eligible streaming services, such as Netflix and Disney+ , Hulu and Amazon Music Unlimited ?

Travel agencies

Online travel booking platforms have revolutionised the way people plan and book their holidays, but the excitement goes far beyond simply booking a holiday. One of the key hallmarks of travel rewards is the accumulation of points or airmiles with each booking made. Whether it's reserving flights, hotels, rental cars, or even holiday packages. Then, the earned points or miles serve as a currency that travellers can redeem for future travel bookings, or even upgrades (such as travelling in business class) or access to exclusive airport lounges. Some programmes even offer early booking privileges, allowing members to reserve their holidays before they become available to the general public. This can be especially advantageous during peak travel seasons or for securing highly sought-after accommodations.

Food delivery services

The rise of online food delivery services has transformed the way people enjoy their favourite meals from restaurants, bringing the convenience of restaurant-quality food to their doorsteps. But with takeaway restaurants competing for custom, many food delivery apps have introduced loyalty programmes to entice hungry customers to keep coming back for more. When users order frequently, they may receive percentage-based discounts, as well as free delivery, so they don’t have to worry about those annoying hidden charges. They may also gain access to special promotions such as limited-time offers, combo meal discounts, or early access to new menu items or restaurant partnerships.

Ideas for small business loyalty programmes

Not got the same budget of the big players shown above? No problem. small businesses can hop on the loyalty bandwagon quickly and affordably too.  Loyalty schemes for smaller companies just finding their feet or local businesses are typically characterised by their simplicity. They often involve straightforward mechanisms and need to be cost-effective.  Their purpose is not only to provide exclusive savings and discounts to loyal customers but also to create a sense of community encouraging business in local towns and cities, as well as online. Here are some ways small businesses can encourage customer loyalty:

• Punch cards : Create a simple punch card system where customers receive a stamp or punch for each purchase. After a certain number of stamps, they earn a discount or a free product. This straightforward approach encourages repeat visits.
• Referral rewards : Encourage customers to refer friends and family to your business by offering rewards for successful referrals. 
• Birthday treats : Send personalised birthday discounts or gifts to participants. It's a genuine way to show appreciation (while encouraging them to visit your business during their special day).
• Cross-promotions : Partner with other local businesses to cross-promote each other's loyalty programmes. For example, a coffee shop and a nearby bookstore could offer joint rewards for customers who visit both establishments on a regular basis.
• Feedback Incentives : Encourage customers to provide feedback through surveys or online reviews by offering small incentives, like a discount on their next purchase.
• Special events : Host members-only events, such as private sales, workshops, or tastings, to make loyal customers feel valued and appreciated.

Now for some real-life examples…

A local coffee shop

A small, independently owned coffee shop may offer a loyalty card where customers receive a stamp for each coffee purchased, and after a certain number of stamps, they get a free drink of their choice.  You could also consider hosting special events or coffee tastings exclusively for loyalty cardholders, which fosters a deeper connection with customers and encourages them to visit your shop, over competitors in the same town.

Independent gym

Creating a loyalty programme tailored to an independent gym can be a strategic move to not only retain existing members, but also attract new fitness enthusiasts. Here's an expanded look at how such a program can be designed:

1. Loyalty point accumulation Here members earn loyalty points for every visit or workout session which can be tracked electronically through a membership card or a mobile app. Each visit contributes to their loyalty point balance, then loyalty points can be redeemed for various rewards, including:

• Discounts on monthly or annual membership fees.
• Complimentary personal training sessions or nutritional consultations.
• Access to exclusive gym events, workshops, or wellness seminars

2. Tiered rewards structure Programmes can be structured with multiple tiers, each offering increasing benefits as members accumulate more points. For instance:

• Bronze Tier : Members reach this level after a set number of visits, typically around 10 to 20. At this stage, they may unlock benefits like a small discount on membership fees.
• Silver Tier : Achieved after a higher number of visits or loyalty points, this tier could offer additional perks such as a discount on personal training sessions or access to premium classes.
• Gold Tier : Reserved for the most dedicated members, the Gold tier can provide substantial benefits, including significant discounts on membership fees or exclusive access to advanced fitness programs.

3. Personalised member experience To make the scheme more engaging, a gym could use member data to personalise fitness recommendations. For example, members at different fitness levels could receive workout plans tailored to their goals, whether it's weight loss, muscle building, or overall health improvement.

Pet grooming service

Pet groomers play an essential role in keeping our furry friends well-kempt, but in a competitive market, retaining customers is key. How can they prevent your customers from going elsewhere? Starting up a loyalty programme of course!  Here are some ideas this type of small business could use as part of their strategy:

• Pamper points for pet owners : Loyal pet owners earn "Pamper Points" with each visit to the grooming service. After a predetermined number of visits, typically around 5 to 7, customers qualify for a free grooming session for their furry friend.
• Pet of the Month showcase : Recognise and celebrate loyal customers by featuring a "Pet of the Month" on your social media platforms and website. Encourage customers to share photos and stories of their pets and why they love your grooming service. The chosen "Pet of the Month" could receive a special grooming session or spa day, creating excitement and engagement among your clientele.
• Pet product samples for top-tier members : Elevate your loyalty programme with tiers, and reserve the highest tier, perhaps called "VIP Pet Parents," for top-tier members. Members at this level receive not only the benefits of lower tiers but also exclusive perks like free pet product samples.
• Special events and pet parties : Organise pet-friendly events or parties exclusively for participants and their pets. These gatherings can include pet costume contests, playdates, or educational sessions on pet wellness.
• Priority booking : Give members priority when booking appointments. This can be especially beneficial during peak grooming seasons or busy times of the year.

The mechanics of customer loyalty schemes

There are a number of different types of customer loyalty scheme, each tailored to suit the unique needs and preferences of businesses and their customers, which include the following:

Here, participants are issued physical or digital cards to track their loyalty and earn rewards.  These programmes are commonly used in retail, hospitality, airlines, and more. Here are some examples:

• Stamp cards (typically for small businesses) A stamp card (also known as a punch card), is a simple and somewhat traditional method used by businesses to encourage customers to return to their store.  Customers receive a physical card that they get stamped, for each qualifying purchase or transaction they make with the business. Once the customer collects a certain number of stamps or punches on their card, they are rewarded with a free product, discount, or other incentive. Stamp loyalty cards are commonly used by small businesses such as coffee shops, restaurants, cafes, ice cream parlours, and small retail stores. The good news is that they’re straightforward and cost-effective to implement. 
• Supermarket loyalty cards Supermarket loyalty cards represent a widely embraced strategy employed by grocery store chains, aimed at nurturing customer loyalty. These cards are particularly attractive to budget-conscious shoppers who are eager to secure cost-effective deals. As soon as a customer signs up, businesses gain valuable insights into their shopping habits and preferences. This treasure trove of data empowers supermarkets to craft targeted promotions and exclusive offers tailored to each individual customer's preferences, significantly elevating the likelihood of repeat visits and future purchases. At the heart of most supermarket loyalty cards lies a fundamental feature: the accumulation of points, which can be exchanged for complementary products or discounts which encourages them to return to the same supermarket.
• Restaurant loyalty cards Restaurant loyalty cards are a savvy marketing strategy that eateries across the UK are using to cultivate a loyal customer base while enhancing the overall dining experience. At the heart of restaurant loyalty programmes lies the concept of customers earning rewards with each visit. These rewards can take various forms, such as points, stamps, or digital credits. Typically, customers accumulate these rewards based on their spending, the number of visits, or specific items ordered. However, perhaps one of the key benefits is the prospect of heavy discounts or even free meals.  Customers become eligible for enticing rewards after reaching a predetermined milestone, such as a certain number of visits or a minimum spending threshold. In some cases, restaurants go the extra mile with loyalty members when celebrating a birthday or special occasion by offering complimentary desserts to make the occasion even more memorable. In most cases, restaurant cards can now be uploaded onto mobile apps, which allows customers to view their rewards status, and receive real-time updates on promotions and offers seamlessly.

Online loyalty schemes are customer retention initiatives that are primarily operated through digital channels, such as websites, mobile apps, and email.  Here are some key features and components:

• Digital enrollment : Customers can sign up through a business's website or mobile app. During the enrollment process, they provide their contact information and may be asked to create an account.
• Virtual rewards : Virtual rewards, such as points, digital credits, or badges, are used to incentivise customer participation. Customers earn these rewards for various actions, including making online purchases, referring friends, writing reviews, or engaging with the brand on social media.
• Credits redemption : Customers can redeem digital credits for rewards directly through the digital platform. Rewards typically include discounts on future purchases, free products, access to exclusive content, or other valuable incentives.
• Personalisation : Online programmes utilise customer data and online behaviour to personalise offers and recommendations. Advanced algorithms analyse past interactions and preferences to suggest products or content tailored to individual tastes.
• Gamification : Some online loyalty programmes incorporate gamification elements to enhance engagement. This might include challenges, leaderboards, badges, and interactive features that make the program more entertaining and engaging.
• Data analysis : Businesses use data collected to gain insights into customer behaviour, preferences, and online interactions. This information informs digital marketing strategies, content creation, and improvements to the overall customer experience.

B2B (business-to-business) loyalty programmes are strategic initiatives designed to foster strong and mutually beneficial relationships between a business and its business customers or partners, unlike B2C (business-to-consumer) loyalty programmes, which target individual consumers,  Here's an overview of key elements and considerations for B2B loyalty programmes:

• Target audience : B2B loyalty programmes primarily target businesses, including suppliers, distributors, wholesalers, resellers, and other corporate entities. The goal is to incentivise these businesses to continue working with the programme provider.
• Relationship-based : These schemes emphasise building and nurturing long-term relationships. These relationships often involve ongoing contractual partnerships, making loyalty crucial for sustained success.
• Rewards and incentives : Just like B2C programmes, B2B loyalty schemes also offer rewards and incentives to participants. These rewards can include discounts on bulk purchases, access to exclusive products or services, co-marketing opportunities, or priority support.
• Value-added services : Many B2B loyalty platforms provide value-added services, such as training, technical support, or market insights, to help partners improve their business operations.
• Multi-tiered structures : They often incorporate multi-tiered membership structures, where partners can progress to higher tiers based on factors like transaction volume, engagement, or long-term commitment. Higher tiers come with greater rewards and privileges.
• Collaboration opportunities : Some programmes may offer collaborative opportunities, such as joint marketing campaigns, co-development of products or services, or participation in industry events. 

Tiered-based loyalty programmes are a structured approach to incentivising repeat business, which has become successful in a number of industries. These programmes reward customers based on their level of engagement and spending, aiming to motivate them to ascend through different tiers or levels. As they progress, they unlock progressively valuable rewards and benefits.  Let's delve deeper into how tiered loyalty programs operate:

• Tiers or levels : They typically consist of multiple tiers or levels, each representing a different level of engagement or spending. Common tiers follow a Silver, Gold, Platinum, format (albeit often renamed).
• Tier qualification : To enter or move up to a higher tier, customers must meet specific criteria set by the business. This criteria can include factors such as the total amount spent or the frequency of purchases etc.
• Increasing rewards : As customers progress through the tiers, they are rewarded with increasingly valuable benefits and incentives, such as discounts, free products or services, early access to promotions and exclusive events.
• Tier maintenance : Some programmes require customers to maintain their spending or engagement levels to retain their tier status. If they do not meet the criteria, they may be demoted to a lower tier.

Trade loyalty programmes are initiatives designed to build and strengthen relationships between a company and its distribution partners, resellers, wholesalers, and other business-to-business (B2B) entities within the supply chain. These may include builders or bathroom showroom companies. Here are some key components of trade loyalty programmes:

• Rewards for sales and performance : Partners earn rewards based on their sales performance, achieved targets, or other key performance indicators (KPIs) specified. These may include discounts, rebates, cash incentives, co-marketing funds, or free merchandise.
• Co-marketing support : Businesses frequently extend co-marketing assistance to their trade partners, encompassing resources like marketing materials, training and access to marketing funds. These provisions prove advantageous for both parties as they empower trade partners to more effectively promote the company's products or services.
• Access to exclusive products or services : High-performing trade partners may gain access to exclusive products, services, or early product releases, giving them a competitive edge in the market.
• Data sharing : To strengthen collaboration, companies may share market data, insights, and customer information with their trade partners, helping them make informed business decisions.

The different types of customer loyalty

Not all loyalty is the same. In fact, some loyalty isn’t even loyalty! (Wait… what?).

Let’s just take a look at loyalty you have for brands that you probably interact with on a day-to-day basis... You shop at your favourite supermarket most likely because it’s convenient, and prices are relatively competitive. Maybe it’s around the corner, and even if they’re more expensive than other places, it’s probably only a few pence so not worth quibbling over. The problem is, if you move house, or if the prices rise enough that you think it’s maybe worth an extra 5 minutes in the car, you’re off somewhere else! The supermarket  thinks  you’re loyal because you’re back there every week, whereas in reality you’re ready to go at a moment’s notice.

On the other hand, let’s imagine your favourite coffee shop, maybe one where you’re friendly with the barista who makes your flat white  just  the way you like it. Not only will you go an extra 30 minutes out of your way just to get a coffee on the way to work, but you’ll rave about them to your friends. “You should come and see Jo at Bean-2-cup, honestly she makes the best flat white, I won’t go anywhere else!”. This is loyalty most brands only dream of.

Maritz's loyalty quadrant  (which we're lovingly re-creating with our colours!) organises different loyalty into four types - true, cult, inertia and mercenary. These are then split on two axes by whether the loyalty you’ve built is relational or transactional (are you focused on price, or offering an exceptional and emotional relationship?), and whether the customers are passive or active in their interactions with your brand and with their loyalty.

1. Inertia loyalty – “I’m here because it’s too much trouble to go elsewhere.”

This type of loyalty almost isn’t loyalty at all. Sure, the customers keep coming back for more, but that's only because there is a barrier to exit, not because they love your brand and have an emotional connection. It could be that they're not aware of an alternative product or service, so buy from you for ease, or it could be that the price is within their budget. It’s unlikely that these customers will recommend you to other people. The risky thing about this type of loyalty is that there's a high chance of them being influenced by your competitors. All your competitors would need to do is run a decent promotion to convince this customer it’s worth an extra 5 minutes out of their day to switch and BAM - they've nabbed them from you! So how can you encourage true or cult loyalty with this group? A lot of the activities will need to focus around education and reward. Educating them not only about your products and the value of them, but also about your business values and beliefs in the hope that they relate with them. As they start to learn more and are rewarded for their time and loyalty, their opinions may change.

2. Mercenary loyalty – “I’m loyal because you pay me to be loyal.”

Like inertia loyalty, this type isn't exactly ideal for your business. To put it bluntly, they are loyal because of some sort of bribe. These people love shopping around for the best deals, discounts and rewards, therefore are easily influenced by your competitors. If you are continually trying to attract these customers from your competitors, you’ll get trapped in a race to the bottom. You need to be very cautious of this type of loyalty as they're only attracted to your offers, and not your products, services, beliefs or values. You can alter their mindset from being "money driven" to "value driven" by educating them on the value of your products so they can see what they're getting for their money, rather than promoting the discounts on offer.

3. True loyalty – “I’m here because I’m emotionally connected.”

First up, we have true loyalty. This type of loyalty means customers have an emotional connection with your business, like believing you share some of their values. They are very happy with the products or service you offer and are unlikely to be influenced by your competitors. Although they respect and admire your business, they aren’t quite ready to be recommending you to everyone they meet! These customers are already very happy with what you offer, but you should still continue to reward their loyalty and reinforce that behaviour. You should try and introduce ‘wow moments’ and extra special VIP service for special customers, and maybe start to encourage them to tell their friends by rewarding referrals.

4. Cult loyalty – “I’m in for life. The brand reflects my values and identity.”

The customers that show "cult loyalty" are your brand evangelists, and your brand forms part of their identity! Like true loyalty, as discussed in the point above, they have an emotional connection with your business and share your values and beliefs, but more importantly, they think your brand  represents  their values and beliefs to others. These customers are very unlikely to shop elsewhere and be disloyal. These customers are almost an extension to your sales team, and LOVE to rave and shout about your products, service and their experience to their friends and family. They know you won’t let them down, and might make them look good to their friends toboot! Be careful though, if you drop your service levels and make bad on a recommendation they’ve made of you, there might not be any coming back…

So it's important to ask yourself...

Do your customers want to 'snog, marry or avoid' your brand.

Our CEO Richard explains here:

5 Loyalty Programme Myths

Have you fallen prey to some of the most common customer loyalty myths out there? Take a look at what’s been travelling through the grapevine lately, and exactly why it’s a mistake to take them as truth.

1. Myth: It’s too time consuming

Fact: The right loyalty programme doesn’t need to represent a big, ugly drain on your time. It’s more than possible to maintain a successful scheme without sacrificing all your time to it. 

Devising a   customer reward programme   from scratch   can   be very time-consuming, but there’s no reason why already-busy companies should have to devote their own time and energy to building something worthwhile brick by brick.  

This is our particular area of expertise at Incentivesmart – building loyalty programmes that integrate easily and seamlessly with your existing processes. For instance, our work with   Fluid  saw us integrate our rewards platform with their existing CRM system, meaning the additional ‘work’ of running the scheme was automated, and the business didn’t need to disrupt flow just to make it operable. 

2. Myth: Vouchers work just as well

Fact: Vouchers aren’t totally useless, and they can be appreciated, but they’re not memorable, they feel restrictive, and they’re definitely not fun. 

Vouchers are there to be redeemed against a subsequent transaction, and businesses like them because they encourage customers to return for that subsequent transaction. This is good for encouraging a little extra return business, but is that comparable to long-term loyalty from customers who are really motivated to give you as much business as possible? How compelling can a voucher get?

A varied and exciting rewards catalogue is something that’s   worth   working towards. You just can’t generate that same level of excitement with vouchers unless those vouchers are worth considerable cash – and where’s the benefit for you in that?  

Some businesses will offer vouchers that work at more than one business. Love2Shop is a good example of this. There are some benefits there since they’re more compelling and memorable than a voucher for, say, 10% off from the business that issued it, but it also limits the amount of data you can gather on your customers – and   data is one of the major benefits of running a loyalty programme. 

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3. myth: the reward doesn’t matter as long as we’re doing something.

Fact: Wrong, wrong, wrong. Your rewards catalogue can make or break your incentive programme. 

Ah, the old ‘it’s the thought that matters’ chestnut. This is very true in plenty of scenarios – Christmas gifts from your great-great grandmother or a teacup of tepid tap water ‘tea’ served up by a toddler, for instance. But, when it comes to rewards extended to customers who could transform your retention and churn rates, it would be a big mistake to assume they’ll sip happily away, rub their bellies, and say, ‘Yum!’

Now more than ever before, customers are very switched on to the strategies companies use to win their business. This is as true in B2B as it is in B2C, and it’s very important that modern businesses design everything – from marketing to rewarding – around the understanding that customers are cynical, and they know when they’re being undervalued. 

Offering the right rewards – whether you’re looking for   channel partner incentives   or opportunities to reward your own employees – is imperative. It means the difference between causing the release of those happy chemicals and leaving customers feeling cold and disinterested (at best) or irked and repelled (at worst).

The time when we could be generic and bland has long-since passed. So many businesses – the overwhelming majority, in fact – offer loyalty schemes, but customers will only buy into a handful. Stand out on the strength of your rewards catalogue. If they don’t see things that interest them, why bother collecting the points? 

4. Myth: Loyalty only lasts until the next competitor runs a deal

Fact: Most customers are looking to align with brands that showcase their values, particularly when it comes to customer-centrism. Loyalty is worth more than a rival sale or promotion – that’s what makes it so valuable. 

The types of customers who are willing to jump from one brand to the next depending on what deals are running at that moment aren’t the kind of customers you should be working to acquire. These customers will ‘love you as they leave you’ in the sense that they will be drawn in by   your   promotion, and drawn away by a rival promotion.

We refer to these types of customers as ‘mercenaries’, and there’s very little benefit in targeting them. They drive-up first-time business, but they also drive-up your churn rate.

By focusing on long-term loyalty, you begin to take on more of the ideal type of customer:  the evangelist. These customers aren’t just bringing return business, but genuine engagement that gets you more word-of-mouth recommendations, and a higher ROI over the long haul. 

5. Myth: It’s better to just shrink margins and improve customer service.  

Fact: This is risky. Where does it end? While improving customer service is always a good thing, you can’t make endless improvements, just as you can’t endlessly shrink margins. 

This is a common trap for businesses to fall into – the idea that they just need to be   more   competitive to keep winning over business. There’s a certain amount of truth in it – after all, most of us are suckers for a great deal – but this can’t be a ‘one and done’ strategy. Eventually, those shrunken margins will be rivalled by another business, and you’ll need to shrink them thinner still to keep competing at the same level. That’s why they call   razor-thin margins business kryptonite .

Improving customer service and making better use of those   B2B communication   opportunities will always serve the business, but don’t consider that an alternative to strategising customer loyalty.

Take yourself out of this vicious cycle as soon as you can. You and your customers will be better for it. 

Ready to kickstart your own customer loyalty scheme?

Launching a loyalty scheme for your business should be at the top of your priority list to keep your customers returning time and time again. While building a devoted customer base might not happen overnight, there are a few key crucial aspects to keep in mind: make it easy to use, actively share its advantages with your customers, and closely keep an eye on how it performs.  As you embark on this new business journey, remember that nurturing these valuable customer relationships is a gradual process that requires time and patience, but the lasting impact will make every step worthwhile.

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10 best customer loyalty programs and their case studies

• 6X more expensive to win a new customer than retain as existing one ( Parature )
• 5% increase in customer retention can lead to a 25-100% increase in profit for your company.  ( Harvard Business Review )
• 68% of millennials wou l dn’t be loyal to a brand that doesn’t have a good loyalty program. ( Loyalty Report )

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Customer loyalty programs: types, tips & examples.

12 min read A customer loyalty program encourages people to keep coming back by offering them a reward for their repeat business. Learn how to choose a customer loyalty program and select customer incentives for better retention and great ROI.

What is a customer loyalty program?

A customer loyalty program encourages customers to keep coming back to you, offering them reward incentives for their repeat business.

Whether it involves collecting points or just spending more money, customer loyalty programs are an up-front deal with repeat customers: buy from us again, and we’ll give you something extra. Customer incentives could include vouchers and discount codes, exclusive products and member-only prices, free delivery or even free merchandise.

It’s a well-established way to retain customers and build loyalty. That said, it’s not always easy to get it right. Here are some tips for making your efforts a success, as well as customer loyalty program examples to inspire you.

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What is the ROI of a customer loyalty program?

Brands might wonder why they should invest in a customer loyalty program. Before are just a few benefits to consider:

Keeping existing customers costs less

In times of economic uncertainty, there’s less money to go around and higher levels of competition, meaning brands need to prove why customers should choose their business over others.

A customer loyalty program can provide that extra incentive to customers who might be debating whether to choose your brand. A rewards program for repeat purchases – perhaps with a discount or free product offered – can help you to ensure customers keep spending more. This costs you less in the long run than trying to win new business.

Existing customers are a safe bet – the likelihood of selling to an existing customer is 60-70%, whereas it’s only 5-20% for a new prospect.

Offering added value attracts new business

It’s not only existing customers that can be swayed by a successful loyalty program. New audiences might also be interested in how customers earn rewards, particularly if the customer incentives are offered straight away. This added value can be a great selling point, particularly when potential customers are comparing rival brands.

Loyalty data is a powerful tool

Customer loyalty programs can be a rich source of useful data. From customer preferences, motivations, buying habits and more, you can gather a wealth of information to help you predict future customer behavior and tailor your customer experiences and product offerings.

Over 60% of consumers told us that brands should demonstrate that they care more about them, and that they would purchase more as a result. Offering personalized customer incentives for loyalty is a great way to increase your customer retention and show that you care about customers as individuals with specific preferences and needs.

Customers are keen to join loyalty programs

No matter their generation, most consumers are either already a member of their favorite brand’s customer loyalty program or would join if there were one. Millennials in particular are keen to join (72%). Customers are already looking for loyalty programs to join – why not give them the customer incentives they’re looking for?

The best types of customer loyalty programs, with examples

There are a few types of customer loyalty programs to choose from. Depending on the type of customer relationships you have, you can choose how to reward customers for their business with one of four program types:

1. A paid loyalty program

A paid loyalty program exchanges benefits for an ongoing or one-time fee, paid for by the customer. Amazon’s Prime system is probably one of the most recognizable paid loyalty programs. For a recurring monthly membership fee, Amazon Prime users are able to access video, music and shipping benefits at any time. Of all the types of loyalty programs, this is appealing because it’s paid for by the customers themselves.

Image source: aboutamazon.com

2. A tiered loyalty program

In this type of loyalty program, customers get different benefits depending on their rank in the system. A customer who makes repeat purchases or engages more will rank higher, and the rewards they can access will improve.

The Virgin Atlantic Flying Club is a great example. Rather than offering “miles” or points for flights for customers to use on future journeys, Virgin Atlantic now offers a Flying Club membership that provides tier points. The tiers offer different benefits to customers. This gives Virgin Atlantic an edge against competitors that don’t offer loyalty rewards, because it gives customers a reason to choose Virgin over another airline in a regulated industry where there’s typically very little room for differentiation. The more a customer chooses Virgin, the more they’re rewarded. Win-win.

Image source: virgin.com

3. A rewards program (or points program)

Customer loyalty programs of this type give customers loyalty points, allowing customers to choose how they’d like to use these points for discounts or full purchases. This is the most common type of customer loyalty program, because it is easy to implement and simple to understand. There’s no hurdle to joining up, except for providing details a customer might already provide during a checkout process. It’s one of the best customer loyalty programs you can offer as a result.

The Starbucks Rewards customer loyalty program allows you to collect ‘stars’ or points to use towards free items. Starbucks outdid competitors by introducing the program, and has now introduced an app to help customers collect, check and spend their rewards. A digital component of a loyalty program can be a key differentiator.

Image source: stories.starbucks.com

4. A value-based loyalty program

A value-based loyalty program doesn’t directly benefit the customer, but it can convince them to make repeat purchases. Rather than giving customers financial discounts or free goodies, the brand donates a percentage of sales or pledges to take action on a social, environmental or economic issue.

Cosmetics company Lush offers a ‘Charity Pot’ customer loyalty program, donating all of the proceeds from specific body cream sales to charitable organizations. This encourages customers to buy specific items repeatedly and gives the brand a credible air of corporate social responsibility.

How (and when) to start your customer loyalty program

First, determine if you need a loyalty program.

It might seem unnecessary, but determining if a loyalty program will be a good addition to your  business strategy is important before you start. You can figure out your customers’ lifetime values and also how much acquiring a new customer actually costs your business. This can give you a framework for how much to invest in creating a loyalty program and whether it makes sense to start one at the present time.

Understand your current customers

The key to effective customer loyalty programs is understanding your current customer base’s motivations. You should be able to answer the following questions about each of your customers:

• What kind of products/services does each customer buy, and how often?
• How long have they been a customer, and how quickly do they make a payment?
• What other products do they show interest in, or might show interest in?
• What competitors or alternative suppliers might they go to?
• What profit is generated by their business?
• How satisfied is this customer with our service and customer experience ?
• What would incentivize this customer to return for another purchase?

Your ideal target audience for customer loyalty programs is an individual who buys from you frequently, but could increase the profit they generate for your brand. They’ll ideally pay quickly and be interested in further products or services from your brand.

Ways to gather this information include:

• Customer data collected during purchase
• Operational data
• Financial data
• Feedback surveys
• Customer interviews
• Listening to customers across multiple channels
• Market research

Set your KPIs and budget

Create KPIs for your customer loyalty program. For example, what sales increase would you like to see, and for which products and regions? Setting these goals for your loyalty program will help you to determine the right approach, progress and ROI at a later stage.

You’ll also have to create a budget, which should be separate from your budget for developing new customer pipelines. Market research might help you to determine the average cost for your industry.

Choose your customer incentives with their behaviors in mind

Choosing the right type of customer incentive for your business is important. You’ll need to understand what motivates your customers. Is it giving back to the community,  ongoing benefits, or an ad-hoc reward that generates freebies?

You’ll also need to work out what makes most sense for the business – for example will it be a point per dollar, or a stamp per transaction? How will you reward their loyalty?

Spread the word

Once you’ve decided to implement your program, ensure that your internal teams are aware of their roles. Additionally, you’ll need to spread the word through your marketing, social media output and more to make your customers aware. Make incentives clear to new customers with quick benefits highlighted. You may offer initial incentives to join as well as ongoing rewards.

What makes a good customer loyalty program?

Ease of use.

If you want customers to keep coming back, keep things simple. Once they’ve committed to your customer loyalty program, you need to reinforce that loyalty by making transactions effortless – especially when collecting and redeeming rewards. That way, purchases from you become a habit. A clunky and unreliable system or too many caveats and conditions may drive them away.

A Customer Effort Score (CES) survey can be helpful for judging your existing customer loyalty program and customer experience, as well as functionality to analyze unstructured feedback (such as survey verbatims or social media posts) to automatically assess effort, sentiment, and emotional intensity.

High value incentives

Traditional customer loyalty programs have evolved into more of a subscription, requesting monthly fees in return for a VIP experience. An example might be unlimited free priority shipping, or additional perks and features.

It might seem counter-intuitive, but charging a fee isn’t a deal-breaker, provided the value of the reward is higher than the payment. It can actually be viewed as a way to save, particularly if the customer shops regularly with you.

Flexibility

Offering a choice of incentives can be useful for broadening the appeal of your customer loyalty program, but understanding your customer segments, preferences and priorities is instrumental. For example, if you know that your customers are global and shop online, you’ll want to include rewards that appeal to them specifically, such as free international shipping.

Reward tiers

Make loyalty rewards a progressive achievement by including tiers. This gamification encourages customers to get to the next level and unlock more benefits, adding a competitive element with higher-tier customers feeling proud of their status and lower-tier ones being motivated to achieve the same level of prestige. Make sure the path to higher tiers is clear, and encourage higher-tier customers to spread the word about incentives.

Related resources

Customer Churn & Retention

Customer Loyalty 18 min read

Customer churn 19 min read, customer retention surveys 5 min read, churn reduction 15 min read, customer acquisition cost 16 min read, customer retention strategies 13 min read, calculate clv 13 min read, request demo.

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Ecommerce tips, strategies, and news – all without ever having, [case study] build customer loyalty like starbucks + costco.

Building customer loyalty is a primary way to increase conversions and multiply profits. Below we explore two case studies in how to build customer loyalty, featuring Costco and Starbucks.  But first, we cover customer loyalty program basics, including how to define customer loyalty, why it is important, and ultimately, the types of loyalty you can build. If you would like to skip the theory and head straight to the case studies , click here .

What is customer loyalty program marketing?

A customer loyalty program, often called a rewards program, is a customer retention strategy that focuses on repeat purchases. Customer loyalty programs are designed to incentivize customer actions. Programs can offer many types of benefits such as rewards, points, cash back, gifts, free shipping and more.

Next we will see the benefits of customer loyalty, including improved add to cart rates, conversions, and AOV.

Why is customer loyalty important in eCommerce?

Returning visitors dramatically increase profitability. In our study on New vs Returning customers , we found that retained visitors

• Added items to carts 65.16% more than first time visitors
• Converted 73.72% more than first time visitors
• Spent 16.15% more per transaction

Further studies confirmed these benefits of customer loyalty. One study by Harvard Business School found that "Loyalty leaders - companies at the top of their industries in NEt Promoter Scores or satisfaction rankings for three or more years - grow revenues roughly 2.5 times as fast as their industry peers and deliver two to five times the shareholder returns over the next 10 years." And another study by  ZenDesk found that 75% of customers are willing to spend more from companies that give them a good customer experience, while 50% will switch to a competitor after one bad experience.

Image Credit: Zendesk's 2021 Customer Experience Trends Report

How to build customer loyalty?

There are two major types of customer loyalty. The first is transactional loyalty, and the second is emotional loyalty.

How to build transactional customer loyalty

The first is transactional loyalty. This type of loyalty is rational in nature. Customers perceive it is in their best interest to stay with this company based on repeated past experiences. For example, they may believe that the brand is the least expensive, most convenient, or least risky option. Famous brands who have built their business through transactional loyalty include Walgreens and CVS. In fact, certain industries compete primarily on transactional loyalty, including pharmacies, gas stations, and grocery stores. There are many ways to generate transactional loyalty. Below are few principles.

• Loss aversion: Customers value losing more than gaining. By incorporating rewards, points, and bonuses you can influence customers to continue shopping with you else they lose the points they have earned
• Recency Bias: Customers overweigh what has happened most recently. Brands can take advantage of this by introducing daily deals or other tactics to boost
• Reciprocity: Finally reciprocity is a well documented social norm where people respond to a positive action with another positive action. (link to Wiki). Brand can create transactional loyalty by leading with value, such as a gift or credit, which can spur customers to want to respond.

How to build emotional customer loyalty

The second type of loyalty is emotional loyalty. As the name implies, this type of loyalty is not based on a "rational" calculation that being loyal is better for the customer, but instead is based on an emotional connection. Typically, this connection takes the form of status, the brand becoming part of the customer's identity, or the brand being used to express their identity. Because of this, they are much less likely to be influenced by competing offers and brands may enjoy higher price elasticity when they set their pricing strategy . Again, there are a few principles at work that eCommerce stores may take advantage of to maximize customer emotional loyalty. There are many famous examples of brands that have created emotional loyalty with customers, including Apple, Disney, Starbucks, Coke, and Pepsi.

We've covered how Starbucks creates loyalty through their omnichannel-retail strategy here .

Customer loyalty examples: tactics and strategies from top companies

Below we break down examples of customer loyalty programs, and call out specific tactics these companies make in a running list.

How Costco creates customer loyalty

Costco is a multinational company that operates membership big-box retail stores. The company has grown to 152.7 billion dollars annually, and makes for a fantastic case study on customer loyalty. As their management states in their latest 10-Q filing , "We believe the most important driver of our profitability is sales growth, particularly comparable warehouse sales growth.... Comparable sales growth is achieved through increasing shopping frequency from new and existing members and the amount they spend on each visit (average ticket)."

“We believe the most important driver of our profitability is sales growth, particularly comparable warehouse sales growth.... Comparable sales growth is achieved through increasing shopping frequency from new and existing members and the amount they spend on each visit (average ticket) ” - Costco 10-Q, 2021

1. Cross subsidizing with a membership model

Costco's loyalty program begins with their membership business model.  Members pay an upfront cost to be able to enter the store and purchase goods. In return, Costco provides low, competitive prices, private label items, and other exclusive perks.

“Our membership format is an integral part of our business model and has a significant effect on our profitability. This format is designed to reinforce member loyalty and provide continuing fee revenue. ” - Costco 10-Q, 2021

2. Using loss leaders to promote transactional loyalty

Part of Costco's loyalty strategy is to "provide members with quality goods and services at the most competitive prices." Instead of maximizing profits per transaction, they focus on maximizing each customer's lifetime value to the company. This is exemplified most clearly in their gasoline service.  "We believe that our gasoline business draws members, but it generally has a significantly lower gross margin percentage relative to our non-gasoline business." Costco takes measures to ensure members will always save on their gas bill. They are able to do this because of their membership business model, which doesn't rely on profits in gasoline to fuel the business.

3. Using unique, private label products to increase loyalty

Private label products increase customer loyalty in a number of ways.  First, it distinguishes Costco. Instead of competing in purely commoditized products, Costco can offer exclusive options for their members.  Further, as customers become habitualized to these products, it improves their membership retention rate . If customers want to enjoy these products, they must continue shopping at Costco.

Because of the exclusivity and collapsing the supply chain, these product are often more profitable on a unit basis as well. 

Image Credit 

4. Maxime loss leaders with creative financing options

Finally, Costco compliments their product offering with a branded credit card. They have tailored the rewards card to maximize customer loyalty, highlighting some of the biggest reasons to be a member.

• 4% cash back on Costco gas
• 2% cash back on Costco purchases
• Costco membership is bundled with the price of the card

How Starbucks improves customer loyalty

Starbucks is another premier case study of how to improve customer loyalty.

5. Cross channel marketing

Starbucks does an incredible job driving customers into their loyalty program. We've covered before in our case study of Starbucks' omnichannel strategy how they tie in different channels, all leading to subscribing to their renowned loyalty program. Below we see a clear example. Once subscribed to their email list, customers receive member exclusive offers. If they would like to partake, they must enroll in the loyalty program.

Starbucks extends their Rewards program to lower margin grocery items as well. The rewards themselves help drive traffic to their in-store locations, increasing frequency, lifetime value,  and accessing a whole new group of customers.

6. New product development

Starbucks also drives repeat purchases through new product development.  With a steady stream of new options, customers are nudged to come back and try their latest creations. These new products often embody other aspects of the business, in this case Starbuck's new relationship with OATLY.

“We recognize that we are a beverage-forward concept. Beverage is our key point of differentiation.” - Pat Grismer

7. Create urgency with limited time products

Additionally, seasonal holiday beverages create excitement in their customer base and provides a sense of urgency to come into the store. In fact, there are now many seasonal beverages that customers pine for, including Pumpkin Spice Latte, Peppermint Mocha, and Irish Cream Cold Brews.

Further, Starbucks constantly rotates in limited run premium products.  Combined, holiday and limited time products give a reason to return.

8. Unique experiences for Rewards Members

Finally, Starbucks routinely creates rewards member engagement campaigns. These often take the form of exclusive games and rewards Starbucks Rewards Members can participate in. Below is just one example. In Starbucks For Life, Rewards Members collect game pieces that can earn them rewards ranging from a $500 gift card, Bose  Earbuds, and of course, the namesake grand price, free Starbucks for Life.

Next Steps...

Starbucks and Costco are great case studies in how to build customer loyalty.

At it's core, customer loyalty is about providing a better experience. While there are many ways to improve customer's experience in an eCommerce context, the primary ways revolve around creating personalized, relevant experiences and offers across all channels. Below are a few resources we have put together to help.

• Advanced eCommerce personalization examples  - In this guide, we showcase numerous personalization examples, including digital first brands such as Thrive Market and Third Love. 
• Triggered email examples and best practices  - Email remains the best channel for driving profit. In this guide, we showcase how top brands like Nike, Amazon, and Google use triggered emails to increase AOV.
• Database marketing examples  -  Finally, leveraging first party data on your customers is the best way to create better offers. We've found RFM analysis to be especially useful here.

Lastly, we help hundreds of premier eCommerce stores generate customer loyalty and repeat purchases. If you would like to see if we can help your store, schedule a personal demo here .

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Unravelling the Code to Incredibly Effective Nike Loyalty Scheme

The eCommerce landscape is thriving. The primary challenge isn’t just drawing in users, but ensuring they remain engaged. Over 90% of businesses today offer a loyalty program. Some examples like a Nike loyalty program set the standard for rewards programs – and it’s possible to replicate the same in your store.

Nearly every retailer offers a loyalty program, and it’s likely you belong to one or more of them. The formula is familiar: buy products consistently, accumulate points, and then exchange those points for discounts or complimentary items. At a glance, cultivating customer loyalty appears simple. But more often than not, it’s not the case.

In this article, we’ll delve into the art of shaping a loyalty scheme , taking Nike’s strategy as an ideal illustration. By the end, you’ll possess the knowledge needed to launch your own effective loyalty program .

What Are the eCommerce Loyalty Programs?

The concept of brand loyalty in the context of nike, nike’s loyalty program: ai-infused excellence from a global brand, challenges for ecommerce companies in terms of customer retention, top reasons why customer loyalty and retention strategy are critical, how does the nike loyalty scheme work, the core secrets of successful nike loyalty scheme, types of rewards programs, ideas and trends for customer loyalty programs, summary: building a customer loyalty program, get an ecommerce expert consultation.

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E-commerce loyalty programs are systems online retailers use to offer perks to their customers. Users accumulate points or benefits when shopping. The more they shop, the more benefits they acquire, which can be used for discounts or complimentary items, motivating them to revisit the platform. 

Moreover, many eCommerce loyalty programs also offer benefits for various interactions, like writing product reviews, referring peers, sharing posts on social media, or even just registering or completing a profile. By offering benefits for a broad spectrum of user actions, they not only motivate purchases but also foster a deeper connection with the brand. 

The success of such a strategy lies in its clarity and simplicity. Users should find it straightforward to understand how to gain points and their value.

Nike is one of the most valuable sports brands and a globally recognized trademark. Nike’s brand value made an astonishing $53 billion in 2023, and its yearly revenue surpassed $51 billion . Such remarkable success stems from the combination of innovative products and customer devotion, which together turn the brand into an icon. Nike’s loyalty program accounts for over 100 million members and continues to build a dedicated follower community.

SOURCE: Nike Partnerships and Events page

The origination of Nike’s brand loyalty concept

Nike’s brand loyalty program, known as NikePlus, was introduced in 2005 as a way to reward and engage repeat customers . The program initially offered members access to exclusive products, early entry to sales, and personalized recommendations based on their purchase history and preferences.

Over the years, Nike has expanded and evolved its loyalty program to offer additional benefits and incentives. Loyalty cards and accumulated credits became a gateway to special promotions, birthday rewards, free shipping, and unique events. Over time, Nike has expanded its loyalty scheme with digital features, such as the Nike Run Club and Nike Training Club apps, which integrate with the loyalty program to offer tailored training plans and challenges.

Nike’s commitment to shaping a devoted adopter community was sparkling through every facet of its business activities. The brand’s exemplary marketing strategy showcases how to build strong emotional bonds with clients and turn a product into a lovemark.  

Essential elements fueling Nike brand loyalty

So, which aspects of Nike’s culture help to continually expand its enthusiastic community of followers?

• Innovative products. Nike has a long history of innovation, constantly pushing the boundaries of athletic footwear and apparel design that meets and anticipates consumer needs. 
• Iconic branding . Nike’s signature swoosh logo and memorable advertising campaigns consolidate its brand identity and resonate with consumers. Through powerful storytelling and aspirational messaging, Nike has inspired loyalty and admiration for the brand.
• Inclusive marketing . Nike has embraced diversity and inclusivity in its marketing campaigns, celebrating athletes of all backgrounds, abilities, and identities. This way, the brand has fostered a sense of belonging and empowerment among consumers, strengthening their connection to the brand.
• Community engagement . Nike actively involves its community in various events and initiatives. By supporting youth sports programs and investing in local communities, Nike has built meaningful connections with consumers, athletes, and fans.
• Innovative retail experience . Staying at the forefront of advanced technology, Nike invests in creating innovative and omnichannel retail experiences that blend physical and digital channels. From flagship stores to immersive online shopping, Nike offers consumers unique shopping journeys.

Artificial Intelligence (AI) carries revolutionizing potential for industries, and those who adopt it efficiently will stay ahead of the curve. Nike has been in the avant-garde of implementing AI in various business activities. 

How does AI contribute to Nike brand loyalty and the Nike loyalty program in particular? 

AI-powered app

Nike brings personalization to a new level by crafting an app that can scan your foot with a smartphone camera and provide accurate shoe-fitting recommendations based on the obtained data. To attain this purpose, the app combines augmented reality technology and AI algorithms that continually learn and deliver more precise recommendations each time. This way, the app tackles the issue of ordering incorrect sizes.

Predictive analytics

Nike uses AI-powered predictive analytics to anticipate customer needs and behavior, allowing the brand to engage with members and offer relevant promotions and incentives. Intelligent algorithms accumulate user information through apps, including Nike Sneakers, Nike Training Club, and the Nike app. By analyzing collected data and trends, Nike can identify opportunities to delight customers , make product and design decisions, and take other strategic and tactical steps.

Chatbots and virtual assistants

Nike integrates AI-powered chatbots and virtual assistants into its loyalty program to provide personalized user support and assistance. These AI-driven tools can help members with inquiries, enhance searches, derive advice based on consumer behavior, manage orders, and more.

Customer engagement program

Artificial intelligence technology empowers a new level of personalization. By combining advanced apps, loyalty programs, loyalty card s, rewards, and omnichannel retail experiences, Nike exercises a tailored approach that is so praised by the modern audience.

Begin eCommerce Website Optimization

The structure of a website is akin to the foundation of a house. Lay a solid groundwork for your business's growth with a properly configured store.

Retaining users for your eCommerce platform is as essential as bringing in new ones. Yet, ensuring user commitment hinges on multiple factors. 

Here’s a look at potential hurdles: 

• Market Dynamics : The online space is teeming with rivals presenting similar offerings. The vast options make it easy for users to switch preferences, underlining the need for retailers to differentiate themselves. 
• Exceptional User Support : Without direct interaction, providing top-notch support becomes challenging. Users look for prompt and efficient solutions. Falling short can result in them leaving. 
• Building Trust : Confidence is paramount for online shoppers. Since they can’t check out items firsthand, they rely on descriptions and feedback. Moreover, they need certainty that their personal and financial data remains secure. 
• Customized Experience : Users want personalized shopping journeys. Retailers not meeting this expectation might lose customers to those that do. 

Tackling these issues demands thorough interventions. A meticulously planned loyalty program for eCommerce can counter these challenges, differentiating you from the rest, cementing trust, providing customization, and bolstering user involvement.

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Customer loyalty boosts earnings, enhances sales performance, and enables long-term growth.

A well planned and implemented loyalty program may assist you in retaining existing customers, attracting new customers, reducing attrition, and increasing revenues.

Almost six in ten UK adults agree that firms should provide loyalty programs, and nearly 60 per cent of internet users consider ‘winning rewards’ to be one of the most valuable components of the retail purchasing experience.

• Loyalty programs establish an emotional relationship.  Customer loyalty and retention strategy enhance revenue and customer lifetime value. On the most fundamental level, this is accomplished through incentives. But there’s more going on here, and the emotional connection that loyalty programs build might be much more essential.
• Recurring customers have a high ROI.  On average, a business owner spends five times as much to attract a new client as it does to keep an existing one. Current customers are 50% more willing than new consumers to switch brands and spend 31% more on each transaction.
• Customer loyalty and retention strategy allow you to reach out to new consumers.  Solid client word-of-mouth is critical to gaining new consumers in the age of eCommerce and digital product reviews. In fact, personal suggestions are trusted by 83 per cent of customers, more than any other kind of marketing.
• Customer insights are provided through loyalty programs.  When you digitize your reward program, you have access to real-time data on how your consumers interact with your program and your business as a whole. Access to this data allows you to create unique and successful tactics for strengthening not only your loyalty program, but also your brand as a whole.
• Creating a successful customer loyalty program has never been easier.  A digitally enabled loyalty solution will be required if you want to grab the interest of modern buyers (and gain access to many of the perks highlighted in this article).

The entire program is distributed via apps and the Nike membership program. Fans may become members of one of the top retail loyalty scheme s in the world by joining up on the official brand’s website. They may also join any of the four applications available, which include:

• Nike Run Club, 
• Nike Training Club.

Customers can monitor their accumulated credits and receive communications from the firm regarding members-only collections, among other perks. As a result, it is one of the greatest instances of a loyalty system.

So, what is a loyalty scheme from the perspective of Nike? Perks include:

• obtaining first dibs on tickets to sporting events, 
• exclusive releases, 
• early access to new releases, 
• professional training guidance, 
• incentives for app engagement, 
• birthday offers, 

The icing on this perks-filled dessert is free delivery.

Nike is ranked ninth in the world in terms of consumer brand loyalty . Nonetheless, it is one of the firms with the most devoted customers.

Let’s broaden the plan and see how it turns out.

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At the heart of the Nike loyalty scheme is a secret built on ideas such as omnichannel optimization, community development, exclusivity, and personalisation.

One of the primary advantages of becoming a Nike member is the availability of unique rewards. Loyal consumers get access to all of the fantastic things that the firm has to offer. They may shop unique member-only collections and receive things before they are released to the public.

Because of the exclusivity, the product is not easily accessible to everyone. With quality to back it up, the company can charge more for its products than competitors while still making a lot of money. 79% of Nike consumers said the special incentives are a big part of why they stick with the brand.

Exclusivity and rewards work well together to make the loyalty scheme ideas work . Adopting this scheme for your business can be done in the form of loyalty tiers that use a reward system to maximize engagement, sales and offer more perks as points accumulate.

Exclusivity

Another reason that Nike customers engage with the brand, is that they exist in a community that is tangible and useful. Users who join get access to free workouts, training instructions, and educational materials. The applications also provide articles about topics that the community finds interesting.

In what is one of the best loyalty schemes examples , Nike uses specific wording in ads. They also utilize call-to-action language to entice customers to become members and feel a sense of belonging. Almost half of all customers indicated they are more inclined to be loyal to a brand if they believe they are in the company of others who share their values.

The easiest method to achieve the type of engagement and community you want is to look for it on social media platforms where people are more inclined to spend their time. Putting the community first guarantees that you have clients who will connect with you and buy your items when they are announced.

Nike Run Club’s followers on Instagram vs Adidas

Many times, it has been stated that personalisation is the finest approach to make clients feel as if they have a personal connection with the business. When a brand remembers their birthdays and anniversaries and treats them to such occasions, 61 per cent of the public feels special.

Personalisation is what makes loyalty stick. Customers feel thoroughly understood and well-treated, rather than simply another casual shopper who will come and go.

Using the same method is as easy as surprising consumers with a fantastic greeting on their birthdays, and addressing them personally using their name. It may also entail sometimes providing them with unique bargains on something they may have desired in order to make them feel special and loyal.

Nike employs a one-of-a-kind points system that may be reproduced to reward customers who spend more and advance them to higher tiers.

Personalisation

One of the enticing aspects of the Nike Loyalty Scheme is its robust omnichannel strategy, which links members’ mobile applications at all times, even while they are shopping in a store. They may then use the same login for all apps and websites.

Ease of access and integration of all activities to track points and deliver rewards appropriately is a terrific approach to keep your consumers coming back.

Customers can have their loyalty profiles scanned when purchasing in-store. The system is designed in such a way that consumers’ loyalty may be recognized by Nike regardless of the technique they use. A smooth omnichannel experience makes it easier to account for loyalty and reward it in a deserving way.

Omnichannel Experience

Your strategy’s design will hinge on your market and target audience. Here are some methods to consider: 

• Points System: The thrill of accruing points and aiming for perks keeps users coming back.
• Tiered Benefits: Regular users receive exclusive deals and premium services from eCommerce stores , showcasing appreciation and making committed users feel treasured. 
• Cash Benefits: Cash returns are a strong gesture, implying that retailers cherish user commitment. 
• Purchase Cards: These types of rewards programs offer a complimentary item after a set number of purchases.
• Membership Perks: They create an elite group, granting members the best deals or unique items, enhancing user involvement. 
• Philanthropy Points: Users feel good knowing their purchases aid noble causes, deepening the bond. 

If you are wondering how to create a loyalty program, start by thinking of its type. Pick the one that best ensures users of your commitment to quality and value. Adapt your strategy to your user’s desires and tastes, nurturing strong bonds, encouraging repeat buys, and carving a distinctive presence in the fiercely competitive digital space.

Gaining customer loyalty is on the rise as more companies rush to establish relationships with customers. The shift happening now is giving birth to new trends, which have interesting propositions and approaches that answer the question; why is the Nike loyalty scheme a success?

The most significant development in this market segment has been the implementation of emotional and behavioural-based loyalty programs. Traditional models in paid/subscription services such as Amazon Prime were driven by transaction-based models and behavioural models.

Emotional loyalty, on the other hand, has produced greater outcomes and lasted longer due to the stronger bonds built between a brand and its clients.

An emotional element incentive, as opposed to merely rewarding customers after they make a purchase, is all about addressing the question, “Why should I pick your product?” Gallup research reveals that when firms employ micro-engagements, personalization, data-driven choices, individualised rewards, and a seamless customer experience, strong emotional connections are developed.

Emotional and Behavioural-Based Loyalty Programs Are On The Rise

Not only does the omnichannel approach benefit the brands, but it also offers great benefits to the customers. Making the experience seamless, easy-to-navigate, and convenient leads to higher conversion rates, improved returns on investment, more sales, and better customer retention rates.

Our current future is more linked than mankind has ever been. As time passes, the relationships will become more interwoven and deeper. The Internet of Things (IoT) is generating connections that ensure customers may be rewarded regardless of where they spend, whether in a physical store or online.

Start by digitising your loyalty programs so that you can offer rewards across all channels and allow shoppers the opportunity to pick a channel that works best for them. With recent advances, connecting all of your channels is now easier than ever.

Omnichannel Reward Programs Will Be the Standard

The emergence of data-driven decisions has resulted in more efficiency and overall better results. Integrating data with machine learning models automates the processes, eliminating the need to go through mounds of data to determine who has a birthday and when to reward them.

The entire process can be automated and protected via blockchain, so clients know they will never lose their loyalty points for the rest of their lives. With blockchain, the loyalty rewards can all be aggregated and channelled into a wallet of redeemable points with value.

Many of the loyalty programs can be automated and optimized in a way that produces the best responses from the target audience. Before you adopt the ideas wholly, run pilot programs to see success rates before making programs generally available in your overall customer loyalty and retention strategy.

The Role of Big Data, Machine Learning, AI, and Blockchain

Brand interaction is becoming more mobile-focused than ever before. The reason for this is that more people are buying on their phones, checking out things on the move, and overall spending more time on their phones than on any other device.

The basis for focusing on mobile is that people carry it with them at all times and can get all of the benefits via mobile applications, while also providing marketers with the opportunity to directly interact and target customers in a tailored manner.

Although 84 percent of merchants provide a mobile loyalty experience, just 22 percent display loyalty points/rewards on the home screen. Experts call mobile the bridge between offline and online experiences by integrating engagement with mobile apps when customers make in-store purchases.

Mobile Loyalty Apps Will Continue to Gain Popularity

Personalisation just by names is not enough, which is why hyper-personalization is the name of the game. If the customer feels like your competition knows them better than you do, you will lose them.

As AI technology hits new milestones every year, hype-personalization does not have to be a hassle. It can be a mostly automated process where your only input is deciding what kind of format you would like it to follow.  

Loyalty programs can be used to personalise the customer experience while generating the kind of customer insights that a brand needs. Purchase history, product preferences, and redemption of points can all be tracked to make your marketing strategies even better and more informed, like the Nike loyalty scheme .

Hyper Personalisation Will Separate the Leaders & Laggards

Nike loyalty scheme, as well as other big-brands’ loyalty programs, may be used to inspire your retention strategy, establish long-term loyalty, and expand your ecommerce business. More data-driven and AI-driven models will be used in loyalty programs in the future years. They will make it simple to interact with your consumers at scale without the need for more staff or responsibilities.

We’ll see programs shift away from the old, analytical, emotionless approach and toward a more flexible strategy that focuses on the individual buying the goods and their emotions.

To that aim, WebMeridian provides all-in-one services for businesses seeking a more personalized approach. This is what customers are thinking about when they come up with loyalty plan concepts and programs. We can provide both offline and online companies with the force they need by basing the plans on what is emotionally significant. We can provide both offline and online businesses with the force they need to keep their clients for a long time by basing the plans on what is emotionally significant.

We work with companies of various sizes, and among our clients are well-known brands with a long track record of success.

Contact us to implement an efficient and reliable client loyalty program, and get started right away.

The RAPID loyalty method consists of three measures, each of which evaluates one of three aspects of customer loyalty: RLI (Retention Loyalty Index): The extent to which consumers will stay clients or leave to rivals; includes loyalty issues such as: renew service contract, leave to competitor (reverse coded).

Retention is the percentage of existing customers who continue to do business with you. Loyalty assesses a customer's proclivity to choose a corporate entity as a preferred option and suggests a degree of resistance to competition.

The total cost of the Magento eCommerce website includes developers’ hourly rates (30$-60$) as well as the scope of work required. Let’s take a look at the tasks that your online business will require: Step #1Requirements Investigation Stage (it usually takes nearly 20-40 hours); Step #2. Design of the Project’s Architecture (nearly 40-80 hours); Step #3. Installation of Magento 2 (1-2 hours); Step #4. Implementations of the Backend (needs at least 200 hours and depends on customisations you may need); Step #5. Implementations of the Frontend (starts from 200 hours); A project of this nature should take between 1000 and 2000 hours to complete.

What customisation encompasses as an action. Customisation is required if you need to rebuild or replace particular default features for your company’s needs. This necessitates more developer effort and may be accounted for as extra development hours. You may change the theme, modules, and shop features like goods, orders, search, login, and checkout. You may also contact us to adapt any feature for your shop and enable you to understand the prices based on our estimates. A tailored solution ensures that you do not squander money on features and capabilities that you do not require.

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Rewards Case Study: Amazon Prime

Not too long ago when you’d mention the word ecommerce, Amazon was the only thing that came to mind for many shoppers. Today ecommerce platforms like Shopify, BigCommerce, and Wix have made it easier than ever for entrepreneurs to start their own ecommerce business, but Amazon is still top-of-mind for many in the world of online shopping.

Along with that comes its loyalty program, Amazon Prime . While it’s different than most loyalty programs we discuss, being a paid subscription model, it still has millions of loyal customers. So let’s break down the program and see what Amazon is doing well and where they could improve.

What Amazon Prime does right

What started as an online bookstore quickly became the gold standard in ecommerce. Amazon is an all-encompassing ecommerce solution and is often seen as the "Wal-Mart" of ecommerce. Thanks to its size, popularity, and ongoing innovation, Amazon Prime remains a central topic of discussion in the future of ecommerce!

1. Amazon Prime is easy to understand

You will be greeted with plenty of benefits when you sign up for the program. The Prime explainer page does a really good job of showing all the benefits without overwhelming you.

The page highlights each key benefit with an accompanying icon and brief description. This makes the page easily skimmable, while also providing adequate detail for prospective customers. It's just enough information to get you excited, without being too overwhelming. This is vital for a strong explainer page.

However, some people will want all the details. That is why Amazon Prime provides links to more detailed explanations at the bottom of the page. Want to know more about Amazon Music? Just click that link and all the details you could possibly need are right there.

Amazon’s program at its core is a subscription to get cheaper expedited shipping and access Amazon’s multimedia outlets. It can be boiled down to two main benefits, but Amazon does a good job of building these benefits out to create a program that is relevant to a variety of customers. Some customers are readers, while others are gamers. And for the customers who enjoy both, the program is even more appealing. By diving into the details of program benefits, Amazon has created an explainer page with near-universal appeal.

2. Amazon offers a broad choice of shipping methods and speeds

There is not a one size fits all loyalty program. You need to adjust and tweak your rewards to match what your customers are looking for in a program. A luxury brand’s loyalty program would be structured differently than Amazon Prime. Nonetheless, Amazon seems to give customers exactly what they want.

Amazon’s biggest advantage over other ecommerce stores is its variety of fast delivery methods. Amazon makes two-day shipping feel like the economy option by offering even faster methods, including drone delivery within an hour in some locations:

Members get their orders delivered fast, free, and with excellent customer service along the way. This simple benefit is one of the best examples of giving your customers what they want from your loyalty program. When customers think of Amazon Prime it’s become essentially synonymous with the brand’s fast Prime Delivery.

3. Prime comes with additional perks — music, movies, and more

Most know Amazon for its selection and shipping, but many people are unaware of their other services. Today’s customer is likely accustomed to having a long list of monthly or annual subscriptions — Netflix for video streaming, Spotify or Apple Music for music streaming, iCloud or Google Photos for photo and video storage, and the list goes on. But with customers trying to cut back their discretionary spending in uncertain economic times, a one-size-fits-all subscription might be what they’re looking for.

Amazon Prime offers competing products for all of these. It's a fantastic way to get your services into the hands of thousands and to build a thorough ecosystem of products and services.

As we write this post, we keep wanting to call these services "free." From a user's perspective, the $139 spent per year is to take advantage of the shipping offers, while other features feel like extra perks. They aren't really free, but Amazon positions them as perks rather than features to create this illusion.

Members see extra features as a cost-saving opportunity since they are already paying more per year for services that don't deliver the same breadth of value. That’s not to say customers will cancel their Netflix or Spotify subscriptions after signing up for Prime. They’ve developed loyalty to the other brands and may prefer the options available to them on the other platforms.

But for the super price-conscious, value-driven consumer, Amazon has positioned itself perfectly as the one-size-fits-all solution! Members see value in using these services and Amazon expands market share and brand awareness in all of the areas they are less well known for. This is loyalty marketing at its finest!

4. Amazon Prime has started recognizing the importance of “shopping small”

It’s no secret that we’re all about supporting small businesses here at Smile. Amazon is often considered the anti-small business ecommerce solution. It’s even become a bit of a taboo topic in the movement to “shop local” or “support small businesses”.

Like any brand that wants to survive, Amazon has made an effort to start meeting these customer preferences. Its Buy with Prime feature allows customers to reap the shipping benefits Prime offers on other ecommerce sites beyond amazon.com. When customers shop on its network of participating ecommece sites they can select the Buy with Prime button to purchase the product with the expedited checkout experience they are used to. This is the perfect solution for customers that want to shop small but still appreciate the value of free, fast shipping.

Amazon has even included features and spotlights of the founders to help its customers connect with the brands. With the ability to shop collections by your “vibe”, Amazon Prime gives customers a centralized hub for discovering awesome small businesses that they can support directly while still receiving the Prime benefits they know and love.

While we always encourage shopping small wherever possible, we have to give credit where credit is due. We know a good loyalty program when we see one and Amazon Prime is a great example of exceeding customer expectations and adding value.

What Amazon Prime is doing wrong

Before we get into this section we want to clarify that we could not find any glaring problems with Amazon Prime. After all, there’s a reason there are 200 million Amazon Prime subscribers worldwide. This is more of a “recommendations for improvement section” than it is a “what’s wrong” section.

1. Customers feel Prime overpromises and underdelivers for the price

Loyalty programs are usually a tool used in retention marketing . This means they are focused on getting a greater percentage of your existing customer base to come back and become profitable repeat customers.

As we’ve mentioned, the biggest perk most customers associate with Prime is the fast delivery. But many customers have been complaining that the same-day or two-day delivery they were promised was in fact an empty promise. When you offer something as a benefit, not to mention the main benefit, of your loyalty program — you better deliver (on time).

@amazon why do you falsely advertise with a Prime membership 1 day delivery standard at the time of purchase but then change that after I’ve paid to a 2 day delivery standard but put a delivery date of 3 days? What am I paying Prime for? — Eric G (@ezza) June 1, 2023

In some cases, Amazon sidesteps the one-day delivery promise if you live in what they classify as a “remote” area. This makes sense, sometimes. Customers in rural towns don’t expect the same delivery speed as those in major cities. But where customers have an issue is when the “remote” label is applied too generally.

For example, I live in a small town and two of my sisters live in neighboring towns 5 minutes east and west of me. While my address has earned me a “remote” status and 2-day delivery that ends up being closer to 3 or 4 days, my sisters both get the 1-day delivery they were promised. I won’t lie — paying the same price as them to watch delivery trucks drive right past my house is more than a little frustrating.

2. Users are not rewarded for spending more (or more often)

Today’s best loyalty programs incorporate elements of gamification or status-based rewards. This means they challenge customers to strive to be better or to beat each other. These types of programs are called VIP programs or tiered programs. Amazon would no doubt benefit from a program like this.

One of the best examples of a tiered loyalty program is Sephora's Beauty Insider , which has gotten makeup users to be proud of spending $1,000 a year at their store.

We believe Amazon could take advantage of a similar style program. If we were to restructure Prime, we would make it free to join and give additional shipping benefits based on tiers. Members would start in basic and get discounted shipping. When a customer makes a certain amount of purchases in a year (maybe one above the average purchase frequency ) they get free basic shipping. When they make the next threshold of purchases they get free one or two-day shipping like the current Prime structure.

This tiered style program would allow Amazon to see the benefits they currently see with Prime while engaging customers who are not yet frequent buyers. Customers will spend more if they are challenged to do so!

3. Amazon confuses customers with multiple loyalty programs

Amazon has two types of loyalty programs — Amazon Prime and Shop with Points. This is a collaboration with other point providers, where they can use those points to make purchases on Amazon. Amazon offers points directly through a Visa card, but most are done through an external point system.

Running two different programs can create confusion — especially when both are so prominent. Amazon could easily combine Prime and a points-based program to make something that would be super effective.

Is Amazon Prime worth it?

All in all, we like how Amazon has structured the Prime program. They have created a program their customers love and they give those customers exactly what they are looking for, most of the time.

We think they could improve the program with a focus on delivering on its promises to all customers, some gamification elements, and a clearer distinction between its two reward structures. But all in all, the sheer amount of Prime subscribers speaks for itself and Amazon is doing a thing or two right.

Editor’s Note: This post was originally published on November 5, 2015, and was updated for accuracy and comprehensiveness on June 14, 2023.

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Starbucks Loyalty Program Case Study

Starbucks, renowned as one of the foremost coffee brands globally, owes its success not just to its exceptional range of products. A significant contributor to its widespread acclaim is its highly popular loyalty program , which has been an inspiration for many U.S. restaurant chains and retail stores. Launched on December 26th, 2009, the Starbucks rewards program has amassed over 30 million active members, contributing to nearly 60% of the brand's total revenue. The program effectiveness was strikingly evident in 2019, with Starbucks reporting a substantial 7% increase in sales primarily attributed to the efficacy of its rewards program.

Program type 

Points system.

• Points for rewards
• Coalition Loyalty

Starbucks Rewards leverages a points-based system ingeniously designed to enhance customer engagement and loyalty. Members accumulate 'Stars' with each purchase made via their registered Starbucks Card or through the Starbucks mobile app.  The program is structured to encourage varied forms of engagement, enhancing the overall customer experience and brand loyalty.

• Earn 1 Star per $1 spent when you pay in cash
• Earn 2 Stars per $1 spent when you preload your digital Starbucks Card
• Earn additional bonus Stars through special promotions
• Earn double Stars on Delta Airlines travel days
• Earn double Stars on promotional days
• Points expire after 6 months

Starbucks Rewards allows its members to redeem their accumulated Stars at various levels, each unlocking distinct rewards. This structure caters to diverse preferences, allowing customers to either redeem their Stars for immediate benefits or save them for more substantial rewards.

• 25 Stars: Redeem for a free drink customization, such as extra flavor, espresso shot, or alternative milk.
• 50 Stars: Get a complimentary hot coffee, tea, or bakery item like a bagel or croissant.
• 150 Stars: Choose a free handcrafted drink, hot breakfast, or a parfait.
• 200 Stars: Earn a complimentary lunch item, like a salad, sandwich, or protein box.
• 400 Stars: Exchange for packaged coffee beans or select Starbucks merchandise.

Coalition loyalty

Starbucks and Delta Airlines have embarked on a partnership, merging the world of coffee with the skies. Linking your Delta SkyMiles® and Starbucks® Rewards accounts opens up a new realm of earning opportunities and exclusive benefits.

• Travel-day perks: Double Stars on Delta travel days
• Everyday earn: 1 mile per $1* spent at Starbucks
• Exclusive offers: More opportunities to earn Stars and miles

Interesting takeaways

Multi-channel communication.

Starbucks leverages multiple channels to communicate about its rewards program, ensuring widespread awareness and engagement. The use of a dedicated landing page, mobile app, points balance reminder emails , company blogs, and social media platforms creates an ecosystem where information about the program is readily accessible and consistently updated. The clarity and frequency of updates, including press releases for significant changes, demonstrate Starbucks’ commitment to transparency. This approach not only keeps existing members informed but also attracts new participants by clearly outlining the program’s benefits. Good communication is likely a significant factor in the program's high membership numbers.

Program simplicity and incentive structure

The simplicity of the points system (earn points and redeem for rewards) is user-friendly and easy for customers to grasp. This clarity enhances the appeal of the program and encourages participation. The structured nature of rewards incentivizes customers to accumulate more points to access greater rewards. This gamification element adds an extra layer of engagement, as customers are motivated to reach the next level. As customers get closer to a significant reward, their motivation to attain it increases. This psychological aspect of goal setting and achievement is a powerful tool in enhancing customer loyalty and encouraging more frequent purchases.

Incentivizing preloaded payments

Starbucks ingeniously incentivizes customers to preload their Starbucks account by offering double points for purchases made using a preloaded Starbucks Card. By preloading their accounts, customers commit themselves financially to future purchases at Starbucks, which effectively guarantees a degree of customer loyalty and repeat business. This strategy turns occasional visitors into regular customers, as the preloaded funds will likely be used exclusively at Starbucks locations. From a financial perspective, this strategy is beneficial for Starbucks. When customers preload their accounts, the brand receives cash in advance, improving its cash flow. This tactic also promotes increased engagement with the Starbucks mobile app, where preloading and tracking of rewards can be easily managed. 

Coalition program with Delta Airlines

The partnership with Delta SkyMiles is a strategic move that broadens the program’s appeal. By collaborating with an airline, Starbucks extends its reach beyond the typical coffee shop customer. This alliance allows both companies to tap into each other’s customer bases, potentially attracting new customers who are loyal to one brand to become interested in the other. It’s a creative way to expand market reach without direct competition. For customers who already patronize both brands, this coalition loyalty program reinforces their loyalty and increases their engagement with both Starbucks and Delta. It creates a more integrated customer experience and can deepen the sense of brand loyalty.

Areas of improvement

The removal of the tiers system.

The previous iteration of the program had a 'Gold' tier, which was a smart way to acknowledge and reward the most loyal customers. By offering them the ability to earn points faster and providing exclusive benefits, Starbucks recognized and cherished its most valuable customers. This tier system not only incentivized increased spending but also gave a sense of exclusivity and status. While simplifying the program might make it more accessible for new customers, it risks diminishing the perceived value for power shoppers. The elimination of the tier system could lead to a decrease of engagement from these highly valuable customers.

Lack of personalized engagement or rewards

In the current market, personalization is key to customer engagement. Starbucks’ generic approach to rewards and communication, without considering individual customer preferences and behaviors, is a missed opportunity. Personalizing rewards and communications could significantly enhance customer loyalty and encourage repeat business. Leveraging customer data to offer personalized rewards and product recommendations could not only improve customer satisfaction but also drive product discovery and sales.

Limited post-purchase engagement

Post-purchase engagement is crucial in maintaining a connection with the customer even after they leave the store. This ongoing engagement is essential for converting first-time buyers into regular customers. While Starbucks has started initiatives like Starbucks Odyssey , which offers additional ways to earn rewards through digital journeys, its integration with the main rewards program appears to be lacking. A more seamless integration could enhance the overall experience and effectiveness of the loyalty program. Recognizing that some of these initiatives are in their early stages, there is potential for growth and improvement.

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Sephora Beauty Insider Loyalty Program Review

While Sephora’s Beauty Insider has maintained its position of one of the most successful loyalty programs, it has gone through several phases to ensure that its customer base is glued to the benefits and experiences.

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Customer Loyalty Programs: A Definitive Guide With 13 Actionable Steps

Antavo’s definitive guide on customer loyalty programs shows you what to focus on in order to create a high-performing rewards program.

In the world of customer retention, building a loyalty program that stands out is a major endeavor for any company. Loyalty programs can be a game-changing opportunity if created with care and precision. However, taking the first step is often the most daunting, due to the many decisions that need to be made around your rewards program.

Still, if you’re reading this, then you’re undoubtedly determined to get to the bottom of things. And you’ve come to the right place! This article is a 360-degree look at customer loyalty programs. Here you’ll learn:

• How to create a loyalty program concept that goes beyond the tried and tested
• Which type of loyalty program and features are the best fit for your business
• How to avoid the most common and most dangerous loyalty program mistakes
• How to plan, design and manage a high-performing loyalty program with a positive ROI
• And much more!

Success lies in understanding the market and your customers. With our help, you can be an expert in all things loyalty programs, too. So let’s dive into it!

You can also check out our Loyalty Program Concept Worksheet that will help you think through the key characteristics of your future loyalty program.

Table of Contents

What are loyalty programs and why are they relevant in 2024.

Loyalty programs have been around for decades, if not a full century. Though it all may have started with a simple idea (probably in a coffee shop somewhere) showing a small token of appreciation to customers for their purchases, the concept has evolved tremendously — especially over the past few years. As such, the topic of customer loyalty programs deserves a little bit of attention, so that you know why Loyalty 1.0 and 2.0 are outdated, and what kind of new KPIs are being driven thanks to the latest advancements in the technology.

Building Customer Loyalty in the Current Market Environment

Today’s customer expectations are higher than ever. Research conducted by Salesforce states that 72% of marketers say meeting customer expectations is more difficult than it was before. When asked, shoppers say they want many things: a quick, hassle-free shopping experience, monetary benefits, quality products, etc. But the thing they really crave the most is novelty.

Even though modern customers are willing to switch brands after a single bad interaction, if you can offer them exciting, meaningful experiences, they will stay with you forever. That’s what customer loyalty means in 2024: a long-lasting bond between customers and companies, full of new and meaningful experiences. But how can you achieve this? Here’s a list of trends worth keeping in mind:

• Now, being loyal means much more than simply buying products. Companies should therefore reward all sorts of activities.
• Personalization has become essential, so it should be extended to rewards, the shopping experience, and even how you communicate.
• Saving time is more important than saving money. Moreover, consumers view experiences as being more valuable than possessions. Make sure to simplify the experience and create memorable moments.
• Customers wish to consume curated content, so they seek out influencers and authentic recommendations. And according to Ogilvy, for every channel where influencer marketing is added has the potential to increase ROI by up to 30% .

Defining the Term: Customer Loyalty Program

Despite being a commonly used term, everyone has a different interpretation of what a loyalty program is. So what are customer loyalty programs exactly?

• Wikipedia : A loyalty program is a structured marketing strategy designed to encourage customers to continue to shop at or use the services of businesses associated with the program.
• Investopedia : Loyalty programs, sponsored by retailers and other businesses, offer rewards, discounts, and other special incentives as a way to attract and retain customers.
• Gartner : Loyalty programs are a mechanism for growing revenue from existing customers, a conduit to customer data and an incentive for customers to self-identify at brand touchpoints, etc.
• Salesforce : A customer loyalty program is a marketing approach that recognizes and rewards customers who purchase or engage with a brand on a recurring basis.

These are excellent definitions, but they only scratch the surface of what a loyalty program is capable of. Antavo’s definition goes beyond to say:

A loyalty program is a marketing tool that helps brands, products and service providers change customer behavior as well as build deeper emotional connections with them – both in and out of the buying cycle, across online, in-store and mobile channels. This is done through the use of monetary rewards, personalized content, exclusive services and privilege-driven experiences that are aligned with the customers’ lifestyle.

The Benefits of Customer Loyalty Programs

Considering that returning customers spend 67% more than new customers , it’s easy to see why retention is a top priority in loyalty programs. Still, well-designed loyalty programs are capable of driving a variety of other business KPIs, such as:

• Higher lifetime value : A loyalty program uses various rewards and incentives to get customers to the 2nd and 3rd purchase, or increase their average order value.
• Recurring member interactions : Companies can increase their available touchpoints and engage with customers on a daily basis by introducing a loyalty program that has features such as gamification, badges & challenges, quizzes, etc.
• Social media virality & influencer marketing : Loyalty programs are the perfect tool for rewarding customers who invite their peers, which helps brands increase their credibility. Brands can also generate positive word of mouth by offering influencer-only perks and rewards.
• Data collection & user-generated content: Brands can use customer loyalty programs to entice customers to provide valuable content (reviews, ratings, social media activity), as well as gather valuable zero-party data via gamified surveys.
• Generate a positive ROI: Loyalty programs are capable of generating a positive return on investment, which means they can play an integral role in the marketing strategy.

The History & Evolution of Customer Loyalty Programs

Originally, Loyalty 1.0 was a great differentiator, especially in an age when the internet was less widespread. In the early era of stamp cards and exchanging points for coupons, loyalty programs helped to reduce the cost of discounting, essentially functioning as a cheap currency. But later, when everyone ended up with a wallet full of loyalty cards, the concept no longer felt special. It turned out that customers wanted better rewards for their loyalty.

As loyalty programs that solely focused on financial rewards started losing relevance, the need to evolve from the old school loyalty model became clear. The age of Loyalty 2.0 was all about pathfinding, and bringing new ideas to the table about how to update the formula. This is when we saw the appearance of experiential and partner rewards, data collection and segmented communication, as well as the adoption of various in-store and mobile technologies, eventually setting loyalty programs on the path to omnichannel.

Loyalty 3.0 – The Rise of Emotional, Personalized Reward Programs

Though each innovation proved valuable, Loyalty 2.0 used these new features in isolation, which led to loyalty programs being strong in omnichannel, but lacking in rewards, or vice versa. As such, Loyalty 3.0 was introduced to respond to the attitude that today’s customers crave something that truly resonates with their personalities, and the belief that their loyalty can only be established if a brand’s values align with their own.

The motto of Loyalty 3.0 is that customers should be engaged both inside and outside of the buying cycle. In other words, shoppers should be rewarded for actions that are non-transactional in nature in order to show appreciation, and foster brand love.

Why should you engage customers outside of the buying cycle?

Loyalty 3.0 aims to solve the biggest problem with traditional loyalty programs: low engagement. Rewarding customers only when a transaction takes place severely limits your opportunities to deliver an emotional high because, in most industries, purchase events are too few and far between to keep people engaged.

However, when you recognize the members of your loyalty programs for a variety of interactions – not just transaction-related – they will feel good about your brand far more frequently. These interactions can include contributing user-generated content on social media, writing product reviews, taking a product-related quiz, or referring a friend. Also, you can engage customers in everyday activities, such as going for a run in their new shoes or wearing clothing items with smart tags in them.

The Loyalty 3.0 model

On top of that, Loyalty 3.0 is successful because it unifies everything that came before into a seamless experience.

• At its core, Loyalty 3.0 programs still have the traditional loyalty elements, such as points, coupons, etc, however they build upon this foundation by adding engagement incentives (gamification), emotional rewards (non-transactional, experiential rewards), and a value focus (promoting charity and healthy lifestyle).
• All of these elements are packaged with data science (data-driven personalization) and various loyalty mechanics (tiers, badges & challenges).

Customer Loyalty Programs During Times of Crisis

The Covid-19 pandemic has had long-lasting effects on the world, greatly accelerating digital transformation, and permanently altering customer attitudes and behavior. But amidst these customer retention and acquisition challenges, how did loyalty programs perform?

To uncover the exact role and importance of loyalty programs in the recent global crisis, Antavo’s Global Customer Loyalty Report surveyed over 320 corporate respondents. Here’s what we found:

• 60.5% of respondents reported that the Covid-19 crisis “increased” or “significantly increased” the development of their loyalty strategy
• 62.1% of respondents reported that their loyalty program helped keep their customers engaged during the Covid-19 crisis.
• Through Covid-19, members in a higher tier level had a 29.6% higher visit frequency than members in lower tiers.

Maintaining customer loyalty in face of rising inflation

It’s clear that loyalty programs are highly effective tools during any crisis, not just the global pandemic. Mary Pilecki, VP, Principal Analyst of Forrester called loyalty a lifeline for the inflation crisis , urging businesses to retain savvy customers by offering both transactional rewards, like loyalty points, as well as to engage buyers emotionally.

Indeed, during a crisis, customers are more value-conscious than ever, and they are looking for the best deals out there. Loyalty programs that go beyond the buying cycle are especially popular because they allow customers to earn points and rewards without making purchases— an act of generosity that’s especially appreciated during an economic crisis.

Key Takeaways & Actionable Insights

• Fostering loyalty is more than just encouraging customers to buy more
• Customers’ expectations are higher than ever, and one-size-fits-all loyalty solutions are no longer able to satisfy them
• Next-gen loyalty programs are capable of driving a diverse range of KPIs, from data collection to social media virality
• Brands should aim to establish Loyalty 3.0 by going beyond the buying cycle, focusing on the emotional side of loyalty
• Loyalty programs have proven to be especially effective during crises

How to Create a Customer Loyalty Program

Building a loyalty program is a long and intricate process. It involves plenty of research and brainstorming, but also has a technical aspect that requires brands to be aware of their tech stacks and platform capabilities. In order to provide the most comprehensive guide possible, the entire loyalty program creation process was divided into 13 distinct steps.

Step #1: Building the Loyalty Program Concept

Just like any journey, launching a loyalty program should start with a roadmap. The importance of a solid concept should not be understated: the more aspects of the reward program you can establish at this early stage, the fewer surprises or unexpected roadblocks you’ll run into later on.

Exploring the Program Structure

Before jumping into the fun stuff (e.g rewards, gamification, etc.), spend some time laying down the foundations. Some of these might seem obvious at first, but as concept planning starts becoming complex, it’s easy to lose sight of them.

Geographies : Define the list of countries where the program will be initially launched, and in which languages and currencies it will be available in, because these could potentially make management more complex in the future. Also, decide whether you wish to launch in all geographies at once, or start with a single country to gauge the reception.

Basic structure : Come up with a high-level overview of the theme, design and overall feel of the program. This should include a marketable and catchy name not just for the program, but also for the loyalty currency and tiers, if applicable. You should also determine the basic values for how many points the baseline currency translates to (e.g. 1 AUD = 1 point), and how many points are required to reach a higher tier. This might change as the development progresses, but giving it some thought early on helps you stay on top of things.

Channels: Make sure to detail which channels will be involved in the loyalty program, and whether you wish to integrate them to create an omnichannel loyalty program. If you’re planning to launch your loyalty program in multiple stages, specify both the initial channels and the channels that will be introduced in later stages.

Download our loyalty concept worksheet to take the first step towards building your loyalty program blueprint.

Program Logic & Rewards

Defining the program logic is the crux of a smooth customer loyalty program launch. This process will rely heavily on the type of loyalty program you choose, which will be discussed in a later section. Still, here are a couple of concept points to keep in mind.

Point logic : If your loyalty program will offer some kind of currency or points, they should come with certain conditions, such as rounding logic, refund rules, expiration dates, etc. You should also dedicate time to calculating how many points additional actions, such as enrolling into the program or writing a product review, should be worth. You should also consider how many points certain rewards will cost.

Tier logic : If you are planning to create a rewards program with tiers , first, you must decide how many tiers you will offer(3-5 is optimal), specify whether the tier system is points-based or spend-based, and what the point / spend range should be for each tier. Also, don’t forget about tier expiration and how members will be downgraded, if applicable.

Rewards : Rewards design will be discussed in detail in a later chapter, but at this point keep in mind that whether you plan to offer monetary rewards like coupons, or more experiential benefits. You should begin to consider costs (both for you and the customer), decide whether rewards can be claimed multiple times by members, and determine whether unused rewards will have an expiration date.

User Journeys & Reporting

Once you have laid down the basic foundation of your program, it’s time to think about the ways customers will engage with it. Smooth user journeys are half the experience.

Enrollment & opt-out processes: Since a good first impression is key to success, it’s important to get the enrollment process right. Best practice usually is to keep the process short, intentionally, to save the customer’s time. Don’t worry about getting all the data you want right off the bat — you can always use gamified surveys to collect additional data later on. As for the opt-out process, even though it’s not a positive experience from the business point of view, it still should be quick and painless for the customer. Consider ways you can learn or benefit from the opt-out process, for example, asking one last question to learn why members have decided to opt out.

Loyalty campaigns: Campaigns are limited-time or segment-specific events that enrich the core experience by offering double points, instant rewards, or other perks. In your loyalty program concept, list any loyalty campaigns that you are planning to launch right after the program goes live.

Challenges : These are a series of actions that members have to complete in order to earn a reward. To plan a challenge, make a list of all of the actions that members will need to complete in each challenge and specify what prize they will receive when they have finished.

Reporting : Wanting to report and track the KPIs only after the program has launched is a common mistake. Monitoring the relevant data points requires a lot of work behind the scenes. Not factoring in reporting capabilities early in the planning process means that you may miss out on valuable data, especially from the early days of the customer loyalty program.

• Building the concept for your loyalty program should be a detailed and thorough process
• The concept should cover as many program elements as possible to make sure they are figured out in time for the implementation stage
• While working on the concept, think about areas such as geographical markets involved, program (point and tier) logic, user journeys, campaigns and reporting

Step #2: Choosing the Program Type That Fits Best

Customer loyalty programs are like cars: from an outsider’s perspective, they all serve the same purpose. Cars get you from point A to point B, while loyalty programs help you retain customers, right?

However, it’s the small details that make the difference. Loyalty programs can be put into distinct categories, which cater to specific industries and business types. Knowing the different types of customer loyalty programs and which one of them fits your brand the most gives you a headstart in designing your loyalty concept and increases the likelihood of delivering an experience that your customers will truly love.

Antavo’s technology gives you the freedom to choose from 10 different structures or mix and match elements from each.

1. Earn & Burn – Reward redemption

Earn & burn is the most common approach to loyalty where customers earn points for spending money or completing other activities. Then customers can exchange their points for rewards. These kinds of programs encourage customers to keep making purchases in order to earn more rewards and see that their spend is valued.

• Ease of use : The rules and mechanics are pretty straightforward, easy for customers to quickly grasp them and start using the program immediately.
• Incentivized customer identification : Since all kinds of purchases are rewarded, customers are compelled to identify themselves both online and offline.
• Fast implementation : The relatively uncomplicated nature of earn & burn programs makes the implementation process quicker and easier.
• Convenient and easy-to-budget : These programs are easy to manage because the rate of reward redemption is determined by the available loyalty currency.
• High perceived value : Customers view these rewards as valuable yet easy to achieve, which has a positive effect on engagement rates.

Loyalty program highlight

Starbucks really makes the most out of the earn & burn formula with its loyalty program: customers earn Stars for each $1 spent at their local coffee shop, which then can be redeemed in five different reward categories, including a Starbucks-branded cup.

2. Tiered Programs – Progress & Benefit

With a tier-based loyalty program , customers gain access to incremental benefits and rewards by advancing through the ranks. Tiered programs encourage customers to spend and engage more in order to reach the next tier level or, in the case of tier expiration, to maintain their existing privileges.

• Added value to status : Because each tier level is associated with different benefits, the higher the tier, the more exclusive the brand experience is.
• More targeted experiences : Segment your customer base more effectively with tiers. Doing so improves the experience and provides a basis for targeted communication.
• Establishing a long-lasting relationship: Tier-based programs keep customers engaged for longer, because reaching a new tier feels like an achievement and motivates the customer to continue ranking up.
• Behavioral science in action : Maintaining tier levels is just as important and desirable for customers as reaching higher ranks. Therefore, in programs where tiers expire due to inactivity, customers will keep spending to prevent losing valued privileges.
• Customers shielded from the competition : Due to the high time commitment associated with reaching the highest tier, customers are less likely to switch to another brand’s program because they won’t want to start over.

A modern luxury shopping destination, MATCHESFASHION , needed a loyalty program that could meet the company’s high standards. The program features four tiers and customers reach new ranks by keeping their spend high. Not only does the quality of rewards increase with each tier, but the quantity of benefits and exclusive services available also increases.

3. Perks – Join & Enjoy

A loyalty program based on perks grants benefits and rewards to all members unconditionally, regardless of how much they spent. The goal here is to generate an emotional attachment with the brand, which leads to recurring purchases. This approach also boosts enrollment rates.

• Support brand building : Associating your brand with an accessible reward experience is highly likely to drive additional customer acquisition and promote brand awareness.
• Generate a sense of gratitude : Since benefits are granted unconditionally, members feel indebted — rather than entitled — to the privileges on offer. This helps to establish an emotional connection.
• Easy to manage : Running a perks program isn’t difficult: there’s no liability due to the absence of points, and you’re free from commitments since there are no achievable statuses.
• High value for actual cost : Exclusive services and transaction-related privileges are seen as desirable by customers, even though they come at a relatively low cost for companies in most cases.
• Highlight services unique to your brand : If your business is characterized by exclusive services that are hard to replicate, it’s a great idea to put them in the spotlight with the help of a perks program.

BMW UK offers an exclusive, perks-driven reward experience for company car drivers. Inside Edge – empowered by Antavo – gives members unrestricted access to perks such as free coffee and muffins at Costa Coffee, discounts on BMW services, free movie rentals, special learning courses, and many more.

4. Gamified Programs – Play & Unlock

This type of loyalty program is based on -challenges or badge collecting to engage customers in a gamified way . The goal is to encourage members to interact regularly with touchpoints and repeat key behaviors so that they don’t lose their privileges.

• Shape customer behavior : Ensure each challenge has an end reward that can be claimed by performing a series of actions, or by reaching new milestones.
• Boost spend through badges : Create badges based on the number of purchases or on total lifetime spend, so that members who wish to earn a badge and the associated reward need to be more active buyers.
• Popularize non-transactional touchpoints : Valuable actions such as completing surveys, writing product reviews or downloading the mobile app can be popularized by including them in a challenge.
• A truly gamified experience : Badges and challenges offer a more exciting and visually enticing way to engage with customers, and helps you to gamify the loyalty experience.
• A safe choice to launch with : Gamified loyalty program offerings can start out small, and then be expanded. Explore how customers respond to gamified activities and act on the insight.

Planet BrewDog is the loyalty program at craft beer brewing company BrewDog. BrewDog wanted a simple yet intuitive loyalty program that aligned with the brand’s mission of offsetting the CO2 output. As a result, Planet BrewDog doesn’t use points. Instead, members can earn badges and unlock instant rewards for various actions.

5. Loyalty Communities – Target & Retain

Communities are smaller clubs within the loyalty program. They are based on specific topics, interests or values that are important to your customers. As a result, these clubs are a great tool to help you strengthen your relationship with members.

• Add an unlimited number of communities : Provide each of your customer segments with an experience that goes beyond transactions, setting you apart from the competition.
• Connect with customers via their interests : Communities can be centered around a popular product, such as a gaming console; a lifestyle or hobby; or even ethical values, like sustainability.
• Support brand building : Build a like-minded community around your brand by attracting customers with specific interests. Community membership can be free or tied to access criteria.
• Highly personalized experience : By targeting a smaller audience with a common interest, you’ll get to know these customers better and be able to provide targeted offers that truly resonate.
• Reinforced program structure : Communities aren’t standalone loyalty programs, but instead serve as an exciting and engaging add-on to another loyalty program type, such as Earn & Burn.

Italian luxury fashion retailer LuisaViaRoma has a loyalty program centered around exclusivity, called LVR Privilege. There’s a VIP club within the loyalty program called Sneakers Club. After paying 1,000 points to enter the club, members receive early access to upcoming sneaker drops for a whole year.

6. Lifestyle Loyalty Programs – Recognize & Engage

Encourage valuable behavior and establish long-lasting brand love by rewarding customers for living actively or caring for the environment. Connect your brand to your target audience’s ideals, values and aspirations.

• Engage customers outside of the buying cycle : Move beyond rewarding transactions and offer customers experiential rewards. Acknowledge members for non-purchase interactions such as recycling or working out.
• Bolster your brand image : Take a more active stance on social and environmental issues. Customers feel better about spending money when they know your company is doing good.
• Reward positive lifestyle choices : By integrating a tracking app into your loyalty program, customers can immediately receive points for completing fitness or other activities.
• Share the same values : Align with your customers’ beliefs and aspirations. This is crucial for companies today, especially when their target audience includes Millennials and Gen Z.
• Building advocacy through lifestyle : Being part of your customers’ everyday lives is a great opportunity to reward them for living well and to show them that you truly care.

Surfwear company Rip Curl has created a loyalty program that recognizes customers for doing what they love the most: surfing. Thanks to an integrated sports tracker , members can earn points for being outdoor, riding waves. This helps the company forge a strong emotional bond with their customers.

7. Influencer or Referral Loyalty Programs – Invite & Impress

People trust recommendations from their family, friends, and credible influencers more than they trust advertisements. That’s why a referral program is one of the most effective ways to attract customers.

• Leverage word-of-mouth : Customers are the best promoters of your products. People are more likely to purchase a product when it is recommended by close friends and family or an authentic influencer.
• Create relevant relationships : Reward customers for inviting like-minded shoppers to buy from your store. Show how much you value their contributions and let them know that they are a key part of your success.
• Easily track influencer activity : Each influencer receives a unique link, seamlessly integrated for sharing. These links provide companies with insight into who they should reward.
• Build credibility : Credible influencers usually have a large, engaged audience that brands can tap into to build their reputation and drive sales.
• Expand your network : When working with new influencers, you might connect with new audiences. Create more meaningful and niche marketing initiatives, and build customer relationships.

For the China-based Lagardère Travel Retail , social media integration with WeChat played a critical role in the loyalty program concept . It allows members to enroll, earn points and, most importantly, participate in live streams right on the social media platform.

8. Paid Loyalty Programs – Exalt & Differentiate

In paid loyalty programs , members pay a recurring fee to receive great benefits they can use right away. This is an attractive way to both acquire new customers and establish a stronger relationship with current customers.

• Identify your most loyal customers : With an up-front payment, these exclusive programs attract high-quality customers. Only those who are truly dedicated to your brand are willing to pay for premium privileges.
• Connect at an emotional level : Being recognized connects customers and your brand on an emotional level. Once members have paid the fee, they will want to enjoy the advantages of being a part of the paid program.
• Drive a higher ROI : Higher purchase frequency, basket size, and brand affinity are all ensured by a paid loyalty program. The initial investment that members make fund these programs.
• Obtain quality customer data : The data you’ll receive about shopping habits and personal interests can be used to personalize the member experience.
• Keep customers engaged for the long run : Members will be more committed and engage more regularly with your brand, promoting a lower dropout rate.

Membership for Best Buy’s Totaltech loyalty program costs $199.99 a year. In exchange, members receive unlimited, round-the-clock tech support, members-only prices on merchandise, free 2-day shipping and installation on all orders, as well as VIP access to dedicated phone and chat teams.

9. Coalition Loyalty Programs – Connect & Unify

Coalition loyalty programs unite multiple brands under the same roof. Ideal for shopping malls, department stores, airports and retail hubs, these programs increase footfall while also encouraging customers to enroll using various technology solutions .

• Increase footfall and repeat purchases : Create a thrilling shopping environment where customers can earn points at any store, and then redeem their point for rewards during the same visit.
• I n-store customer identification : Choose from a wide range of technologies and integrations to create a holistic customer journey, where shoppers can be seamlessly identified and rewarded.
• Add value through joint tenant offers : Tenants can upload offers and campaigns directly to the loyalty platform, which you can monitor and review.
• Gamified customer engagement: Run co-branded social media contests, organize in-store treasure hunts, introduce a multi-brand referral system and encourage user reviews.
• Easy and unified enrollment at all tenants: Boost the number of loyalty program members quickly and effortlessly by integrating receipt scanning, cloud printing, card linking or other innovative technologies.

Launched in September 2020, Darna Rewards is a coalition loyalty program in the UAE region. It allows customers to earn points and enjoy a wide range of benefits in a network of dining, gym & spa, theme parks & golf facilities, and retail establishments.

10. Hybrid loyalty programs

A hybrid loyalty program merges two or more types of programs together, because mixing multiple elements is often the key to adapting a loyalty scheme that fits your business strategy.

• Select the best from each program type : Bypass the limitations of any individual type of loyalty program and reach your full potential. Start with functionalities from one type of loyalty program, and mix things up later on by adding exciting new elements.
• Move the most important KPIs : Each program type helps to move KPIs in its own way. With a mixed program, you can easily drive non-commercial goals, such as supporting your brand positioning.
• Cater to your target audience : Reach your audience more effectively by optimizing your loyalty program over time. Introduce elements from various loyalty program structures that resonate with your customers.
• Connect with your customers’ values : Make a lasting impact by introducing features that support your brand’s message. Reward sustainability or an active lifestyle to connect with customers who share your brand’s values.
• Flexibility from the start : Play around with various elements from different program types and see what works. You don’t need to commit yourself to one idea alone – you can always introduce something new.

Sephora’s Beauty Insider program is a prime example of how to create an exciting loyalty program that offers something for everyone: it has three reward-packed tiers, offers the ability to turn loyalty points into coupons, and includes additional benefits, many of which are truly experiential.

• When it comes to designing your loyalty program’s core logic, there are so many options to choose from other than point earn & burn
• Tiers are a fan-favorite among customers and have lots of potential for long-term engagement
• Perks are ideal for boosting enrollment rates and fostering gratitude among members
• The core loyalty program type can be boosted through gamification, community building, influencer marketing and lifestyle elements
• For malls, department stores, retail locations or brands with large partner networks, coalition loyalty programs are an optimal fit
• You can always mix and match elements from different loyalty program types to create a hybrid-style program

Step #3: Creating the Reward Catalog

Now that you have an idea how your loyalty program looks, it’s time to talk about rewards. The kind of incentives your reward program will offer should be clarified rather early on, because rewards have a strong impact on the budget, as well as on the technical requirements for implementation. So make sure to plan out what kind of rewards you want to make available for the launch, and also consider what rewards should be added on later on.

What Kind of Rewards Should You Offer?

In short, rewards are benefits or physical items that are granted, gifted, or assigned to loyalty program members based on their achievements or efforts within the program. When designing your rewards catalog, choosing the most fitting incentives for your brand and target audience is equally as crucial as picking the right goals and objectives you would like to achieve with your loyalty program.

There are 5 types of rewards you should consider:

1. Financial benefits

Financial benefits are either percentage-based or fixed-amount discounts. They are a hygiene factor: customers generally expect some form of monetary benefit, but these alone won’t make people more loyal to your brand. Still, coupons (especially as a welcome reward) are effective for boosting member acquisition, and these types of rewards are easy to implement.

2. Events & experiences

Events & experiences really allow you to use your creativity. The category can include things such as concert tickets, free lunches, party invitations, and hotel stays. These are great opportunities to grant customers lifetime memories, which can lead to lifetime brand love and advocacy. On the other hand, the more exclusive the reward, the less attainable it should be, so you can maintain the exclusivity factor. Plus, organizing events is no easy task.

3. Physical gifts

Gifts are a type of product or hand-crafted item that customers receive, either from your inventory or from a partner’s. Gifts are perceived as more valuable and desirable than a simple coupon. According to Gartner, product experience (the customer’s journey involving the product) has the biggest impact on customer loyalty, which accounts for over  36% change in customer loyalty , respectively. Gifts are also great mystery rewards if you wish to surprise members. However, be mindful that some gifts require manufacturing or prolonged acquisition.

4. Service-related benefits

Service-related benefits have the goal of making the shopping experience more convenient from a customer’s perspective. These could be, for example, express shipping, money-back guarantees, or free alterations. Service-related benefits tend to generate positive word-of-mouth, but only if they have NOT been available before in your loyalty program. Moving privileges like free alterations from an accessible, low tier to a higher tier may cause backlash.

5. Custom rewards

Custom rewards represent any kind of reward that does not fit into one of the aforementioned categories. Custom rewards are the perfect opportunity to get creative: come up with something unique and brand-specific which can distinguish your business from the rest. Use your customer insight, creativity, and resources to devise something unique.

For more insider knowledge about designing an appealing reward system for your loyalty program, download our ebook .

Deciding the Right Price for the Rewards

The price-point value is the number of points (and their real-life money equivalent) required in order to claim a particular reward. It’s a pivotal part of any customer loyalty program: make the price too high, and it will turn customers away. Make the price too low, and it will bite into your profit margin.

The exchange rate is defined by three factors:

• The actual cost of the reward (objective value)
• The availability of the reward (objective value)
• Perceived value (subjective value)

For example, let’s assume that in your loyalty program 1 point is worth $0.2. Loyalty points can be redeemed for a gift reward that costs you $80 in total (including shipping). To calculate the point price for this reward, take the price of the incentive and divide it by the fixed exchange rate of loyalty points. In this case, it means that the pricetag for the gift should be around 400 points.

Being flexible is half the battle

Of course, other factors can influence the outcome. If the previously-mentioned gift is designed or signed by one of your brand influencers, then their fans are most likely willing to pay double the price just to get their hands on it. But if you have a warehouse of trinkets you wish to clear out by handing them out as loyalty program rewards, then lowering the cost will entice bargain-hunting members to jump on the opportunity. The best course of action is to test the waters with a test group. See how long it takes for customers to reach the rewards, and adjust the values accordingly.

Remember: it’s always better to start strict, and loosen the rules later on, than go the other way around. Raising the price of a reward after launch may anger customers, but lowering it shows goodwill. Also, the first reward should always be at arm’s length for new members (like a welcome reward), but add a condition that activating it requires at least a single purchase, in order to protect your profit margin.

Managing the Accessibility of Loyalty Rewards

It’s worth mentioning that price isn’t the only thing that affects the desirability of a reward. Creating scarcity may potentially boost the value of an incentive, but not giving away all rewards at the beginning is also vital if you wish to engage with customers for a long time.

Here are your options for limiting the rewards in your catalog:

• No limitation : Think of any discount or coupon, with a set value.
• Time limitation : A classical FOMO tactic, where customers need to redeem their reward within a specific time period.
• Quantity limitation : If the available stock is limited, people automatically see the reward as valuable. Plus, customers race against each other because only the early birds will get the worm.
• Limitation by status : You can also segment your audience based on relevancy and spend value, for example, giving your top spenders exclusive access to certain rewards.

Let’s Not Forget About the Logistics

Deciding how to deliver the rewards to customers should be the final item on your checklist. After all, logistics can be costly, so they should definitely be taken into account during the budget planning phase. Reward delivery is handled differently at each company, but here are the most common tactics:

• Delivered by a partner : If you choose some of the options listed in the previous section, the partner will take care of the delivery.
• Shipped to a company blacksite : The reward will be sent to one of your local stores, where customers can pick it up .
• Delivered with the next purchase : The customer will get their reward automatically with their next purchase. This keeps money in your pocket, but can be a bit disappointing for the buyer.
• Code redemption : The reward itself is a coupon code, which the customer can use during checkout.
• Direct download : If the reward is a leaflet or an event ticket, the customer can access it through a download link.
• Rewards can be categorized in a variety of ways, ranging from financial benefits to physical gifts, or even invitations to community events
• You should use a solid pattern to calculate the price of each of your reward
• Changing the accessibility of a reward can add an extra layer of FOMO or exclusivity to it
• Make sure to factor the logistics into your calculations

Step #4: Adding a Little Spice With Experiential Rewards, Gamification and Surprise & Delight Elements

The next step in creating a loyalty program is adding some features that make the experience truly shine. This is a topic that relies heavily on your creativity, because you need to come up with ideas that complement your brand image. Remember how Rip Curl used a sports tracker to reward surfing, thus creating a unique, on-brand reward journey? You need to do the same! Here are some great loyalty program ideas for inspiration.

Experiential & Lifestyle Rewards – Because Meaningful Engagement Matters

In a loyalty program that’s meant to be emotional and customer-centric, experiential and lifestyle rewards should be at the forefront of attention. In Antavo’s Global Customer Loyalty Report 2022 , when current loyalty program owners were asked about their future plans, 65.2% of respondents not offering experiential rewards stated that they plan to introduce this feature within the next three years. As for respondents who plan to introduce a loyalty program in the next two years, 55.4% reported that their loyalty program will include experiential rewards.

The only thing that impresses modern customers, especially Gen Z buyers more than a memorable experience is when a brand aligns with their values. This can be done in a variety of ways, such as promoting charitable giving, rewarding sustainability, or incorporating lifestyle elements into the loyalty program.

The best experiential & lifestyle rewards for customer loyalty programs

• Early access – Early access to upcoming sales events or product drops is an excellent reward. For one, it makes loyalty program members feel privileged because they have access to something that other people do not. But early access also helps you save money, because managing it in the loyalty program platform has little to no associated cost.
• Enhanced customer service – One of the leading causes of dissatisfaction among customers is not receiving adequate and polite help in times of need. Avoid this by providing your most valuable buyers with a VIP customer service line , which clearly shows that you care about them.
• Lifestyle-driven rewards – Instead of reserving certain rewards for a high tier, use them to reward specific activities. For instance, make limited-time merch available only to those who bring back used clothes for recycling, or to those who use an integrated sports app to complete a workout challenge.
• Members-only events – Organizing an exclusive, members-only gathering to celebrate your brand’s birthday is the perfect opportunity to foster a like minded community, give participants the time of their lives, and identify potential brand advocates and influencers who can be nurtured later on.
• High-end partner rewards – Harness the power of partnership and add exquisite rewards to your catalog, such as concert or movie tickets, branded merch, or an all-inclusive meal at a fancy restaurant. Partner rewards make your list of rewards more alluring, and for a relatively low cost.
• Community input – Nothing makes customers fall in love with their favorite brands more than the opportunity to leave their mark on the brand’s history. Being given the opportunity to provide feedback or ideas about future products, or getting invited to try out the loyalty program before the official launch, will create memories that last.

Gamification – Let the Fun Begin

Game-like elements and mechanics in a non-game context is the definition that best describes gamified loyalty programs . The gamification market itself is looking at a bright future, predicted to reach $27.7 billion in market size around 2026. And, as the market grows, new opportunities and technologies will emerge, allowing loyalty program owners to make their system even more fun and engaging.

Keep in mind that you can use gamification elements in any rewards program, no matter what structure you choose. Just make sure to pick a type of gamification that matches your brand image, and creates a fun and exciting experience for members.

The best gamification features for customer loyalty programs

• Badges & challenges – Badges and challenges are popular gamification elements that create the feeling of accomplishment, while strengthening the customer’s connection with the brand. Because being honored is something we all love, badges are one of the most effective tools for building habits.
• Social media interactions – Nowadays, social media is in every corner of our lives. Customers love exchanging experiences and sharing ideas with each other, so why not harness the power of word-of-mouth? Turn your customers into brand advocates by rewarding them in a hashtag contest on Instagram.
• Online & offline treasure hunts – Treasure hunts make customers feel like kids again as they search for specific items on your website or in-store . The aim here is to help customers familiarize themselves with parts of the (e)store that they might have overlooked. They help you promote product and store discovery in a subtle yet entertaining way.
• Leaderboards – Leaderboards can be a great way to motivate users to interact with your program more often. Whether you are tracking their progress on collecting badges or playing with a built-in minigame, they are an effective way to get users to engage with each other, helping companies build communities.
• Prize Wheel – Everyone loves the sight of a spinning wheel, especially when it lands on a tile with a nice prize. Prize Wheels immediately get customers’ attention and are a fun, engaging way to build anticipation. They are also a great eye candy to boost enrollment rates — especially on mobile devices.

Surprise & Delight – Make Your Customer’s Jaw Drop

By adding surprise and delight mechanisms to your retention strategy, you can create special occasions in shoppers’ lives and experience a boom in purchase frequency and customer engagement. After experiencing a pleasant surprise or mystery reward, shoppers will not only be more inclined to start repeating valuable actions in hopes of receiving more benefits, but they will remember your business fondly as well.

Surprise and delight can be used to play on customers’ desire for excitement, recognition and individuality. Receiving an unexpected gift or perk from a business not only has the potential to make a customer’s day, it also has the potential to turn them into a lifelong, loyal, brand advocate.

The best surprise & delight features for customer loyalty programs

• Birthday surprises – If you know a customer’s date of birth, then you have the perfect opportunity to surprise them with an unexpected offer, discount or reward. Thoughtful gestures like this make customers feel appreciated and will increase their lifetime value.
• Surprise rewards – Offer members random rewards, like free cupcakes, during their next store visit, or consider sneaking a product sample into the package of their next online order. Samples have the added benefit of giving customers a chance to try something they haven’t yet. If they love the sample you sent, they might even purchase the full-size product later on.
• Mystery gifts – The concept of mystery gifts is simple: give customers a bit of excitement and awaken their curiosity by offering a secret surprise. Customers won’t know what they‘ll receive until it arrives at their door. This approach makes it more likely that members will create a buzz about it on social media, helping you engage a larger audience.
• Secret tiers – Offer a secret tier to your most valuable customers, in addition to the publicly displayed tiers in your loyalty program communications. The aim is to grant privileged treatment to your most valuable customers. This is especially beneficial for luxury-oriented brands.
• Free shipping days – Offer top-tier members free shipping for a limited time. Notify them via email and watch engagement and purchases skyrocket during the offer. By limiting the offer to specific tiers, you can ensure this benefit continues to feel exclusive to your top customers.
• A loyalty program needs more than just points and rewards: it requires unique mechanics and features to truly stand out
• Gamification is a great way to make the experience more fun and build certain habits among members
• Experiential rewards don’t have to be expensive, but they should, however, reflect your brand’s values and style
• Surprise & delight is all about timing: if you wish to give a reward, make sure to do it when members least expect it!

Step #5: Building a Framework for your Data Collection Ecosystem

Data is the lifeblood of any business. However, recent privacy laws and the crackdown on third-party cookies has forced companies to re-evaluate their data strategy. As a result, attention has turned towards zero- and first-party data, as well as the technology and solutions that help brands capitalize on them.

What role do customer loyalty programs play in this, you may ask? Well, reward programs benefit businesses on two fronts : they help organizations collect zero-party data through incentivized surveys, while also delivering valuable first-party data about shopping habits, reward preferences, and so on.

Making Surveys a Fun Activity

Zero-party data is the type of data collected via surveys, questionnaires, feedback forms, customer profiles, and other methods. Unfortunately, customers generally skip these, either because they dislike the idea of sharing their information, or just don’t know how it will be used.

This attitude can be changed by putting a reward on the line. According to Accenture, 54% of shoppers are open to sharing personal information and shopping preferences with retailers in order to receive personalized offers. So the solution is simple: offer customers bonus points, personalized offers and other benefits, in exchange for filling out your surveys.

But take a step beyond typical old survey formats.  Customers still want fun and excitement — even when they are filling out incentivized surveys. Instead of asking a list of bland questions, use gamified surveys to present your questions in a more engaging way, using visuals, sliders, and a more personal tone.

It’s important to realize that loyalty programs are a tremendous source of zero-party and first-party data. So those businesses that are really leaning into their direct marketing strategy through digital channels recognize that, in the context of these data privacy changes that we’ve seen, they’re able to really gather very good data from their customers relative to what they’re responding to, and so forth, through loyalty programs. And it’s a great way to create a very strong data foundation with your existing customers.

Brian Walker

Chief Strategy Officer at  Bloomreach

Gamified survey formats

• Like/dislike questions : Here, members can express their opinion about a topic or question by tapping on thumbs-up or thumbs-down icons. This format also immerses customers in the quiz, so they are likely to answer dozens of questions without noticing the amount of time they’ve spent doing so.
• Image option : Loyalty program members tend to engage more with content that features images, as it helps them visualize the subject. Learn more about your customers’ preferences by showcasing a curated selection of images.
• Free text : Offering several choices is better than asking members to come up with an answer on their own. This approach also makes customers aware of the choices they have. Still, make sure the answers are presented in a quirky manner to keep up the interest of participants.

Adding a Touch of Relevance Through First-Party Data

Besides incentivizing surveys, loyalty programs also provide more touchpoints and a greater amount of first-party data to collect, then leverage. For instance, if a customer is in a mid-level tier of your loyalty program, you know they are a loyal, returning customer. Also, if a customer is at risk of churning, you can look up their coupon history to know whether a low-value coupon will be enough to reactivate them.

This rich layer of loyalty data can be infused with your marketing activities in a number of ways. Here are a few examples:

• Surprise & delight birthday emails, where the reward is determined by the customer’s tier or overall purchase volume
• Reminder emails for customers who are close to reaching a new tier, recommending that they make a purchase to move up
• Friendly notification emails when a customer’s points or tier membership are about to expire
• Monthly summaries of the progress members have made

Loyalty Programs Are Just One Piece of the Personalization Puzzle

In order to put the data you’ve collected into good use and fully personalize the loyalty experience, you need to integrate with a best-in-class technology provider or two. When it comes down to it, there are three providers in particular who provide invaluable service when it comes to personalization:

• Marketing automation providers
• Customer data platforms
• Loyalty programs

All three have their main area of focus:

There’s no jack-of-all-trades provider if you are looking for quality

The question is: can a loyalty program substitute the other two? On a technical level, yes (to a degree), but it’s not recommended. Some customer loyalty programs may offer built-in churn prediction capabilities, or have the ability to trigger loyalty emails for a couple of hundred high-target members.

Nevertheless, these features don’t measure up to the sophistication and ease of use provided by a CDP or marketing automation platform. Of course, this is true the other way around, too — just because a marketing platform has earn & burn or referral capabilities, they won’t be enough to build an innovative and unique loyalty program.

Achieving personalization through synergy

Instead of trying to go solo, you should look into ways how to incorporate the loyalty program, marketing automation and CDP together. For example, loyalty programs incentivize survey completion, which can then be fed to the CDP’s algorithms. Or surprise & delight birthday emails can be enhanced with a gift, such as bonus loyalty points or a discount on the customer’s favorite product category.

Using a combination of tools is also the most convenient development-wise. Just make sure that the loyalty technology you have chosen comes with a huge network of integrations , because developing integrations alongside the implementation process may cause unforeseen delays.

• Loyalty programs are a tremendous source of zero-party data because you can use the reward system to cost-effectively incentivize survey completion
• Gamified surveys come in many shapes and sizes, but their main objective is to make data collection fun and easy for members
• Loyalty programs also generate plenty of useful first-party data if you establish the right touchpoints and track the data carefully
• In order to use the data in a smart way, loyalty programs should be linked to other platforms, such as CDPs and marketing automation

Step #6: Going Omnichannel

Bear in mind that applying your customer loyalty program to only a single channel (be it offline or online) will limit its full potential. In this day and age, an omnichannel presence is expected from brands, as 60-70% of customers shop across channels, according to McKinsey . So make sure that the loyalty experience is consistent no matter whether the customer shops in your eCommerce store, your brick-and-mortar store, or browses your app while on the go.

Your Omnichannel Loyalty Checklist

In Antavo’s Global Customer Loyalty Report 2022, survey participants stated that offering a seamless omnichannel experience is one of their biggest challenges in the coming years. However, seamless omnichannel experiences have also been touted as one of the most influential loyalty program trends, meaning that even though it’s difficult, overcoming the challenge is well worth the effort.

Here’s a checklist to set you on the right path to omnichannel loyalty:

• Identify where your customers browse and shop the most. Focus on creating a smooth experience across those core channels first, then build from there.
• Map out your data. Where does your customer data come from and where does it live? What could you do better if it were unified?
• Consider your current offers and promotions. Are you making it easier for customers to engage on every channel where they want to shop?
• Understand how your customers enjoy spending their time. How can you reward them for it?
• Ask customers what causes they care about. Whatever the cause, it’s another opportunity to build real relationships.

Bridging the Gap Between Online, Offline and Mobile

A seamless omnichannel experience for your loyalty program is only possible through a single customer view — a unified account that holds all information about a customer, no matter on which channel they interact. For instance, craft beer manufacturers can keep tabs of a customer’s favorite drinks based on their online purchase history, and if the brand owns a bar, their bartenders can look up the patron’s profile to give them personalized beer recommendations on the spot.

This might seem easy, but very few organizations have access to a single customer view. According to a study by BCG, only 30% of companies have created a single customer view across channels. Luckily, if you’ve followed the steps of the previous chapter, you’re already building your loyalty program with data collection in mind, so now you just need the right technology to capture valuable data in a brick-and-mortar and mobile environment.

The Loyalty Card Dilemma: Plastic or Digital?

One decision you should definitely make early on is whether you wish to have traditional plastic loyalty cards, or digital cards that are stored on smartphones or displayed on the online membership page.

Surprisingly, plastic cards are still a fan favorite: according to the For Love or Money 2022 loyalty report, 49% of loyalty program members in Australia in 2022 still prefer to use traditional plastic cards, this has decreased from 81% in 2017. This interest is mainly driven by Gen Z and Gen Y customers. Though the survey only covers Australia, it’s safe to assume that many customers around the globe have a fondness for traditional loyalty cards.

However, one big advantage of digital loyalty cards over their physical counterparts is that they’re more likely to be within reach. 98% of Gen Z shoppers own a smartphone and it’s almost always on their person. Therefore it’s safe to say digital loyalty cards or coupons stored on the phone have a higher chance of being used and redeemed.

Mobile Passes

When it comes to digital passes, there is a smoother and more elegant way to present them, which doesn’t require customers to look for them in a browser or online membership page: Mobile Passes. Passes can be loyalty membership cards for a loyalty program, virtual coupons, tickets to special brand events, or even digital boarding passes for your next flight. Mobile Passes are stored in the smartphone’s mobile wallets, which is a native app on both iOS and Android smartphones.

Here’s how mobiles passes work:

• When a customer’s mobile pass is scanned at the POS, they can redeem their points for various rewards and discounts. At the same time, retailers are able to identify in-store shoppers and learn more about their customers.
• Shop assistants can also use the system to enroll customers into the loyalty program and get instant benefits for future visits, such as a dedicated express checkout lane.
• Those who already have a digital loyalty card receive push notifications when near the store. These can be reminders or notifications about the latest sale.

Store Assistant Portal

In order to capture data about brick-and-mortar purchases and send them to the loyalty program’s database, you need specialized software and hardware solutions. A common strategy is to integrate with the POS system you use in your store, so you can scan each customer’s loyalty card (or credit card, if card-linking technology is enabled).

This is a great use case if you wish to enable in-store point collection, as well as identify brick-and-mortar customers. However, if you want to give members more in-store options, you need to look for more sophisticated solutions. Antavo has developed the Store Assistant Portal: a custom-build application that runs on an Android tablet, helping staff members to administer purchases, returns, and point management for their Antavo-empowered loyalty ecosystem.

How the Store Assistant Portal works

The Store Assistant Portal allows staff to smoothly and efficiently handle loyalty management tasks in the physical environment.

• After scanning the customer’s loyalty card with the tablet’s camera, the Store Assistant Portal guides staff members through the most essential management tasks, such as looking up purchases or arranging returns.
• After every transaction, the customer’s point balance is automatically updated.
• The Store Assistant Portal offers more options for reward management, including a point redemption capability, where shoppers can turn their points into discounts in custom increments.
• Going omnichannel is no longer an advantage, but rather a must
• The first step in becoming omnichannel is to establish a single customer view
• Plastic cards are slowly fading out, so make sure to cater to the smartphone-loving generation with mobile passes
• In order to identify and reward customers in your stores, you’ll need either a POS integration or a unique solution like Antavo’s Store Assistant Portal
• To not only connect with in-store customers but also tenant retailers, consider opting for a robust hardware solution

Step #7: Aligning Your Customer Loyalty Program With Industry Standards

What’s considered to be “standard” or “expected” varies by industry. For instance, 85% of retailers regard personalized offers as important to the customer experience, according to Loyalty360 . On the other hand, fast food chains offer free meals when members hit a certain milestone, reaching a certain number of visits or specified purchase volume. Frequent flyer programs , on the other hand, are known for more service-related benefits, like waitlist priority, excess baggage allowance, access to VIP lounges, etc.

Knowing your must-have elements and understanding which features have untapped potential are key to standing out from the competition. Therefore, this section is dedicated to a brief overview of how loyalty programs are designed in certain industries and verticals.

eCommerce Loyalty Programs

Forrester predicts that online shopping will grow to 27% of overall retail sales by 2023 . To get a slice of this pie, businesses focusing on digital shopping require a tailored solution. An eCommerce loyalty program is a customer retention tool geared toward keeping and engaging existing customers, so they will buy in higher quantities, shop more often, or interact with your brand more frequently. They also help eCommerce brands establish themselves against big names such as Amazon without competing solely on the basis of discounts.

Top Loyalty Features for eCommerce Rewards Programs

• Offer management
• Social media contests & raffles
• Gamified surveys
• Incentivized reviews
• Multi-currency & multi-language modules

Retail Loyalty Programs

A retail loyalty program is a type of reward program that’s built from the ground up to help brick-and-mortars survive in a high-stakes market environment, as well as help customers build a meaningful relationship with their favorite store. Loyalty programs are extremely popular in retail: according to research by Gartner, 71% of retail brands analyzed are adopting loyalty programs .

Top Loyalty Features for Retail Rewards Programs

• Tiered, subscription or hybrid program types
• Digital loyalty cards and mobile passes
• Proximity marketing
• Card-linked offers
• In-store treasure hunts
• Instagram contests

B2B Loyalty Programs

B2B loyalty programs (or B2B rewards programs) are customer retention solutions that differ greatly from their B2C counterparts. When it comes to rewarding client or customer interactions, they take into account larger deal sizes, more complex buying decisions, and place an emphasis on long-term relationship building.

Top Loyalty Features for B2B Rewards Programs

• Perks or tiered loyalty program types
• Partner or co-operative rewards
• Referral systems
• Coalition loyalty capabilities

Fashion and Beauty Loyalty Programs

The fashion & beauty industries are multi-faceted markets with a number of distinct categories, such as fast fashion , luxury fashion , footwear & athleisure , cosmetics and jewelry , just to name a few. Still, these kinds of reward programs are easily recognizable for their focus on experiential rewards, community-building elements, and status-driven tiers and privileges.

Top Loyalty Features for Fashion and Beauty Rewards Programs

• Tiers or perks
• Early access to products and sales
• Social media contests
• Birthday surprises
• In-store community events

Food & Beverage and Grocery Store Loyalty Programs

Loyalty programs for food delivery companies, supermarket chains, and online beer retailers aim to build loyalty in a sector where customers have a high visit rate, but relatively low order value. As such, discounts and coupons are less viable and instead loyalty must be built through other means. For this reason, food & beverage and grocery store loyalty programs have to balance between low-value and high-value rewards.

Top Loyalty Features for Food & Beverage and Grocery Rewards Programs

• Earn & burn or subscription programs
• Digital loyalty passes
• Receipt scanning
• Badges & challenges
• Store-specific offers
• Friend referrals

Pharmacy and Drugstore Loyalty Programs

In a highly crowded market that gives customers plenty of options to fill their prescriptions and purchase health-related products drugstore and pharmacy loyalty programs aim to give buyers a reason to be faithful to a particular brand. They also need to balance two distinct customer groups: those who are price-sensitive and those who seek convenience.

• Earn & burn or lifestyle programs
• Community features
• Rewarding healthy lifestyle
• Survey & content consumption
• Loyalty app

Automotive Industry Loyalty Programs

Automotive loyalty programs are unique customer retention tools geared towards companies in the automotive industry, including but not limited to car manufacturers , third-party dealerships, car rental services and fuel retailers . Automotive loyalty programs can be tailored to drive individual KPIs, such as boosting personalization, raising brand awareness, increasing social media presence, and so on.

Top Loyalty Features for Automotive Industry Rewards Programs

• Tiered or subscription programs
• B2B loyalty programs
• Partner rewards
• Gamified data collection
• Connected car technology rewards

Financial Services & Telecommunication Loyalty Programs

Financial services and telecommunication loyalty programs have a lot of untapped potential on the market. Because customers don’t purchase products in a traditional sense, the way they are rewarded needs to be unique. These companies also tend to interact less frequently with customers, therefore every touchpoint must be unique and meaningful.

Top Loyalty Features for Financial Services & Telco Rewards Programs

• Account-based benefits
• Subscriptions or rewards for renewal
• Reward sharing
• Infotainment content & quizzes
• Sweepstakes

Mall and Department Store Loyalty Programs

Department store and mall loyalty programs are complex reward systems that are geared towards enhancing the retail location’s value proposition, using multi-brand promotions and rewards that feature local services. However, while mall loyalty programs have more options to create cross-brand journeys, department store loyalty programs tend to focus on premium treatment.

Top Loyalty Features for Department Store and Mall Rewards Programs

• Coalition loyalty programs
• Cross-brand reward journeys
• Tenant management
• In-store gamification
• The structure, reward types and overall feel of a loyalty program depends heavily on the industry the program is built for
• eCommerce programs have plenty of opportunities to make the online experience more fun and engaging
• Retail programs should focus on creating in-store touchpoints
• B2B loyalty programs are more methodical and focus on long-term engagement

Step #8: Choosing the Right Loyalty Technology

It’s time to leave the strategy side of your upcoming customer loyalty program behind and talk about the more technical aspects, such as loyalty technology. So this section is dedicated to better understanding what’s behind the hood of a loyalty program: what type of loyalty technologies are out there, how to ensure that the management process is user friendly, and what to keep in mind while preparing a loyalty program RFP.

The Three Types of Loyalty Tech

It goes without saying that the software behind your reward program should be top-notch, otherwise you won’t be able to incorporate more sophisticated features, like online treasure hunts or rewarding workout milestones through a sports tracker app. Generally, there are three options to choose from:

• Developing the technology in-house : In the case of a loyalty program, the DIY route not only takes a lot of money and manpower, but also forces your team to invest an enormous amount of time into investigating loyalty program trends, customer behaviors, and UX trends. You can come up with the most unique loyalty program idea but it could take months – or even years – to turn it into a reality. Unless you have a whole department of developers at hand who can focus solely on your loyalty program, this route would be quite an investment.
• Hiring an agency : If an agency has experience working in the loyalty field, then you’re already off to a good start. Agencies can help you create an alluring customized loyalty program, they’ll help you develop it from start to finish, and they can even manage all the marketing communication around it. There’s one caveat, though: this solution is sure to cost a lot of money.
• Using technology from a third-party vendor : Third-party loyalty solutions represent the golden middle: they require active planning and co-operation on your behalf, yet the technology itself is readily available, so there is very little development needed in order to launch. This is especially true for pure-play loyalty technology providers , which offer sophisticated features such as gamification, multiple tiers, and gamified surveys. And because you are only paying for the technology, it’s more cost-effective then delegating the entire project to an agency.

Going No-IT With a No-Code Loyalty Platform

There’s no bigger frustration for a CRM or marketing professional than managing a platform that requires constant tinkering from the IT team. According to the Global Customer Loyalty Report , 76.2% of those who already offer — or plan to offer a loyalty program — want to equip their marketing team with the right tools and/or processes to reduce dependency on IT team. And going “no-code” is the most straightforward way to do so.

A no-code programming platform uses a visual development interface that enables non-technical users to create features by dragging and dropping software components, without the need for coding experience.

Using a no-code loyalty platform allows you to move faster and breathe easier while doing your job. With this approach, setting up a loyalty campaign or offer can be done without coding knowledge and without any support from the IT team. Using a no-code platform also comes with a lower maintenance cost, and has a lower implementation cost overall.

Writing an All-Encompassing RFP

An RFP, or request for proposal, is a type of business document that helps companies share the details about a project, in this case, the launch or revamp of a customer loyalty program. The primary goal of a loyalty program RFP is to solicit proposals from various vendors, which is highly recommended if you plan to work with a third-party vendor.

Deciding to issue an RFP means you have to pre-emptively do some research and come up with the concept for your loyalty program. But ultimately, this process leads to better results in the long run. RFPs facilitate a shorter vendor selection process, easier scoping, and minimize the chances you’ll go over budget. Just make sure to:

• Make the RFP — especially the goals, criteria and evaluation process — as detailed as possible
• Decide whether you are looking for: strategic support, a use case on how they would execute your concept, or proof that vendors have the capabilities required to deliver the expected outcome.
• Clearly state what kind of tech documentation and certifications you expect to receive, and make a distinction between the must-haves and the nice-to-haves.

Speed up your search for the perfect loyalty technology vendor with this comparison worksheet, which guides you through all the important aspects needed to evaluate vendor offerings.

• In order to ensure that your concept is realized without any compromise, you need to pick a loyalty technology that fits your needs
• You can develop the technology in-house, hire an agency to manage everything, or go with a third-party vendor
• Choose a technology that’s no-code, otherwise the day-to-day management risks becoming overly complicated
• One efficient way to ensure that the technology you choose will end up meeting your needs is to create an RFP that you can send out to agencies and vendors

Step #9: Preventing Loyalty Program Fraud

When planning and creating a loyalty program, it’s only natural to stay focused on the bigger picture, and set up the rules based on the way members generally behave. But let’s not forget that there are individuals who don’t play by the rules and instead seek to game the system or, even worse, commit fraud.

In recent years, loyalty program fraud has risen by 89% . This is due to the fact that loyalty points, coupons and rewards have real-life monetatary value which attracts fraudsters. So if members can find a way to claim a single coupon multiple times without losing it, or rack up loyalty points by spamming product views, they can actually cut into your margins.

Fraud in loyalty programs

• Hacking : Exploiting a security vulnerability to gain management control and stealing data or taking over customer accounts — these are the worst that could happen in any loyalty program. As such, you should treat cybersecurity as a top priority , and be sure to check the data protection capabilities of your third-party provider or agency if you aren’t developing the technology on your own.
• Employee fraud : Sometimes the greatest source of fraud can be found within your organization. For instance, employees who have access to the platform can misuse their privileges and hand out free points or rewards to their friends. Discovering internal fraud and identifying bad actors is often the hardest part, as employees may be able to use their knowledge and position to cover their tracks.
• Gaming the system : Though slightly less malicious than the other types of fraud listed here, users may exploit a bug or unforeseen loophole and cause significant financial harm as a result — especially if the loophole becomes public knowledge before it is fixed. Not to mention that punishing the culprits, who are still customers at the end of the day, may risk driving them away.

Deploying Preventive Measures Against Loyalty Program Fraud

Loyalty program exploits can take thousands of forms, and it’s easy to overlook them. Maybe your system allows members to change their date of birth (in case they got it wrong the first time). However, some savvy customers use this to make every month their birthday month, cashing in twelve birthday rewards a year. A single person who finds a loophole might fly under your radar, but if they post their discovery on a popular forum, others will start gaming the system, too. But if you wait until then to act, a lot of damage will already be done.

When it comes to preventing loyalty program fraud, your first line of defense should be your managers. Monitoring the program should involve more than just looking at enrollment numbers and counting the reward redemptions; they should be actively searching for irregularities and unusual patterns.

Loyalty fraud examples, and how to prevent them

• Customers create proxy accounts to capitalize on the welcome coupons : You can either limit the number of accounts per IP, or hand out the welcome reward after they have made their first full-fledged purchase.
• Employees hand out rewards to friends and family members : Introduce a cap on how many points can be earned with a single purchase. If a customer’s point balance is off the radar, it may mean they received points without making a purchase.
• Customers return products but keep the points : Add a pending period to the system so customers don’t receive their points until the redemption period is over.
• The reports show an influx of in-store purchases before or after closing time : This is another sign of employee fraud. Create an automation that automatically rejects points being added outside of opening hours.
• Allowing loyalty program fraud to go undetected can put a serious dent in your bottom line
• Exploits can happen trough loopholes or undetected bugs, which customers may use without malicious intent
• Fraud can also be committed by employees, which can be much harder to detect
• Loyalty programs should be built with reporting and tracking in mind so you can put countermeasures in place

Step #10: Planning the Budget

Now we’ve come to one of the most critical questions for the whole process of creating your loyalty program: how much will it cost ? Because no two loyalty programs are the same, it’s impossible to give a precise estimate. Also, some aspects may change during the implementation phase — features will be added or removed, rewards will evolve… In the end, the best thing we can do to help you prepare is a checklist and worksheet that will help you calculate loyalty-related costs.

Predictable Costs: Management, Marketing, Technology

While planning the budget for your loyalty program, you should start with items with prices that you can map out with relative certainty. Some examples are the salary of all of the employees dedicated to running the program, the cost of training in-store staff to handle and maintain the new technology, etc.

1. HR costs

This covers the total manpower working behind the loyalty program, including managerial tasks like creating and running reward campaigns, as well maintaining and analyzing the whole system. Regardless of your approach to developing the technology, it requires:

• A loyalty program manager
• A CMO, who instructs the loyalty program manager
• A marketing automation manager
• For occasional, high-priority marketing activities, such as a holiday reward campaign, you may also need to involve graphic designers, copywriters, or even a technical project manager
• If your program runs in physical stores, you will also need to involve your Head of Retail, an operational team, and train in-store staff

When we started off with the PRIVILEGE PROGRAM, I managed LuisaViaRoma’s CRM activities. As the loyalty program proved valuable, we were able to expand the team with a colleague who now manages the program, and another who is responsible for the marketing automation campaigns. My role has also evolved – today I am responsible for the team, managing all digital marketing

Marco Ritratti

Head Of Digital Marketing at LuisaViaRoma

2. Marketing costs

The marketing budget should cover any form of advertisement, especially during the weeks before and after launch. Once the program is launched, spare no costs to promote the loyalty program on every channel. Ensure it is visible on your website, and make sure to promote it as part of your value offering through ads, social media, and videos.

3. Technology cost

The most straightforward of the three, technology costs represent all the money you spend on the loyalty program’s backend. If you choose to develop the program itself, this might become impossible to predict. If you choose to go with a pure-play loyalty technology provider like Antavo, you can count on a fixed or scalable recurring fee. On top of that, some of the following technology costs may also apply to your loyalty program’s budget:

• Licensing fee
• Implementation & integration fee
• Consulting fee
• Frontend development fee
• Employee training fee

Less-Predictable Costs: Rewards

Unlike the employee or the marketing budget, it is more difficult to give a precise estimate of how much your rewards will cost. Rewards also depend on customer feedback: unpopular or unused rewards should be subtly pulled from the rewards catalog, or be replaced with new ones.

1. Coupons and discounts

In terms of redemption, there are two types of coupons: redeemable coupons and automatically distributed coupons. When customers need to use their points to get a coupon, they’re basically ‘paying’ for it, which is more beneficial for your business. Discounts that are given to members as a welcome gift, a birthday reward or a tier-up bonus have a bigger usage rate and generate more interest, but are riskier simply because they come at a higher cost.

2. Early access

It’s a little known fact that early access is a golden opportunity among rewards: all you need to do is give a select number of customers the chance to purchase upcoming products before the general public. This not only comes at zero cost, but those who have this privilege tend to go out of their way to capitalize on this opportunity, thus increasing their lifetime value. Early access should always be a top-tier or VIP benefit, so other members will have the motivation to climb the ranks and experience early access for themselves.

3. Services

While planning your customer loyalty program, take into account the kinds of services you already offer. Making your extended warranty into a members-only benefit gives you a powerful incentive at no additional cost. While it can significantly boost your enrollment rates, it can lead to a backlash from the community, who might feel that you are taking away benefits away. A much safer approach is to lower the cost of certain services, e.g. express shipping, for those who sign up to the program.

Events come in all shapes and sizes, ranging from in-store community gatherings to huge anniversary celebrations filled with influencers and special guests. Depending on the scale of the party, this can be quite a pricey reward, so make it sure it’s only done on special occasions. To prevent overspending, more lavish events like cocktail parties should come with an entry fee only your highest ranking members can afford, whereas movie nights or store openings can be made available to a larger audience.

Using content as loyalty program rewards might come in the form of members-only blog posts or videos featuring tips and advice about a healthy lifestyle (or any topic you are an expert on). These are ideal entry-level incentives for tiered or perks programs that have the power to boost your enrollment rate. Content creation can either be outsourced or made in-house by your staff. Nevertheless, you can calculate the overall cost of the production based on how much content you wish to produce each year.

For more information about planning the loyalty program budget (including a list of best practices), download our ebook.

• While calculating the budget, there are two categories to keep an eye on: predictable and less-predictable costs
• Predictable costs include marketing expenses, the salary of the dedicated staff members, as well as the cost of licensing, developing and using loyalty technology
• Less-predictable costs revolve around rewards. The reason why they are less predictable is because the reward offerings are always in a constant flux
• For a successful loyalty program, make sure that the budget allows more than one type of rewards

Step #11: Preparing for the Implementation Process

The time has come. You have your concept and your budget. All you need to do is put the plan in motion, and carry out implementation. But do you know the exact flow of this process? If not, you risk setting unrealistic expectations and be forced to postpone the launch date due if certain integrations fall short or face delays. To avoid this, and to help you get a clear picture of how the creation of your customer loyalty program happens, we’ve laid out how the process should look in theory.

Please note that the following sections detail the implementation process when you partner with a third-party, pure-play technology vendor. If you seek to build your own technology or outsource it to an agency, the overall flow may change significantly.

Launching a Loyalty Program for the First Time

Building a loyalty program is quite a memorable journey. There’s a lot you can learn about it, but there are likely to be unexpected twists and turns that not even this guide can prepare you for. Therefore, it’s highly recommended to rely on advice from third-party experts, even if they may not align with your original vision, because they have more experience building loyalty programs.

1. Fail-proofing the concept

Writing a concept document is easy. Writing a concept document that can be turned into a solid scope is not so easy, especially if you have never done it before. At Antavo, our Business Analysts run through your concept and highlight gaps or edge cases to ensure that the scope is as fail proof as possible. The same applies to the technical aspects as well: if your other technology partners haven’t integrated with a loyalty program provider before, be sure to organize several meetings with the loyalty platform’s Solution Architect, where you can map out the to-dos together.

2. Realizing the scope

Now your loyalty provider will turn your realistic, feature-complete concept into a scope. The scope should include all the technical requirements, loyalty logic, customer journeys, and anything else that needs to be implemented. Think of it as a blueprint with all the action steps needed to actually bring your customer loyalty program to life. Once all the tasks have been delegated, you need a project manager who will oversee execution and ensure that all parties (including the loyalty technology provider, partner companies, and even your employees) keep up with their respective timelines.

An accurate schedule can only be provided once you have finished scoping, because all parties will need to provide their own estimate based on the final list of tasks on their plate.

3. Integrating and configuring the system

The next step is integration. The loyalty technology platform, like Antavo’s Enterprise Cloud, will be integrated with your system (as well as any third party CDP and marketing automation platforms) to ensure that data flows seamlessly between the systems.

In practice, it means that Antavo will receive the required data, such as purchase information, from you, run the loyalty logic to calculate how many points said purchase is worth, and relay this information to your frontend so the membership page will display the correct point balance to members when they log in..

Once the integration is finished, it’s time to start building the end product: set up various features on the platform, upload images, configure the values for currency conversion, and so on.

4. User Acceptance Testing (UAT)

The importance of testing the configuration and ensuring that the program performs up to par cannot be overstated. This is why you should absolutely spend at least one month performing UAT, to prevent critical errors or loopholes to be discovered by members. This kind of testing cannot be delegated to the technology vendor. It must be done either on your end or be done by a System Integrator that oversees your end-to-end integration.

It’s very important to test both positive and negative scenarios, as well as edge cases, to sort out any possible bad experiences. For instance, what would happen if a customer makes a purchase and moves into a new tier, but returns the product soon after? Should they keep their new level, or be demoted — even if it leaves a sour impression?

5. Push the big, red button

Once UAT is finished, there’s only one thing left to do… push the big red button and get the show on the road! Of course, there’s absolutely no reason to do it silently, but we will discuss pre-launch parties, early access testing with influencers, as well as the marketing campaigns in the next chapter.

Revamping an Existing Loyalty Program

If you already have a loyalty program, which you want to improve by switching to a new loyalty technology provider (or simply want to improve your tech stack), then the process is more or less the same. It’s worth highlighting, however, that program revamps are generally much smoother, considering that program owners already are much more experienced in scoping, timeline estimation and process handling. Still, every success story begins with a great plan…

1. Locate old concept documents

Re-launching a loyalty program is more complex than simply copy-and-pasting everything from one place to another. The new provider needs to recreate the whole program structure from the ground up, which is why it’s a tremendous help (and progress booster) to have old concept documents on hand, or to bring in project managers who know the whole structure by heart.

2. Decide what should remain, and what should be improved

Update the concept document with your ideas on how to improve the system, the extra features you wish to add, and so on. These need to be scoped out with a Business Analyst, and not just added as a side note. Trying to add too many bells and whistles may postpone the launch date, so the rule of thumb is to copy as much from the existing program as possible, leave out anything unnecessary, and put together a solid MVP, which can be further expanded with new features later on.

3. Proceed with data migration

There’s an extra step between the scoping and the integration phase that is needed to be performed when revamping a customer loyalty program. It involves migrating the loyalty data to your new provider. This process requires thorough data mapping and may take longer depending on the number of data categories you wish to move. The best practice is to migrate customers, rewards, point histories and transaction histories.

If some rewards or benefits will disappear after your relaunch, maintain customer goodwill by converting old, unused benefits like coupons into points and add them to the customer’s new account so they start out with a good experience.

4. Preparing for the big shift

Performing the configuration and the UAT for existing program owners is generally smoother, since it’s not their first rodeo. Still, businesses during a program revamp should not be overconfident or set unrealisticly short deadlines, because the addition of unfamiliar features and structures can cause many unforeseen issues. And when the launch date comes, make sure to notify members about any downtime while the new program gets up and running behind the scenes. Once everything is in place, all there is left to do is push the big red button (for the second time), and kick off your brand new loyalty experience!

• The implementation process of a loyalty program is slightly different depending on whether it’s a revamp or the launch of your first program
• When launching your first loyalty program with a third-party vendor, make sure to run through your ideas with technical and strategic experts who have more experience building loyalty programs
• If you are revamping your loyalty program, you will likely be more familiar with the processes involved, allowing for more accurate predictions for the launch window
• Regardless of which category you belong to, a smooth implementation hinges on a well-rounded concept and scope

Step #12: Managing the Program Before And After Launch

At this point, your customer loyalty program is ready for the big unveiling. But before you officially open the gates for your customers, there’s a little more planning left to do. First and foremost, you need to organize a launch campaign to capture attention – not just from existing customers, but potential new members as well. Secondly, you need to start thinking about future rewards, holiday campaigns, upcoming features, new integrations…because the work of a loyalty program manager is never over.

Getting Ready for the Big Day

The launch of your loyalty program is probably the most important point in its history. The fresh experience will draw in many customers, and your brand will be on the top of their minds. But don’t take the hype for granted: for maximum virality, you should execute a grand campaign around it.

• Soft-launch the program with a small segment : Before going fully live, you can conduct a small-scale test involving a hand-picked selection of customers or brand advocates. This would give your advocates the chance to try something new and provide feedback, while allowing you to iron out bugs and adjust certain elements, like the point-price of a key reward.
• Arrange a marketing campaign : Announce your loyalty program launch in a newsletter, run Facebook ads, use retargeting, Google Adwords, or even create a promo video starring a C-level executive to drive interest.
• Launch with a bang : For the first few weeks, consider offering limited-time perks and bonuses, like double points on purchases, or a generous welcome gift. The FOMO will prompt customers not only to join, but also make a purchase so they don’t miss a great opportunity.
• Stay on standby for last-minute support : Behind the scenes, things may be shaky during launch. A massive influx of member interactions may reveal bugs or flaws that had not been discovered during the smaller-scale soft launch. Therefore, both your managers and IT staff should be on standby to manage any crisis situations.

Running a Loyalty Program Is a Journey

Having a loyalty program is one thing, but making it a success story is another. After launching your loyalty program, your first priority should be to task the appointed manager with a strategy to keep the program fresh. This includes, among other things:

• Analyze the results : Work with your finance team or your loyalty consultants to understand the results. Use the feedback to adjust program elements and communication to optimize your program.
• Run campaigns in the program : When rewards and activities end or get boring, new ones should be created to match ever-changing customer preferences.
• Evolve the program : Over time, new features and modules need to be added to the program structure to stay relevant and drive more KPIs. If you work with a third-party provider, your dedicated contact will keep you updated about the latest improvements and possibilities.
• Handle customer complaints : Answer customer questions and treat your most loyal customers with extra-special care. This will ensure they keep the faith in your brand.
• In order to smooth out any rough edges before launch, consider testing the loyalty program with an insider group of brand advocates and top buyers
• Don’t forget to host a launch-day celebration and marketing campaign to attract as much attention as possible
• Your loyalty program needs a push  after  launch, too: so keep iterating on it based on feedback and internal analyses

Step #13: Avoiding the Most Common Loyalty Program Mistakes

At this point, the planning for your customer loyalty program should be wrapping up nicely. But before you go out and put it into action, let’s run through the whole concept to make sure it is fool-proof. Here are the most common loyalty program pitfalls you should try to avoid.

1. Being too pushy during enrollment

First impressions are often a dealbreaker. So why make the registration process (the introduction to your loyalty program) a slog? On one hand, it’s understandable: customer data is valuable, and you want to learn as much as you can about new members right away. On the other hand, an overly long enrollment page may scare away busy or impatient customers.

The best course of action to avoid this is to include only the essential information in the registration form: name, email address, password, and maybe the customer’s location. Then, once members are enrolled, offer them a reward — like bonus points or a small coupon — for completing their customer profile. At this point, you can ask all the questions you need because it’s in their best interest to answer all of them.

2. Your loyalty program concept is only one page long

We have written quite a lot about the importance of loyalty program concept. However, we didn’t really touch on how the concept document should look. Even though there is no ideal length, we are confident in saying that it should be longer than a single page.

In other words, DO go into the details. Don’t just write down the type of loyalty program you want. In case of a tiered program, clarify how many tiers you want, what their names and spend/point ranges should be, what kind of rewards should be associated with them, etc. When it comes to scoping, this kind of effort will really pay off!

If you haven’t already, make sure to download our handy worksheet for concept building.

3. Trying to launch with an overcomplicated program

Think about loyalty programs as a marathon, not a sprint. In this guide, we hope you’ve read about plenty of great features and strategies. But trying to launch with a bloated, untested program can have great consequences.

Instead, come up with a lean, yet innovative loyalty program MVP. It should have a solid, well-thought out structure and a list of great rewards, coupled with an extra-enticing feature (like a Prize Wheel, or a sport tracker integration) that acts as a selling point. And before going fully live, organize a testing phase where you invite your most valuable customers. They will love it!

4. Underestimating the power of referrals

Word of mouth is a powerful tool for any business. Customers will always value opinions from within their circle of friends more than marketing. Using a referral program seems like an obvious loyalty solution, yet many companies forget about this crucial feature.

Of course, there are a number of ways you can spice up your referral system, so you can differentiate your program. For example, you might start with a small reward rate, but the rewards will grow and grow after each referral, enticing customers to invite as many of their friends and family members as possible.

5. Forgetting to reward non-transactional activities

Some brands are afraid to take the risk with non-transactional engagement. But these worries are unfounded. Though rational (transaction-driven) loyalty programs still dominate the market, more and more businesses plan to revamp their loyalty programs in order to make them more emotional.

By the way, you don’t need to fully commit your loyalty program to this idea. You can start small by rewarding customers for referrals, or writing product reviews. Then later on, you can introduce more exciting features, like charity donations, once you learn the ropes.

• Make enrollment quick and easy because you can get customer data in other ways
• Don’t be afraid to experiment and go beyond traditional transactional rewards, otherwise your program won’t stand out
• Referral systems are an easy opportunity to acquire new customers, just make sure to add a unique twist to the age-old formula
• Test, test, test! Before launching your loyalty program, make sure to gauge the reaction of a small, targeted audience

How Antavo Helps You

Creating a customer loyalty program in this day and age should be about more than just giving out points and coupons. It’s a one-of-a-kind opportunity to create an experience unique to your brand,s which your competition cannot replicate. We at Antavo are here to help you by offering a sophisticated, enterprise-ready loyalty technology.

Antavo is an industry-leading loyalty cloud that delivers an API-centric, no-code loyalty platform for omnichannel and eCommerce businesses, combined with unique in-store functionalities.

We build comprehensive enterprise loyalty programs to foster brand love and change customer behavior for brands, retailers, and shopping malls. With a scalable and holistic loyalty logic, Antavo supercharges omnichannel and eCommerce companies’ marketing strategy and delivers a next-level shopping experience. Our best-in-class capabilities engage loyalty program members wherever they are: online, in-store or on the go.

Why choose Antavo?

• We offer a no-code platform tha allows you to iterate your customer journeys without the help of the IT team.
• Antavo system is ISO 27001 certified, and we perform regular penetration tests. Security, performance and scalability are at the top of our agenda.
• To ensure that implementation and management are done seamlessly, we empower integrators’ and agencies’ success with unique training materials, lessons and certified courses.
• Thanks to its API-centric technology, Antavo easily integrates with a wide range of technologies, including CDPs and marketing automation platforms.
• You can find a best-fit loyalty solution no matter which industry you are in, as we have 10 different loyalty program structures to offer, all of which can be customized to go outside of the buying cycle.
• Antavo has issued quarterly product releases since 2018, and invest 60% of their revenue into the product.
• In addition to eCommerce, we support retailers, malls, department stores, airports and other multi-tenant environments.
• If you are looking for a seamless omnichannel experience, our platform offers plenty of unique customer journeys, including gamification, lifestyle elements and experiential rewards.
• Antavo has been recognized by Gartner and Forrester in their respective annual reports.

Antavo’s global clients include BMW, KFC, Lagardère, Kathmandu, BrewDog, Mercury, GetPlus, League, the N Brown Group, and LuisaViaRoma – and our loyalty technology contributed 16% growth in revenue for the latter.

If you’re interested in learning more about customer retention trends, next-gen loyalty program features as well detailed guides about our technology, you’ll find plenty of reading material in our blog section .

Looking for inspiration and client success stories? Our case study section welcomes you with open arms. And, on our YouTube channel , we share loyalty discussions and tutorials that showcase our latest tech.

Hopefully, you found this guide useful. Loyalty programs have the power to create great experiences that can change the way people interact with your brand — and change the way you think about loyalty. Our team is wishing you plenty of luck and success in planning and running your own customer loyalty program.

Ready to put what you have learned into action? Our highly trained experts would be more than ready to help you bring your ideas to life using Antavo’s enterprise technology. Simply book a demo or send us an RFP !

And don’t forget to download our customer loyalty reports. These in-depth documents showcase dozens of statistics and highlight future industry trends that will help you navigate the world of next-gen loyalty programs

Tamas is the Head of Content at Antavo and a Certified Loyalty Marketing Professional - CLMP. Tamas is known for having a keen eye for loyalty and customer retention strategies and trends. Tamas is also a true gamer at heart and has an impressive collection of cyberpunk books.

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For Businesses

For students & teachers, 4 examples of great bank loyalty programs.

EVERFI Content Team

Bank loyalty programs are a tried and true marketing tactic, offering the ability to both reward and incentivize customers. While customer loyalty programs in the banking industry are far from new, many of the tactics used in modern programs are drastically different today than those even 10 years ago. Today’s audiences are digital savvy, able to compare products and programs quickly and easily, and often incentivized by cost savings. In fact, 81% of modern bankers expect incentives in the form of loyalty programs or signup bonuses, according to a study by CGI. As a result, bank rewards programs are an important marketing tactic for banks and you should be using them.

Where do you start? These 4 examples of great bank loyalty programs will give you some inspiration on how to set up your own.

4 Great Bank Loyalty Programs

Capital one purchase erasure.

Banks often integrate loyalty programs designed to help customers accrue points towards travel (Air Miles) but Capital One took this a step further. With Purchase Erasure , customers are able to accrue points towards “erasing” already purchased travel. Here, customers simply make the purchase with their credit card or mobile phone, and then submit the purchase for erasure within 90 days of purchase and are refunded.

Capital One has many other bank loyalty programs, including a developer-focused DevExchange, allowing third-party organizations to add to and customize customer loyalty options with their own additions. Why is it great? Simply adding more flexibility to an existing loyalty program idea gives CitiBank customers a lot of advantages because they don’t have to worry if they forget to use points during a purchase.

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CitiBank thankyou

CitiBank actively works to promote customer activity and engagement with “ thankyou ”, a bank loyalty program designed to reward customers for using the bank’s network and partners. Points are accrued through using mobile apps, ATMs, checking accounts, and other services and can be redeemed towards products, travel, and even previously purchased products.

This program not only incentivizes customers to use CitiBank’s cards, but it also promotes them to use other services, while rewarding individuals for actively doing business with the bank.

Wells Fargo Customer Relationship Discount

While many bank loyalty programs revolve around credit and debit cards, many don’t. Wells Fargo offers reduced rates on car and student loans as well as other perks such as no ATM fees and discounts on safety deposit boxes through their Relationship Discount program .

Relationship discounts apply to consumer checking accounts with automatic payments enabled, and essentially reward active customers for using services like auto-payment. The same program offers discounts on a range of Wells Fargo services and even cash-back refunds on things like ATM charges from other ATMs. While this program certainly costs Wells Fargo a lot, it also greatly incentivizes customers because being more active with the bank saves them a great deal in fees and service charges. When combined with increased interest rates on accounts, plus bonuses for having more than $25,000 or more than $250,000, Wells Fargo actively rewards customers for using their services.

What can you learn from it? Bank loyalty reward programs don’t have to be based around spending money, you can just as easily reward using services, especially when those services save you money or earn you money.

Zion’s Bank Pays for A’s

Zion’s Bank actively targets Gen Z bankers with their Pays for A’s loyalty program, rewarding students aged 12-18 for good grades. While the loyalty program is only available in very select areas (Utah and Idaho) it’s a great example of how some banks are using creative and inventive ways to connect with consumers.

Pays for A’s basically offers students $1 per A or A+ grade for students with a Zion’s Bank account and 50 cents per A or A+ grade for students without a Zion’s Bank account. Students with eligible accounts are also entered into drawings to win savings accounts with college money.

Why is this bank loyalty program a great example? It actively targets an up-and-coming generation of customers and encourages them to open accounts with Zion’s. At the same time, it actively promotes the bank to parents, who will become more aware of the bank and its programs as a result of something that actively benefits their children.

Tips for Setting up a Bank Loyalty Program

Bank loyalty programs have existed for decades, but traditional programs often don’t work. You have to be creative, take an extra step, and specifically market your bank’s loyalty program to your customers. These tips will help you to set up a bank loyalty program that works for your customer.

Use Big Data and Automation – Many banks use customer loyalty programs to offer free perks and rewards such as concert tickets, but most customers won’t be impressed unless they specifically need those things. Using big-data and automation, you can choose and select rewards based on how customers spend their money, so perks are always relevant. For example, if someone frequently spends money with airlines, they’d likely appreciate perks in the form of free flights where someone who frequently spends money with music venues will be much more likely to appreciate concert tickets.

Go Mobile – Many people no longer use credit cards but instead purchase directly from their phone and debit using apps like Apple or Google Wallet. Making your bank’s loyalty program mobile-friendly is essential for capturing this audience as well as creating something that’s appealing to younger generations.

Set Goals – You want your bank’s loyalty program to have an end goal, such as customer retention, incentivizing signup, incentivizing credit-card use, or so on. Many financial organizations create multiple customer loyalty programs with different goals, working to incentivize customers into different actions. You should likely do the same.

Bank loyalty programs are an important part of marketing banking organizations and some customers will review them when choosing a bank. Good bank loyalty programs will also help you to promote customer satisfaction, brand awareness, and to reduce customer churn because individuals who are happy with perks they get from their bank are less likely to go elsewhere. However, you don’t have to offer free products and services, some of the most successful bank loyalty programs today are simple discounts on loans and mortgages, increases in interest earned on savings accounts and CDs, and even reduced ATM fees. As long as your customers feel as though they are saving money or getting a great deal, they will be happy, and often more so than if offered something they didn’t necessarily want or need anyway.

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Customer Loyalty: The Ultimate Guide

Learn about why customer loyalty is critical to your business's long-term success and how you can turn your satisfied customers into delighted brand advocates.

HOW BEST IN CLASS COMPANIES BUILD CUSTOMER LOYALTY

An actionable guide on building customer loyalty and retention.

Updated: 02/02/23

Published: 02/02/23

Having a strong customer loyalty strategy can greatly aid brand success. Customers are 50% more likely to try a new product of yours as well as spend 31% more than new customers. Conversely, it costs six to seven times more to acquire new customers than it does to retain current customers.

Whether or not you currently have a customer loyalty program that encourages your customers to return and conduct more business with you, the above statistics clearly show the importance and impact of a successful customer loyalty strategy.

In this guide, you'll discover everything you need to know about customer loyalty and how to create a successful customer loyalty program.

What Is Customer Loyalty?

How to Keep Customers Loyal

Types of customer loyalty programs, best customer loyalty programs, how to measure customer loyalty.

Let's kick things off by defining customer loyalty.

What is customer loyalty?

Customer loyalty is a customer's willingness to repeatedly return to a company to conduct business. This is typically due to the delightful and remarkable experiences they have with that brand.

One of the main reasons to promote customer loyalty is because those customers can help you grow your business faster than your sales and marketing teams. There are several other reasons why customer loyalty is critical to your success.

Why is customer loyalty important?

Customer loyalty is something all companies should aspire to simply by virtue of their existence: The point of starting a for-profit company is to attract and keep happy customers who buy your products to drive revenue.

Cultivating customer loyalty is similar to creating fans. These are customers who are already engaged and can help you gain more business. Just like you know when your favorite band is going on tour or releasing a new project, loyal customers are in tune with what their preferred brands are doing.

They may follow you on social media or subscribe to your newsletter to stay in the loop about new products or updates. This is why customer loyalty marketing is crucial to your brand’s strategy. You already have a built-in fanbase. You’ll need to continue to delight those repeat customers to reap the benefits.

Customer Loyalty in Marketing

Building customer loyalty should be top of mind when creating your brand’s marketing strategy, as loyal customers are happy customers. Customer loyalty will also aid in customer retention . Here are a few additional benefits customer loyalty marketing provides.

Increased Share-of-Wallet

Share-of-wallet refers to the amount of money a customer spends on a certain brand compared to how much they spend on the brand’s competitors. Customers convert and spend more time and money with the brands to which they're loyal. That’ll mean more share-of-wallet for you.

Better Word-of-Mouth Referrals

Customers convert and spend more time and money with the brands to which they're loyal. These customers also tell their friends and colleagues about those brands, too which drives referral traffic and word-of-mouth marketing .

Increased Trust

Customer loyalty also fosters a strong sense of trust between your brand and customers — when customers choose to frequently return to your company, the value they're getting out of the relationship outweighs the potential benefits they'd get from one of your competitors.

Since we know it costs more to acquire a new customer than to retain an existing customer , the prospect of mobilizing and activating your loyal customers to recruit new ones — simply by evangelizing a brand — should excite marketers, salespeople, and customer success managers alike.

But how do you do it? How do you turn happy, satisfied customers into loyal brand evangelists? How do you use positive Yelp reviews, glowing tweets, and Instagram mentions to propel your brand's growth?

Well, we have a few ideas.

• Be as generous as your customers.
• Show your gratitude.
• Provide benefits to your customers with every purchase.
• Scratch the program completely.
• Build a useful community for your customers.
• Communicate effectively with your customers.
• Improve upon your customer loyalty program.
• Continuously evolve your business over time.

1. Be as generous as your customers.

From the outside looking in, customer loyalty programs can appear to be nothing more than a scheme to get customers to spend even more money. (Let's face it; we can all be cynics sometimes.)

That's why truly generous loyalty programs stand out among the rest.

If your loyalty program requires customers to spend a lot of money only to be rewarded with meager discounts and samples, you're doing it wrong. Instead, walk the walk and show customers how much you value them by offering perks that are so good, it would be foolish not to become a member.

2. Show your gratitude.

You might think that, by offering a loyalty program, you're expressing your gratitude for their business and loyalty. Think again. Your customers are routinely bombarded by businesses — your competitors included. Your competitors likely offer a loyalty program, too.

What sets you apart in a way that keeps customers loyal? Expressing your gratitude through handwritten notes or direct, one-to-one messages. Include thank you notes in your product deliveries or purchase confirmation emails, or send special cards around the holidays .

3. Provide benefits to your customers with every purchase.

Build loyalty by rewarding them for each purchase, or offering an incentive to purchase more. This could be a point system where a certain amount of purchases earns a discount or something else of value.

For example, Fabletics offers members of their VIP program points for every purchase. Those points can then be redeemed anytime for different merch tiers. Customers can choose to redeem points as soon as they qualify for the lowest tier or continue saving points to earn something from the higher tier, like an outfit.

4. Scratch the program completely.

Considering how many businesses offer loyalty programs, one innovative idea to make yourself stand out is to nix the idea of employing a " program" altogether. Instead, build loyalty by providing customers with awesome benefits related to your business and product or service with every purchase.

This minimalist approach works best for companies that sell unique products or services. That doesn't necessarily mean that you offer the lowest price, or the best quality, or the most convenience; instead, I'm talking about redefining a category.

If your company is pioneering a new product or service, a loyalty program may not be necessary. Customers will be loyal because there are few other options as spectacular as you, and you've communicated that value from your first interaction.

5. Build a useful community for your customers.

Customers will always trust their peers more than they trust your business. Between social media, customer review sites, forums, and more, the slightest slip can be recorded and uploaded for the world to see. But, you can turn this into a positive by managing a community that encourages customer-to-customer interactions.

One way to do this is with self-service support resources. If you have a knowledge base , you can add a community forum . A community forum encourages customers to communicate with one another on various topics, like troubleshooting the product or retelling service experiences. Even if they leave negative feedback, at least it's left on your domain where you can respond to it and deal with it accordingly.

A community forum can benefit your business in other ways, too — for example on the HubSpot Ideas Forum , customers can pitch ideas and upvote each other's posts. If the idea is good, the product team will consider it for an upcoming sprint. If the idea can already be done with the product, the support team will reach out with a solution. This lets our team provide both proactive and reactive customer service through one resource.

As online communities progress, you may formalize them to keep things organized. Having a consistent system in place ensures fairness and keeps customers satisfied over time.

This is where customer loyalty programs come in handy.

6. Communicate effectively with your customers.

Building and maintaining customers’ trust requires continuous communication. When a customer knows that your business is transparent and honest, they have trust that will have a positive experience in their interactions. This should still be the case especially when it comes to customer service and has a problem to be resolved.

Good communication means your customers should know what is going on with your business. If there is a new product, a major change, company update, shortage, change in hours, or anything that a customer should be aware of so they aren’t surprised, it should be clearly communicated. This is a part of good customer service that is essential for making customers want to continue doing business with you.

7. Improve upon your customer loyalty program.

While earlier we suggested forgoing the customer loyalty program, it’s still an essential cornerstone of any customer loyalty-building endeavor. It’s one of the best ways to build customer loyalty, especially if the brand keeps adding perks that make it impossible to walk away.

Companies provide customer loyalty programs to their most frequent customers to encourage loyalty and long-term business by offering free merchandise, rewards, coupons, or even advance-released products. Continue improving upon yours by offering more perks and rewards as time goes on.

8. Continuously evolve your business over time.

The market and the desires of your audience and customers are going to continuously change over time. Doing research and staying up-to-date in your industry reassures customers that you will always be innovative and offer the best options for meeting their needs. This doesn’t just apply to new technologies, though.

Evolving should include the branding, culture, marketing, and your product itself. Customers develop trust over knowing that companies won’t be stagnant. Being aware of how to continuously improve your business ensures you’re always getting better. Loyalty to your business and your products comes with customers knowing they’re always getting the best.

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What is a customer loyalty program?

Companies provide customer loyalty programs to their most frequent customers to encourage loyalty and long-term business by offering free merchandise, rewards, coupons, or even advance-released products.

So, how do you ensure your customer loyalty program is beneficial for your business and your customers? Check out the types of loyalty programs below.

How do loyalty programs work?

Gaining and retaining customers is the primary goal for businesses. A lot of marketing focuses on gaining customers but retaining them is often a whole different ball game. Loyalty programs work by giving customers an incentive to continue doing business with you. The incentives can be a variety of things, but they should offer a strong benefit to keep them coming back.

• Point-based loyalty program
• Tiered loyalty program
• Paid loyalty program
• Value-based loyalty program
• Coalition loyalty program
• Game-based loyalty program

1. Point-Based Loyalty Program

This is arguably the most common loyalty program methodology in existence. Frequent customers earn points that translate into rewards such as a discount code, freebie, or another type of special offer. Where many companies falter in this method, however, is making the relationship between points and tangible rewards complex and confusing.

Poor option:

"Fourteen points equals one dollar, and twenty dollars earn 50% off your next purchase in April!"

That's not rewarding. That's a headache.

Better option:

Earn a point for each dollar spent. Get a 20% discount after earning 50 points.

If you opt for a points-based loyalty program , keep the conversions simple and intuitive. Although a points system is perhaps the most common form of loyalty program, it isn't necessarily applicable to every type of business. It works best for businesses that encourage frequent, short-term purchases, like Dunkin' Donuts .

2. Tiered Loyalty Program

Finding a balance between attainable and desirable rewards is a challenge for most companies designing loyalty programs. One way to combat this is to implement a tiered system that rewards initial loyalty and encourages more purchases.

Present small rewards as a base offering for being a part of the program, and then encourage repeat customers by increasing the value of the rewards as they move up the loyalty ladder. This solves the potential issue of members forgetting about their points (and never redeeming them) because the time between purchase and gratification is too long.

The biggest difference between the points system and the tiered system is that customers extract short-term versus long-term value from the loyalty program. You may find tiered programs work better for high commitment, higher price-point businesses like airlines, hospitality businesses, or insurance companies.

3. Paid (VIP) Loyalty Program

Loyalty programs are meant to break down barriers between customers and your business ... so are we seriously telling you to charge them a fee? In some circumstances, a one-time (or annual) fee that lets customers bypass common purchase barriers is quite beneficial for both business and customer. If you identify factors that may cause your customers to leave, you can customize a fee-based loyalty program to address those specific obstacles.

For example, have you ever abandoned your online shopping cart after tax and shipping were calculated? This is a frequent issue for online businesses. To combat it, you might offer a loyalty program like Amazon Prime — by signing up and paying an upfront fee , customers automatically get free two-day shipping on orders (plus other awesome benefits like free books and movies).

4. Value-Based Loyalty Program

Truly understanding your customer requires you to identify the values and desires of your target audience — in doing so, you can encourage customer loyalty by targeting those characteristics. While any company can offer promotional coupons and discount codes, some businesses may find greater success in resonating with their target audience by offering value in ways unrelated to money — this can build a unique connection with customers, fostering trust and loyalty.

This could look like a company donating a percentage of the purchase to designated charities that align with a brand’s values.

5. Coalition (Partnership) Loyalty Program

Strategic partnerships for customer loyalty (also known as coalition programs) can be an effective way to retain customers and grow your company.

Which company would be a good fit for a partnership? The answer depends on your customers' everyday lives, needs, and purchase processes.

For example, if you're a dog food company, you might partner with a veterinary office or pet grooming facility to offer co-branded deals that are mutually beneficial for your company and your customer.

When you provide your customers with relevant value that goes beyond what your company alone can offer them, you're showing them that you understand and care about their challenges and goals (even those you can't solve alone). Plus, it helps you grow your network to reach your partners' customers, too.

6. Game-Based Loyalty Program

Who doesn't love a good game? Turn your loyalty program into a game to encourage repeat customers and — depending on the type of game you choose — solidify your brand's image. With any contest or sweepstakes, though, you run the risk of having customers feel like your company is jerking them around to win business. To mitigate this risk, ensure your customers don't feel like you're duping them out of their rewards.

The odds should be no lower than 25%, and the purchase requirements to play should be attainable. Also, make sure your company's legal department is fully informed and onboard before you make your contest public. When executed properly, this type of program could work for almost any type of company and makes the process of making a purchase engaging and exciting.

How to End a Loyalty Program

Loyalty programs are not meant to last forever, for you or your customers. The programs, marketing, and benefits should change over time. It’s important, however, to not end loyalty programs in a way that is off-putting for customers currently in the program. A major way to avoid this is to establish a time limit to the program at the start, and remind users of the ending as it approaches. You can also give a small gift or one-time bonus at the end to counteract the negative feeling coming from losing the benefit.

Now that you have some ideas for your new customer loyalty program, or how to enhance the program you already offer, you'll also need to ensure you have a reliable way to measure its effectiveness.

• Customer Retention Rate
• Negative Churn
• Net Promoter Score®
• Customer Effort Score
• Purchase Habits
• Referral Traffic
• Social Media Mentions

As with any initiative you implement, you should have some way to measure success. Customer loyalty programs should increase customer delight, happiness, and retention — and there are ways to measure these things (aside from rainbows, sunshine, and smiles).

Different companies and programs call for unique analytics, but here are a few of the most common metrics companies watch when rolling out loyalty programs.

1. Customer Retention Rate

Customer retention is an indication of how long customers stay with you. With a successful loyalty program, this number should increase over time, as the number of loyalty program members grows. According to The Loyalty Effect , a 5% increase in customer retention can lead to a 25% to 100% increase in profit for your company.

Run an A/B test against program members and non-program customers to determine the overall effectiveness of your loyalty initiative.

Discover everything you need to start running effective split tests with this complete A/B testing kit.

2. Negative Churn

Customer churn is the rate at which customers leave your company. Negative churn, therefore, is a measurement of customers who do the opposite: either they upgrade or purchase additional services.

These help to offset the natural churn that goes on in most businesses. Depending on the nature of your business and loyalty program, especially if you opt for a tiered loyalty program, this is an important metric to track.

3. Net Promoter Score®

NPS® is a customer satisfaction metric that measures, on a scale of 1-10, the degree to which people would recommend your company to others.

NPS is calculated by subtracting the percentage of detractors (customers who would not recommend your product) from the percentage of promoters (customers who would recommend you).

The fewer detractors, the better. Improving your net promoter score is one way to establish benchmarks, measure customer loyalty over time, and calculate the effects of your loyalty program.

4. Customer Effort Score

Customer Effort Score (CES) asks customers, "How much effort did you personally have to put forth to solve a problem with the company?"

Some companies prefer this metric over NPS because it measures actual experience rather than the emotional delight of the customer.

In this way, customer service impacts both customer acquisition and customer retention. If your loyalty program addresses customer service issues, like expedited requests, personal contacts, or free shipping, this may be one way to measure success.

Now, here are some examples to offer inspiration while you build your own customer loyalty program .

5. Purchase Habits

How long do customers take to make another purchase from you? How many customers are returning products after purchasing them from you? These purchase habits let you know whether customers are loyal to your brand — or whether they’re leaving you for your competitors.

It’s important to understand what, if anything, is causing a return or delaying a repeat purchase. That’s why it’s important to consistently carry out customer satisfaction surveys at least once every quarter or whenever appropriate. You could send one to a customer after they tried out your product, for example, or right after they returned it.

6. Referral Traffic

Referral traffic refers to any traffic that comes to your website from places other than search engines (such as Google). Social media sites, news websites, and other online properties would all count as referral traffic. Traffic from display ads doesn't count. What matters is how many of your customers are linking to your site or talking about you on their social media profiles. You can measure referral traffic using a tool such as Google Analytics.

7. Social Media Mentions

What are people saying about you on social media? Is it positive? Or are they spreading bad word? While this isn’t so much of a quantitative measurement as others on this list, it’s still an excellent way to track customer loyalty. You can track social media mentions using a tool such as HubSpot .

Tracking mentions is an important part of a social listening strategy and one of the best ways to see whether customers are loyal. You can also find out what they’re saying about you in comparison to your competitors.

• Sephora Beauty INSIDER
• Virgin Atlantic Flying Club
• Amazon Prime
• TOMS Passport Rewards
• Hyatt Loyalty Program
• United Mileage Plus
• Odacité Rewards
• Starbucks Rewards
• PetSmart Treats
• Sweet Green Sweet Rewards
• The North Face
• The Body Shop

1. Sephora Beauty Insider

Image Source

Sephora offers a points-based loyalty program. Customers swipe their Beauty Insider cards at every purchase to track the amount of money they spend. Depending on a customer's average purchase threshold, they're grouped into one of three types of Beauty Insider — these tiers identify the top spenders among the already loyal group of customers.

Every dollar spent earns the member one Beauty Insider point — shoppers can redeem points for top-notch beauty products at checkout. Sephora speaks the language of its audience by measuring points in dollars and rewards in cosmetic items.

Why We Love It

One of the best parts of a Beauty Insider at any tier is the free samples! Being able to try before you buy is very beneficial for skin care and beauty products.

2. Virgin Atlantic Flying Club

The Virgin Atlantic Flying Club allows you to earn miles and tier points by flying as well as through your daily purchases — you can apply these miles to your future travels.

Within the Club, there are three tiers customers are grouped into — each of which offers different benefits. Each tier provides many perks for the customers — but, the more customers spend, the higher their tier, and the greater the benefits.

The Gold tier benefits are top-notch because they are extended not only to you but also to guests that are traveling with you.

3. Amazon Prime

For $139 a year , Amazon Prime users get free, two-day shipping on millions of products with no minimum purchase among other benefits. This also includes their streaming service, Prime Video. For example, because of Amazon's acquisition of Whole Foods, Amazon offers Prime users substantial savings on their groceries .

This deal on efficient, reliable shipping on almost any product imaginable offers enough value to frequent shoppers that the annual payment makes sense (think about how much you normally pay on standard shipping for your online purchases).

Saving on the thousands of products on Amazon itself plus saving on all your groceries at Whole Foods equals a ton of savings !

4. TOMS Rewards

TOMS Rewards has a free, point-based reward system that shows their customers what they value as an organization and how they give back to different communities.

Customers sign up for free, make their purchases to earn points, and then use those points to purchase more products, obtain offers, or donate the points (which have a one-to-one monetary value) to support a giving fund or foundation.

There are three tiers customers are placed in that determine their special offers and perks based on the amount they spend with the company.

TOMS has a variety of awesome grassroots partners that are incorporated into their rewards program. Being able to donate your points to the causes you support is an impactful benefit.

5. Hyatt Loyalty Program

Hyatt has a five-tier loyalty program to encourage customer loyalty — although their highest tier requires customers to spend dozens of nights in hotels every year and travel a great deal more than the average person might, they offer a membership that's completely free and has no required thresholds members need to meet — meaning, Hyatt's loyalty program is open to everyone.

Member perks include discounts at their participating hotels, access to special member-only offers, and the ability to earn points on nights spent at the hotel, dining, spa, Exhale classes, and more. Customers can also choose how they want to spend or apply the Hyatt points they earn (e.g. free nights at the hotel or flight miles).

Most rewards programs with different tiers have two or three levels. Hyatt has a total of five which means that there is always a benefit that fits how much the customer spends.

6. REI Co-op

REI's Co-op membership program harkens back to the outdoor gear company's roots as a co-op — a consumer organization that is truly owned by the consumers and managed to meet the needs of its members.

The program makes customers feel good about spending their money at REI because of the company's commitment to this cooperative vision of giving back to outdoor conservation and their prioritization of the members over the profits.

Co-op customers become lifetime members after paying a flat fee of $20. Then, they're rewarded with 10% of the total amount they spent at REI in the previous year, access to deeply-discounted "garage sales," discounted wilderness and outdoor adventure classes, and members-only special offers.

Being able to support the cooperative vision of REI and all the impactful work that they do is an extra perk on top of the regular rewards benefits.

7. United MileagePlus Program

United's MileagePlus Program is meant to streamline the process of earning points on daily purchases and applying those points to payments for global flights, hotels, rental cars, and more for customers.

For the most frequent United customers, they can choose to become a Premier user and receive a MileagePlus card (associated with their tier) to use on purchases so they can rack up even more points and reach greater travel-related perks (e.g. free, checked baggage, upgraded seating, priority boarding, and access to deals with partner hotels and car rental companies).

United has the most global destinations of any airline, so it gives you the most opportunities for where to earn and redeem points.

8. Odacité Rewards

Imsge Source

Odacité Rewards is a program that encourages customers to return to the brand for their regular skincare purchases. Customers earn one point for every dollar spent and are grouped into one of three tiers depending on the amount they spend.

Odacité's program offers rewards unrelated to purchases as well. Customers can earn points for sharing their Facebook page, inviting a friend, following them on Instagram, sharing their birthday, and creating an account.

Points can be exchanged for a monetary value and applied to a customer's purchase for a discounted price at checkout. These tasks are easy to complete and benefit both customers and the business.

Having ways to earn points that don’t require you to spend money is a big plus because it’s essentially getting free rewards!

9. Starbucks Rewards

Starbucks Rewards is a star-based loyalty program in which customers download the Starbucks app or sign up online, add any amount of money they'd like to their digital card, and scan it upon checkout, whether that's in-store or via mobile order.

Every purchase results in the earning of stars — two stars per $1 spent. Within the app, there are prizes and games such as double-star days (customers earn double the normal amount of stars they would), free beverage coupons on their birthday, and other ways to earn bonus stars.

Members can apply the stars they earn to their purchases for discounts and free beverages (and food).

The Starbucks Rewards program makes it fun and exciting to earn rewards with games, bonus challenges, and double star days.

10. PetSmart Treats

What pet owner doesn't love treating their best friend to delicious food, new toys, a haircut, and more? The PetSmart Treats loyalty program makes this easy for pet owners to do while also saving them money.

Pet owners earn points every time they spend (eight points per dollar, to be exact). They can redeem these points in-store or online. Members get free shipping and are notified about member-only sales and in-store discounts, and can use their earned points on grooming, PetsHotel, puppy training, or even donate their points to a PetSmart-affiliated animal charity.

(Not to mention, members earn a free surprise for their pets on their birthday.)

Pet care can be quite expensive, so being able to use points for things like grooming, puppy training, and pet hotels is a great way to save.

11. SweetGreen Rewards and Challenges

SweetGreen Rewards and Challenges program aims to help customers achieve healthier practices as well as boost app engagement. Challenges change weekly and may entice customers to purchase by offering a freebie for certain items. For example, customers may receive a free drink when they order a side.

The program offers a fun way for Sweetgreen to reward its most customers, who often order multiple times per week, to save on their purchases.

Delivery fees can add up if you order food frequently, so removing those provide a lot of great savings for rewards members.

Designer Shoe Warehouse has a long-standing VIP loyalty program that is points-based. Customers earn rewards on a tiered system that gives more as they spend more. A convenient part of the DSW loyalty program is that it doesn't require a physical card. The company’s online system can recognize program members with their name, phone number, or payment information.

VIPs earn 1 point for every $1 spent and Elite members earn 2 points per dollar. Plus, each purchase also earns 5% back in rewards, 10% for Elite members. The program also includes free shipping on every purchase, a 50-point reward for donating old shoes, and a birthday reward.

Shoe lovers are often recycling out their old shoes as they buy new ones, so being able to get rewards for donating them is a big plus.

13. The North Face

The popular outdoor apparel and gear retailer has a loyalty program named the XPLR Pass . It’s easy for customers to earn points through more than just spending. Attending The North Face events, bringing a reusable bag when shopping in-store, checking in at National Parks, and participating in surveys are some of the other ways to rack up rewards. Members earn 1 point for every $1 spent, and a $10 reward for every 100 points earned. However, members are limited to 100 points per calendar year.

Another great benefit of the XPLR Pass is the Renewed Trade-In Program. Members can trade in their gently used gear from the store for a gift card. As well, members can freely return any purchased gear that didn’t work for them within 60 days. The program also offers early access to limited edition collections and chances to wear test products before they are made available to the public.

The members-only field testing is a very useful benefit because there is a lot of gear that you can’t know will fit your needs until you try it out for yourself.

14. The Body Shop

As a business with a long-standing commitment to social responsibility, The Body Shop brings that sentiment to its rewards program. The Love Your Body club is points-based but focuses a lot on the community aspect. Members get 1 point for every $1 spent, and a $10 reward for every 100 points earned.

The Love Your Body club offers exclusive members-only parties and sneak peeks of new collections. Points can be redeemed for discounts but also donations to a variety of charities. Members also receive a $10 coupon for their birthday.

The community aspect of the Love Your Body club is a special benefit because it makes you a part of something special and gives you access to events where only others in the community can attend.

Begin (or Enhance) Your Customer Loyalty Program

Customer loyalty is directly tied to your business's bottom line, retention, and ability to grow better . So, get started today by determining which customer loyalty tactics you're going to tap into and use the examples we reviewed above for inspiration.

(Net Promoter, Net Promoter System, Net Promoter Score, NPS and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.)

Editor's note: This post was originally published in October 2019 and has been updated for comprehensiveness.

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Since the market has been increasingly competitive, several online merchants are struggling in deploying an effective loyalty program to build customer retention among buyers. A loyalty program is necessary for business doers as it helps to remain a sustainable number of customers to make purchases at stores. In other words, loyalty program pays the way for the continuous revenues for a business.

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How does the Starbucks reward program work?

Starbucks offers one of the most effective loyalty programs,, which gives freebies and discounts to members. People know this program under the name “Starbucks Rewards”. Manifest research shows that nearly 48% of mobile users who often use restaurant loyalty apps use Starbucks Rewards. Starbucks reached more than 16 million loyal members in 2019.

The loyalty program is a great way to save money for customers to purchase at Starbucks. New members can register for the Starbucks Rewards Program in a couple of different ways. They can go directly to their website Starbucks.com/rewards or download the Starbucks Rewards app to their smartphones.

Starbucks allows customers to check their points balance, gift card via mobile phone, website, and in-store, on their user-friendly app.

Customers can earn rewards for every dollar they spent, birthday rewards, and double-stars during the limited-time promotion.

When clients reach a specific star level, they can choose to redeem it. You are free to decide where you want to spend your rewards, using the mobile app or showing it to the cashier at the local Starbucks.

The stars will be removed from customers’ accounts after redemption. They can choose how many stars they want to redeem. For instance , you have 100 reward stars, and you can choose to redeem them for two 50-value rewards, four-value rewards, or keep earning to achieve higher-value rewards.

Starbucks often gather information on customers’ habits and offer more relevant perks and freebies to meet customers’ needs with their rewards program. Moreover, their app brings precise details on how clients can earn reward points and redeem them. This helps the brand stay on top of customers’ minds.

What makes Starbuck rewards program become one of the best in the world?

Provide clear communication, diverse and creative offers.

One of the most vital elements to motivate customers to join a loyalty program is to give customers detailed information about their benefits. Starbucks is doing well with this strategy. They inform their customers about how they can earn rewards and redeem them via the app and the landing page on their website.

To increase engagement, Starbucks shows the current points balance of customers on their account at the website or on the app. Clients can then decide how many rewards they want to spend or accumulate to get a higher value

Starbucks creates various offers and redemption options.

25 stars to get an expresso shot, dairy substitute, or additional favor

50 stars to have brewed hot coffee, hot tea, or bakery items

150 stars will bring a handcrafted drink, hot breakfast, or parfait.

200 stars, you will receive lunch sandwiches, a protein box, or salad

To make loyal customers feel more delighted and surprised, Starbucks often announces seasonal promotions or new products to its members first. They can bring double star promotion campaigns to reward their loyal clients.

Various offers will motivate customers to purchase more to unlock exclusive benefits they will earn at different levels. With these attractive offers, every fan of Starbucks will feel that they will make a bargain for every purchase.

You may want to read more about the Excellent Ideas for the Loyalty Programs blog .

Apply technology into the rewards program

Firstly, Starbucks provides a wide range of offers for their customers via a mobile app. The application of hi-tech devices makes the program more accessible to buyers who mostly use smartphones to communicate. With their mobile phones now, customers can use an order-ahead feature to book whatever they want before they genuinely come to stores.

Starbucks increases engagement with their customers by providing free music and games in their reward program. Members can play games in the app to earn more bonus stars. Besides , it allows customers to send gift cards to other members and their friends through the app.

By applying technology in the rewards program, Starbucks lets members make payments and redeem rewards via their mobile app. Therefore , when buyers enter the shop, they only need to pick up their orders without wasting time. This practice gives every shopper the feeling of receiving priority. Moreover , the stores’ chain can also reduce a large workload when people have to line up to wait for their turns to order, which makes the buying and s easier selling process straightforward.

Through centralizing members’ purchase and behavioral data via the app, Starbucks can build long-lasting relationships with customers. Moreover , if they want to have a comprehensive analysis of customers’ buying behavior, they can check the loyal program’s data.

Personalized rewards

Not only creating available offers for customers, but Starbucks also shows their concern toward personal fans by offering them free drinks or unique rewards on their birthday as an appreciation for their contribution to Starbucks.

If members are looking for a personalized offer, Starbucks’ reward program shows them a customized homepage and access to the desired store’s playlist.

Related post: Complete guide to building an effective loyalty program

American Express

How does the american express reward program work.

The American Express company, called Amex, is a multinational financial services company founded in New York, America. This corporation is well known for its success in providing the credit card charge card, and traveler’s cheque, and performing in these areas is also an advantage for Amex in successfully managing providing the credit card

The American express company , called Amex, is a multinational financial services company founded in New York, America. This corporation is well known for its success in providing credit card , charge card, and traveler’s cheque. Performing in these areas also an advantage for Amex in managing their its loyalty program.

The American Express reward program is called Membership Rewards Program offers exclusive benefits that you can use for your journey. Earning reward points on every purchase, then using these points to cover your travel expenses, card charges, or gift cards. Membership Rewards points are easy to earn and flexible to use.

Customers can enroll in the Membership Rewards Program and use their cards for purchases. Each amount you spend, you can earn that reward points. There is no expiration date for using these points. Clients can use them whenever they want.

There are a lot of options for redeeming your Membership Rewards points.

Book travel via the AmEx portal or Expedia

Transfer points to travel partners so that you can use these points for your travel expenses.

Pay with points at the checkout .

Cover your card charges

Use points to purchase online on specific retailers.

Redeem gift cards

Donate to charity

How does the American Express rewards program succeed?

Apply an ecosystem for their loyalty program.

Amex applied an ecosystem for its loyalty program in which involving brands and cooperators also participate. With a membership card from Amex, card owners can redeem their reward points at any affiliated brands, including airlines, restaurants, and so on.

American Express has various Membership rewards partners. They want to redeem rewards points. The transfer partners include Airlines and Hotels such as Air Canada, Emirates, British Airways, Air France/ KLM, Cathay Pacific, Singapore Airlines, Hilton Hotels & Resorts, etc .

You can also use the reward points to pay at the checkout when you’re shopping online at retailers, including Walmart and Amazon. Besides , rewards program members can redeem their points to gift cards through the American Express site at several retailers from Home Depot to iTunes. The points value will be varied based on each retailer.

By doing so, customers know that they can get benefits anywhere.

Build a community for members in the rewards program

In this brand, the loyal customer becomes a member with their member card to accumulate reward points. Instead of considering a buyer as a customer, AmEx treats them like an involving member of a community that they created.

Each member can enroll by individual “AmEx Offers” when they log in their accounts online or via the American Express app. They will have different ways to earn additional Membership Rewards points. For instance , you will earn extra points for a limited time when you use the card at specific retailers. Or you can register for the Member Opinions program to earn points by completing surveys.

Customers feel that they are joining a community with different brands, not only with American Express. Then, they will have multiple selections to earn or redeem their points. Therefore , customer engagement will be much more improved.

Air Miles is a loyalty program running and managed under LoyaltyOne Company in Canada. The reward campaign by this company has significantly changed the way people use to raise customer retention .

Among marketers, Air Miles is considered as an innovator in the affiliation reward program. There are multiple reasons why this program becomes successful.

Bring a coalition loyalty program partnered with hundreds of retailers

The Air Miles coalition has more than 200 retailers brands, hundreds of online retailers, and two Air Miles credit card partners. This loyalty program allows its customers to obtain and redeem reward miles involving stores and brands from gas products to hotel chains. Therefore, people who engage in this program can earn miles quickly and get rewards for their purchases sooner.

The partners’ list displays on their website and shows clear information on how many miles you will earn for every dollar spent.

Delight customers during their shopping journey

Shopping doers are encouraged to spend more as they know that they will soon earn a bargain after that. Applying this method in the reward program, LoyaltyOne, and other brands and product chains can benefit buyers because their ecosystem motivates people to shop more regularly.

With various customer feedback and transaction data, LoyaltyOne Can match customers’ specific desired to suitable shops by analyzing clients’ behavior by segment.

Generate motivation for every purchaser

To increase the customers’ motivation in their shopping experience, the rewards for a higher level of members are visible for customers even though their current status cannot get those rewards. This will make loyal customers spend more money on shopping to unlock the next membership level to get exclusive benefits.

The lessons:

Differentiated loyalty programs.

By separating your loyalty program into different levels from ordinary to gold or VIP level, participants are passively encouraged to invest more money in shopping in order to obtain a higher level.

Treat people individually

Beside general rules and regulations applied for all people joining a loyalty program, each enterprise should find ways to treat their customers individually like Starbucks. Special offers on their personal events are sure to please any difficult customers and make them feel that they are receiving special care from your company.

Affiliate with other brands

Let think about affiliating with other brands and store chains as they will be greatly beneficial to your business. Consider what people need to find out the most appropriate cooperators to form an ecosystem in which every member can support each other and gain profits.

Learn more about Magento 2 Affiliate extension

Final words,

Running a reward program is absolutely a campaign that you should invest time, money, and effort in as their long-term advantages for your sustainable development cannot be counted. To gain success from this program you can consider some typical examples of three brands above.

Besides, if you are a newbie in this area, you can make use of support from Mageplaza Reward Points extension to complete your program. With several outstanding features from storing date to managing earning and spending rates, this extension will definitely not let you down. For more detailed information about how remarkably this extension can contribute to the ongoing success of your company, please visit Reward Points for Magento 2

Loyalty Program for Magento 2

Build up a proper tiered program that offers a special discount by order & customer data

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