loyalty program business plan sample

The Beginner's Guide to Building a Customer Loyalty Program

Published: December 29, 2022

Loyalty. 

It's what you hope to get from your beloved house pet and your paying customers.

I'm no expert when it comes to the first, but when it comes to customer loyalty, I have some insights to share that can help you create a loyalty program that grows your business.

(For more information about animal loyalty, please refer to the 1963 classic film, The Incredible Journey .)

Before we talk about loyalty programs, let's examine how your company can attract loyal customers to your business.

Need a TLDR (Too Long Didn’t Read) directory? Here's a table of contents.

How to Build Customer Loyalty

What is a customer loyalty program.

• Benefits of a Customer Loyalty Program

How to Create a Customer Loyalty Program

• Customer Loyalty Programs for Small Businesses

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• Adopt a multi-channel customer service system.
• Provide exceptional service.
• Be consistent.
• Focus on the customer, not the competition.
• Build credibility through customer interactions.
• Deliver added value.
• Share positive customer experiences.
• Reward customer loyalty.

Customers are driven by their goals, and they’ll be loyal to the company that helps them achieve them. Even if they have a positive history with your brand, a competitor with a better offer can still win them over. Because of this, customer loyalty isn’t earned easily or even guaranteed — the steps below will help you build a following of loyal customers. 

1. Adopt a multi-channel customer service system.

Building customer loyalty begins with being in tune with your customers’ needs . A multi-channel service system is one of the best ways to connect with your customers, especially when they need help. Customers will have more access to your service team, creating more customer interactions , and the more you interact with them, the more often you can influence their experience. 

Multiple channels also allow you to offer an omnichannel experience , where customers have a consistent experience across channels, platforms, and devices. This increases customer satisfaction as your customer service is more accessible, which is exactly what you want for frustrated customers who need support.

Consider adopting help desk and live chat tools to help your customer service team cover multiple channels. For smaller teams, AI software like chatbots can relieve the workload of organizing and distributing incoming requests without having to hire more employees.

2. Provide exceptional customer service.

Going above and beyond customer expectations to provide exceptional service doesn't mean giving away free products, discounts, and perks. It's quite the opposite. Customers want solutions to their problems, not a free sample. Giveaways and discounts simply put a bandage on the problem.

Instead, challenge your team to listen to what the customer is saying and process the feedback. More often than not, your customer will be happier with the solution than they would be with a replacement or perk — although those can help sweeten the deal.

3. Focus on the customer, not the competition.

There's a time and place to scope out competitors, but it's not as beneficial as you might think, as mirroring them to win over their customers doesn’t guarantee the same results. To be the best in the eyes of your customers, you'll need to know what your competitors do, then get even more creative than they are.

Big gains in customer loyalty are the sum of several small decisions. What that means is this: Your success isn't riding on one breakthrough. Every customer interaction, product purchase, and referral by a devout customer contributes to brand loyalty every day.

So when you're tempted to see if the grass is greener on the other side, know it's probably watered with a different sprinkler.

4. Be consistent.

Franchises like McDonald's are so successful mainly because of consistency. Customers know what they can expect from these businesses when they go, no matter where they are in the world. On the surface, that doesn't seem like a contributing factor toward customer loyalty but it is — here's why.

When brands provide consistency through their products and service, their customers can easily incorporate them into their lives. For instance, imagine wanting ice cream, and all you can think about is your favorite cone from McDonald’s. You can count on them to be open and deliver exactly what you had in mind. After enough visits, you'll begin to trust it because it's proven time and time again that it can consistently deliver on its promise (and ice cream!).

5. Build credibility through meaningful customer interactions.

Nearly three out of five consumers report that good customer service is key to feeling loyalty toward a brand. Additionally, 76% of customers say they would stop doing business with a company after one bad experience.

Every business makes mistakes, but the key to retaining customers is acknowledging mistakes and correcting them when they happen. 

Loyal customers expect a positive experience from your brand every time they interact with it. They want to feel like you value them as much — if not more — than they value you. If they sense their business isn't appreciated, you might lose them to competitors.

A CRM can come in handy here as it records the past experiences that a customer has with your brand. It stores messages like emails and calls, as well as customized notes that relay specific information about a customer. This creates a more personalized experience as employees can leverage important historical data regarding past interactions with a customer.

6. Deliver added value.

You're not the only one vying for your customers' attention — your competitors are too. Everyone races to show their customers that they can best fulfill their needs. So, how do you edge them out? Go above and beyond their expectations.

Research shows that one in four customers is willing to pay 10% more in almost every industry if there’s a guaranteed good experience. Other than offering a loyalty program — which we'll talk about soon — you can do this by building a relationship with your customers that extends beyond the moment of purchase to demonstrate that you’re invested in their lifestyle, not just their money. 

One way that your company can add value to the customer experience is to host events or contests that your target audience would be interested in. For example, the energy drink brand, Red Bull, has built a massive customer following by sponsoring extreme sporting events and teams.

Another way to add value is to create a customer community. This could be something simple like a knowledge base or ideas forum, or it could be complex and include a devout network of loyal advocates.

Take Harley Davidson, for example. It founded a community of brand evangelists who advocate for Harley Davidson at different dealerships throughout the U.S. These communities make customers feel like they're part of an in-crowd with a social status exclusive to the group members. 

7. Share positive customer experiences.

If you're doing a good job generating positive customer experiences, why not let people know? Gather customer feedback and share reviews to inform others about the benefits your company brings and broadcast these stories across your different channels. Customers tend to trust other customers more than your advertising, so it's important to leverage positive interactions to maximize customer value .

If you’re unsure where to find feedback, third-party review sites like Yelp give you access to a lot of customer feedback in one place. You could also consider adopting NPS® and other feedback tools to gather qualitative information about your brand or encourage customers to share testimonials that you can share on your site. 

8. Reward your customers.

Customers loyal to your brand are also the most valuable to your business. In fact, customers who have an emotional connection to your brand tend to have a lifetime value higher than your average customer . These customers spend more with your business and should be rewarded for it — this is where a loyalty program becomes essential to building customer loyalty.

A customer loyalty program is a program your business offers that rewards customers for their continuous purchases from you. 

Rewards can be free products, early and exclusive access to new products or events, point systems, awards, exclusive merch — anything you want to do to share your appreciation with them for their business. 

68% of loyal customers will join a loyalty program if offered, and the rewards and unique offers are additional incentives for them to continue their purchases. Customers who join these programs tend to spend more money because they receive benefits for their business. They already enjoy buying from your company, so why not give them another reason to do so?

An easy retort to that question would be that it costs too much to offer incentives without getting anything directly in return. This does appear to be true when you look at an individual purchase. However, loyalty programs benefit your business in ways that extend beyond just one or two transactions.

If you question whether they're cost-effective, below are some key benefits that customer loyalty programs can provide to your business. But first, let’s take a moment to give examples of platforms that make rewarding your clients easy.

Xoxoday Plum

Xoxoday Plum is a powerful customer loyalty rewards platform that helps businesses engage and retain their customers through personalized reward programs. With Xoxoday Plum, businesses can easily create and manage reward campaigns that are tailored to their specific customer base, offering rewards that are both meaningful and relevant.

Yotpo is an incentive marketing platform that helps you build a custom loyalty program, whether tier-based, a point system, or referrals, to engage your existing customers and reach new ones. 

LoyaltyLion

LoyaltyLion helps you create a loyalty program to help your customers feel valued, as opposed to being another number. You can customize a program based on points, rewards, and tiers that customers can access anywhere along their journey, whether you’re re-engaging at-risk customers or saying thank you to an extremely loyal customer. 

Now we’ll discuss why customer loyalty programs are important for businesses.

What are the benefits of a customer loyalty program?

All businesses can benefit from building a customer loyalty program and rewarding customers with additional, exclusive benefits. You might already be a member of some programs, like a frequent flier miles program or a referral bonus program. 

In an increasingly competitive and crowded market, loyalty programs can differentiate you from your competitors and keep your customers around. While loyal customers are more likely to make repeat purchases, that’s not the only reason to start a program. Below we’ll go over the benefits of a customer loyalty program for your business. 

1. Better Customer Retention

Nowadays, customers are making purchase decisions based on more than just price. They make buying decisions based on shared values, engagement, and emotional connections with a brand. Customer loyalty programs are a great way to engage customers beyond just the point of purchase, to interface on shared values, and to provide even more value to customers — making them happier and more likely to keep purchasing from you. You can also work with customers for recurring exchanges. For example, with home service companies, you could create a maintenance plan with homeowners where you come back on a weekly or monthly plan. This keeps the customer engaged and enrolled repetitively. 

And 88% of customers that feel appreciated plan to stay loyal to brands, and 83% plan to spend more . 

2. More Customer Referrals

If your customers enjoy the benefits of your customer loyalty program, they’ll tell their friends and family about it. This word-of-mouth marketing draws in new customers at no acquisition cost and can generate even more revenue for your business. In fact, word-of-mouth marketing drives $6 trillion of annual consumer spending , and people are 90% more likely to trust and buy from a brand recommended by a friend. 

3. Cost-Efficacy

It's more cost-effective for your business to retain happy customers than acquire new ones. Acquiring a new customer is 5-25X more expensive than retaining a current one.

4. User-Generated Content and Reviews

Online customer reviews are almost as trustworthy as recommendations from friends and family. Customer loyalty programs that incentivize reviews and ratings on websites and social media will result in authentic user-generated content from customers singing your praises so you don't have to.

So, now that you're on board with the value of customer loyalty programs, how do you start one? Let’s go over how to create a loyalty program.

• Choose a great name.
• Create deeper meaning.
• Reward a variety of customer actions.
• Offer a variety of rewards.
• Make your 'points' valuable.
• Structure non-monetary rewards around your customers' values.
• Provide multiple opportunities for customers to enroll.
• Explore partnerships to provide even more compelling offers.
• Make it a game.

1. Choose a great name.

The first step to a successful customer loyalty program is choosing a great name. It should incite curiosity and interest and urge customers to participate. Most importantly, you must distinguish it from the myriad of other loyalty programs they might already be part of. 

Image Source

Some of my favorite customer loyalty program names include beauty brand Sephora's Beauty INSIDER program and vegan supplement brand Vega's Rad(ish) Rewards . These clever, unique names hint at benefits but don't give them away — making customers curious to learn more and join.

2. Create a deeper meaning.

Some customers are cynical about customer loyalty programs and think they're just a clever ploy to get them to spend more with businesses. Even if that’s one of your goals, it should be about more than just the money. 

To get customers excited, tap into the "why" behind your product or service to make your customer loyalty program as compelling as possible.

Briogeo is a customizable hair care product line. With just a few answers to a quiz, customers will have a shampoo and conditioner crafted just for their hair on their doorstep.

Its rewards program is just as customer-centric as its product. For every $1 customers spend, they earn three points toward a savings discount on their next purchase. With no frills or distractions, customers know that this loyalty program is getting them closer to even more affordable hair care products. It's a win-win.

3. Reward a variety of customer actions.

Another way to demonstrate your commitment to customer loyalty beyond just purchases? Reward non-purchasing customer actions.

Customers watching product videos, engaging in your mobile app, sharing social media content, and subscribing to your blog are still valuable signs that a customer is engaging with your brand — so reward them for it.

4. Offer a variety of rewards.

Discounts aren't the only way to provide more value to your customers.

Those who spend at a certain threshold or earn enough loyalty points could turn them in for free tickets to events and entertainment, free subscriptions to additional products and services, or even donations in their name to the charity of their choice.

Lyft does a fantastic job of this with its LyftUp program. Riders can round up the cost of their ride to the next dollar and donate the change to the charitable organization of their choice — making it easy and rewarding for them to make an impact while using the service as they normally do.

5. Make "points" valuable.

If you’re asking customers to enroll in your customer loyalty program, make it worth their while and offer something valuable in return. 

For example, if you're offering cashback rewards as part of your customer loyalty program, assign a monetary value to your points so customers can visualize what they can earn (and spend) by continuing to purchase from you.

Credit cards do an excellent job of this by illuminating dollar-for-dollar how people use points — just watch any commercial offering points in exchange for dollars, airline miles, groceries, or gas.

6. Structure non-monetary benefits around your customers' values.

Values are important to customers — in fact, two-thirds of customers are more willing to spend money with brands that take stances on social and political issues they care about.

So, make sure you tap into those values as part of your rewards program, too.

TOMS Shoes donate a pair of shoes to a child in need for every purchase its customers make. Knowing that providing resources to the developing world is important to its customers, TOMS takes it a step further by launching new products that help other important causes — like animal welfare, maternal health, clean water access, and eye care — to get customers excited about helping in other ways.

7. Provide multiple opportunities for customers to enroll.

Once you've launched your customer loyalty program, make sure you're promoting the benefits of joining.

If customers get rewards from purchasing from your online store, next to the price, share the points they could earn from spending that much.

You might have experienced this when flying on an airline that offers a loyalty rewards credit card. The flight attendants might announce that you could earn 30,000 miles toward your next flight — if you apply for the airline's credit card.

Other ways to do this include promoting the program on social media channels and adding on-site push notifications when customers complete an activity that earns them points.

8. Explore partnerships to provide even more compelling offers.

What's better than one reward? Two rewards, of course.

Co-branding rewards programs are a great way to expose your brand to new potential customers and to provide even more value to your existing, loyal ones.

Brands might offer loyal customers free access to co-branded partnerships — like T-Mobile's offer of a Netflix subscription with the purchase of two or more phone lines.

9. Make it a game.

Everyone loves games and competition — so use that winning spirit to get your customers interacting with your brand more frequently.

Lots of brands gamify their customer loyalty programs to earn valuable engagements within an app, website, or at point-of-purchase.

Points are easily translatable for gamification. Take Treehouse , which teaches coding and app development, and rewards engaged users with more and more points leading up to a badge — which users can then display on their websites and social profiles to impress colleagues and potential employers with their skills.

If you're operating with a growing business, you may not have much flexibility when it comes to your budget. However, you can still offer an attractive rewards program that fosters customer loyalty.

Customer Loyalty Programs for Small Business

While growing businesses don't have the same financial influence as bigger companies, these organizations can still create incentives that motivate customers to return to their stores. When developing their rewards program, small businesses need to be creative and develop a unique system that mutually benefits both the company and the customer.

Take a look at a few common ways that growing companies leverage rewards programs to build customer loyalty.

1. Punch Cards

Punch cards are a common reward program for B2C companies. With it, customers get a business card that gets a hole punched after every purchase. Once customers fill up the card with punches, they receive perks and rewards. The benefit of this system is that customers are guaranteed to return a certain amount of time to receive the reward, making repeat purchases and driving revenue. 

Nothing Bundt Cakes has a popular punch card loyalty program that offers customers a free personal cake when they buy 12 of them.

2. Opt-in Email

Opt-in email solicits the customer's email address for communication with your brand. Once the customer opts in, your company can email them offers or promotions.

Emails are cheap to compose and distribute and can be sent at almost any frequency. You can also use email automation tools to deliver emails efficiently.

3. Free Trials

Free trials are typically thought of as incentives used to convert potential leads, but you can also utilize them in rewards programs too. For example, say you have a new product or service that's about to launch. You can release a free trial to members of your loyalty program. This not only acts as a reward for customer loyalty but also works as a marketing tactic that primes your customers for a future sales call.

4. Partner Programs

One way to add value is to look externally at businesses to partner with. By combining your resources, you can create an offer that benefits both you, your partner, and your shared customers.

Credit card companies like Visa and MasterCard do this all the time by offering cards sponsored by a specific brand. While having a credit giant on your side is nice, start by looking for local, non-competitive businesses you can partner with to add more to your offer.

5. Referral Programs

Why track down new leads all by yourself when your customers can help do that for you?

You can incentivize loyal customers to become advocates by offering them an attractive reward for customer referrals. If your offer is good enough, customers will be happy to take the time to network your business with other potential leads.

6. Points Systems

Tracking points is a tried and true method of tracking customer loyalty. The two keys to making these programs successful are a worthwhile incentive and a reasonable timeline to earn the incentive.

Point-based loyalty programs find the sweet spot between the two so customers don’t get frustrated. For example, if you sell workout gear, people might make purchases fairly often, and there are many different businesses to choose from. 

Your incentive would need to be valuable — like a free t-shirt — and the buyer would need to be able to earn it quickly enough to keep them striving toward it, but not so quickly that the reward loses value.

Assigning a point value per dollar is a smart way to find this balance, but you’ll need to make sure it's fair. If it takes 100 points to earn a free t-shirt that usually costs $20, a $10:100 point ratio may not be feasible for your profit margin, while a $1:1 point ratio might discourage customers before they even sign up.

7. Loyalty Discounts

Loyalty discounts come with a bonus to the traditional customer loyalty programs we've covered so far. These types of programs allow you to give back to the customer while also collecting data that can help you personalize their buying experience . Kroger's Community Rewards program is a great example of loyalty discounts in action.

To employ this type of program, you'd offer consistent, predictable discounts to customers every time they display an identification marker that associates them with the program. This might be a QR code, a card, or a phone number.

On the back end, your business captures data about what the customer purchased. Over time, you'll understand your customers' trends, patterns, and habits so you can improve their experience, making them even more brand loyal.

These types of programs are so strong because the incentive is consistent and predictable, which gives the customer a reason to come back again and again.

8. VIP Memberships

Similar to the idea of a loyalty program, there’s an added sense of luxury or exclusivity when a business introduces VIP perks.

By introducing a VIP membership program, customers can subscribe to your company’s email or SMS in exchange for better product selection or ease of use. Not only will they be more interested in your new offerings, but they’ll get notifications each time they check their email or phone messages.

9. Mission-Driven Programs

Giving back to the community is good for the world and business. A great way to foster customer loyalty is to offer added benefits for shopping with your company — like doing something for the greater good.

Baron Fig makes office materials, a broad market to sell in, but has a program dedicated to planting trees for every item sold. Conscious consumers will think highly of your small business and spread the word about these programs because of their selfless nature.

10. Community Programs

Community programs are highly effective for small businesses as they can attract customers in your area or from computer screens.

In the last year, it’s plain to see how a business can impact its audience when it positions itself as a way to connect with others. Some examples are family-owned gyms offering Zoom classes to make customers feel more included, or having bakeries pop up in local flea markets. These are all steps small businesses can take to build customer loyalty and social bonding as well.

Start Your Customer Loyalty Program Today

To get started with building your customer loyalty program, you have to prioritize the customer experience.

A loyalty program won’t magically solve all your customer's issues — it's simply a more interactive way to say, "thank you, come again." Once your customers trust you, they'll be vying for the chance to earn rewards for doing business with your brand. After all, don’t they deserve the royal treatment for being loyal customers?

Editor's note: This post was originally published in July 2019 and has been updated for comprehensiveness.

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13 Brilliant Customer Loyalty Program Examples

• Published on November 29, 2023
• Reading time 12 min read
• Views 82.2k

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.

infographic

• customer retention
• customer loyalty

Customer Loyalty Programs: Best Strategies and Examples of 2024

Should businesses bother with customer loyalty programs? If you were to ask customers, you’d see the appetite is clearly there. In 2022, the average American was a member of 16.6 different loyalty initiatives . 

Given that retaining existing customers is much more cost-effective than acquiring new ones, launching your own program might seem like a no-brainer. But there’s a catch: out of all the programs they’ve signed up for, Americans actively participate in fewer than half .

To reap the many potential benefits of your loyalty program, you’ll need a strategy to make it engaging, relevant, and cost-effective. 

This article will introduce how a strong loyalty program can put you on a solid path to sustainable growth. Then, we’ll cover some of the essential elements to include in your program.

What are customer loyalty programs?

A customer loyalty program encourages shoppers to make purchases or engage with a brand by offering benefits such as discounts, freebies, or VIP treatment.

These programs can take a number of different forms, but they’re all based on the idea that loyalty is good for business . 

Rather than pouring your marketing budget into finding and converting new customers, you’re getting more value from those who have already become part of your ecosystem.

The benefits of customer loyalty programs

The best loyalty programs are chock full of benefits for both the business and its customers.

Customers enjoy:

• Rewards – With most programs, customers receive rewards. These may be perks such as discount codes, VIP treatment, freebies, or points that can be collected and redeemed.
• Personalized experiences – Personalization is a major driver of customer loyalty. By registering for loyalty programs and actively participating, customers provide companies with data on their shopping habits and interests. Businesses can use this information to share relevant recommendations and incentives with that customer.
• A sense of belonging – Customers gravitate to brands that complement their sense of who they are. Loyalty programs create the feeling of an “insider” community, especially if the brand is active on social media and encourages interaction between members.

Meanwhile, businesses benefit from:

• Repeat business – The chance to use or unlock rewards, coupled with a sense of connection to your brand, encourages customers to come back and purchase from you again. 
• Enhanced customer data – As customers sign up for your customer loyalty programs and spend more time on your site, you’ll learn more about who they are – their preferences, behavior patterns, and demographics. Use this information to target your marketing efforts, improve your site experience, and more.
• Brand awareness – Customers who feel connected to your brand are more likely to recommend it to friends and family or engage with you on social media, bolstering your brand reputation and broadening your potential customer pool.

How do loyalty programs work?

Points-based programs.

In points-based programs, customers earn points for making purchases or for engaging with your brand (for instance, by leaving product reviews or starting a wishlist). They can redeem the points for rewards or discounts.

• Simplicity – Points-based programs are usually easy to understand for both customers and businesses, providing a clear incentive structure.
• Flexibility – Customers can collect points over time and choose when and how to redeem them for their favorite products or services.
• Potential for abuse – Depending on the structure of the program, customers might engage in strategic behavior to maximize points without necessarily increasing their loyalty to the brand.
• Perceived lack of value – If the redemption options are unexciting or require too many points for significant rewards, customers may feel discouraged from participating.

Source: Starbucks Rewards

Tiered loyalty programs

Tiered customer loyalty programs categorize customers into different levels based on their loyalty or spending levels. Each tier offers escalating benefits, encouraging customers to strive for higher tiers.

• Gamification – Tiered programs create a sense of achievement and progression, motivating customers to increase their spending to reach higher levels.
• Enhanced engagement – Offering exclusive benefits at each tier fosters a sense of exclusivity and encourages customers to remain loyal to the brand.
• Complexity – Managing multiple tiers and benefits can be challenging for businesses, leading to potential confusion or inconsistencies in program implementation.
• Exclusivity concerns – Customers who are unable to reach higher tiers may feel like second-class citizens, leading to dissatisfaction and reduced loyalty.

Source: Lancome

Paid membership programs

Paid membership programs require customers to pay a fee in exchange for access to exclusive perks, rewards, or services.

• More revenue – Paid membership fees provide a steady stream of income for businesses, offering financial stability and a basis for long-term planning.
• Enhanced loyalty – Customers who invest in paid memberships are more likely to remain loyal to the brand to justify their investment and maximize the benefits.
• Limited appeal – Customers need to feel that the value of the brand is worth the membership fees. Otherwise, they might be reluctant to take the plunge.
• Dissatisfaction – If the benefits of the paid membership don’t live up to promises or justify the cost, customers may churn.

Source: Uber One

Value-based programs

These customer loyalty programs are aimed at forming an emotional bond with customers. Rather than offering them perks and shopping incentives, you donate a percentage of revenue from each purchase to a cause that fits with your brand values.

• Positive brand image – Customers are increasingly interested in shopping with brands whose values they share. This is a way to show your humanity and prove you have a genuine desire to do good.
• Emotional connection – By supporting you, customers feel like a partner in a shared initiative. 
• Limited appeal – Not all customers will share your philanthropic drive.
• No direct rewards – Customers won’t receive any tangible shopping rewards (such as points they can “spend”) so they may be less incentivized to return.

Source: More Rewards

How to create a customer loyalty program

Designing a successful customer loyalty program requires careful planning and consideration of various factors. Here are four key steps that businesses should follow when creating and implementing a loyalty program:

1. Define objectives and target audience

Begin by clearly outlining the objectives of your loyalty program. Are you focused mainly on increasing customer retention, encouraging higher spending, or attracting new customers?

Then, zero in on your target audience. If you’re aiming to boost average order value, take a look at your current high-spending customers. What do they have in common? What do their purchasing patterns look like?

Start building a profile of your ideal loyalty program customers so that you can tailor your structure, incentives and (later) your marketing and communications tactics to them.

2. Choose the right program structure

With your objectives and audience clear, it’s time to settle on a structure for your program. 

Think through the advantages and disadvantages of each structure, weighing factors such as complexity, engagement potential, and cost-effectiveness.

There’s no right answer here – it’s all about what fits best with your goals, resonates with your customers, and fits with your business model and resources.

3. Design rewards and incentives that get noticed

Your rewards are the hook for your entire program, so choose incentives that provide tangible value and motivate customers to engage.

These rewards could include discounts, free products, or exclusive access to events or experiences.

Source: Sephora

4. Implement tracking and analytics

Finding software to build your customer loyalty program

With a thoughtful and well-balanced loyalty program in place, you have a powerful foundation for sales growth, a stronger brand reputation, and brand-new opportunities to engage with both veteran and budding fans.

When you’re ready to start setting up your program, you’ll need a software solution that can help you allocate points, manage rewards, and track the impact your program is having on your business. 

Breadstack provides an all in one customer loyalty program that showcases a combination of intuitive tools and meaningful analytics.

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Customer Loyalty Programs: What Are They? (With Examples)

Why is a customer loyalty program such a key marketing strategy? Here’s what you need to know.

Rebecca otis leder, share article.

There’s nothing like the rush of winning new business. For a long time, marketing departments poured energy into messaging and product positioning to lure new people to their brands. However, while creating new sales leads will always be part of the job, it’s equally important to convert existing customers into repeat customers. Studies have found that it’s at least six times more expensive for businesses to acquire a new customer than to keep an existing one.

That’s why investing in customer loyalty programs — and the digital technology and platforms to support them — is a growing priority.  

The fifth annual “ State of Marketing ” research report showed that marketers’ use of customer loyalty program platforms is projected to grow 80% in the next two years. The study also revealed that 63% of high-performing marketers are already using loyalty program platforms.

Customer loyalty programs aren’t just about offering discounts. They use the purchase history and customer-provided data to present customers with timely and relevant offers; and they improve overall customer experience. Companies can also grow their customer base and deliver even more compelling rewards by forming innovative partnerships with related businesses.

63% of high-performing marketers are already using loyalty program platforms” State of Marketing Report | Salesforce Research

This article covers some common types of customer loyalty programs along with examples. But first, let’s cover off on the basics.

What is a customer loyalty program?

By definition, a customer loyalty program is a marketing approach that recognizes and rewards customers who purchase or engage with a brand on a recurring basis. A company may dole out points or perks, and graduate customers to higher levels of loyalty the more they buy. These incentives and specific benefits often result in the customer becoming a more regular consumer or the ideal — a brand promoter. Benefits may involve free merchandise, rewards, coupons, or insider perks like early access to new products.

Businesses can be wary of giving free extras — however, it’s a strategy that doesn’t have to incur huge costs. After all, psychologist Norbert Schwarz found that spending as little as 10 cents can create reciprocity between two people. Studies have found that members of customer loyalty programs typically spend up to 18% more than other customers.

Throwing in an extra small product or service with a purchase is an excellent way to reinforce a buying decision your customer just made. Everyone loves receiving something for nothing. And for every cent a business spends investing in a customer loyalty program, it is likely to reap multiples in return. By contrast, when a customer walks away from your business, their income stream is lost forever.

95% of customers say trusting a company increases their loyalty” Trends in Customer Trust Report | Salesforce Research

Research also shows that 95% of customers say trusting a company increases their loyalty. What’s more, research shows that 91% of customers say their trust in a company makes them more likely to buy more frequently.

Why are customer loyalty programs important?

The benefits of customer loyalty programs include:

• Better customer retention : Today, customers are making purchasing decisions not just on price, but on shared values, engagement, and their overall experience of your brand.
• More customer referrals : If your customers enjoy the benefits of your customer loyalty program, they’ll tell their friends and family about it.
• Cost efficiency : It’s more cost-effective for your business to retain happy customers than it is to consistently churn and acquire new ones.
• User-generated content : Programs that encourage happy customers to publish reviews and ratings on websites and social media create authentic ambassadors for your brand.

How to build loyalty in every phase of the customer journey

So, how should your business build a better customer loyalty strategy?

Customer loyalty is a precious commodity. If a competitor comes up with a better offer, then your customers will take it — even if they have a positive history with your brand. According to the second annual “ State of the Connected Customer ” report, 57% of customers have stopped buying from a company because a competitor provided a better experience.

That’s why at Salesforce, we believe that creating a customer-centric culture begins long before creating a rewards program. For example, it’s important for businesses to establish a customer service approach that engages customers across multiple channels — including contact centers, social media, and in-store. Companies should build credibility through personalized customer interactions that recall what has happened previously between the customer and the organization. It’s also a good idea to deliver additional value to customers, potentially by inviting them to participate in an online community associated with the product.

Nonetheless, having a well-designed customer loyalty program reinforces a customer’s relationship with their brand. Of course, throwing in a perk or two at the point-of-sale can be what prompts a customer purchase in the first place.

Gradually, however, a business would hope to build momentum as a customer is onboarded — with the goal of cementing a lifelong relationship. Typically, this means you would be presenting the customer with continual opportunities to maximize their loyalty rewards. You’d also be presenting them with smart, targeted communications that celebrate their “milestones” with the brand, as well as their individual needs and preferences.

For marketers, a new focus on customer experience

The role of marketing departments is changing as loyalty programs become the connective tissue that drives the customer experience. Marketers used to be responsible for positioning products, crafting messages, creating ads, and posting on social media. But many are now switching to manage the customer journey and sustain those who are already engaged with the brand.

If the future of marketing lies in a radical change where marketing becomes the bridge builder across different experiences — from the first touch, through to sales and customer service support — it’s essential to create a shared view of the customer across an organization’s business units. Marketers are increasingly tracking customer data, backed by fast-growing capabilities such as artificial intelligence that help them draw insights and make sense of it.

Today, for example, roughly six in 10 marketing teams track customer satisfaction and retention. According to the “State of Marketing” report , the average marketing organization currently uses 14 data sources, a number that is growing by about 20% each year.

In addition, dedicated customer loyalty platforms offer a way for businesses to manage the customer experience after the point of purchase. This software can help businesses keep track of vital metrics such as churn, response rates, and retention rates. This allows them to judge how loyalty programs are performing, and to learn how customers feel about the company overall.

Key metrics for customer loyalty programs include:

• Customer retention rate : This indicates how long customers stay with you. In a successful loyalty program, this number should increase over time as the number of members grows.
• Negative churn : If churn is the rate at which customers leave the company, then negative churn measures customers who do the opposite by upgrading or purchasing additional services.
• Net Promoter Score : This is a customer satisfaction metric that measures, on a scale of 1–10, the degree to which people would recommend your company to others.
• Customer Effort Score : This measures actual experience, specifically how much effort a customer has to make to solve a problem with a company.

What are some of the best customer loyalty programs?

The most basic type of loyalty programs offers customers greater rewards the more they purchase from a retailer or visit an establishment. Examples include airline frequent flyer programs such as Southwest Airlines Rapid Rewards or United Airlines MileagePlus, and initiatives in the hospitality industry such as Starwood Preferred Guest or OpenTable Dining Rewards.

Other examples of brand-exclusive membership programs include Walgreens Balance Rewards, where shoppers receive back 10 cents for every $1 spent on most purchases, which can be redeemed on future purchases. Becoming a paid member of Amazon Prime effectively represents a pledge of allegiance to the global online merchant and includes perks such as free shipping and media streaming. Fashion retailer Banana Republic offers a program where credit card members can get upgraded to Luxe status, which offers free alterations and other perks after achieving a certain spend level. This entitles them to rewards such as free shipping for online orders and “choose your own sale” day.

How do you start a customer loyalty program?

Here are some tips to help your organization begin its own customer loyalty program.

• Create a points system — but make it simple : Allowing frequent customers to earn points that convert into rewards is the basic building block of a loyalty program. This works best for quick, inexpensive purchases at retailers such as fashion outlets and grocery stores. It’s important to make the relationship between points and tangible rewards as simple and intuitive as possible.
• Offer tiered rewards : A tiered loyalty program typically offers a small incentive for making an initial purchase. The value of the rewards increases as the customer moves up the loyalty ladder. This type of program tends to work better for higher-commitment and price-point businesses such as airlines, hotels, and insurance companies.
• Charge an upfront fee : It can be a good strategy to ask customers to pay a one-time fee that allows them to bypass common purchase barriers later on. Amazon Prime’s upfront membership fee, for example, allows subscribers to make frequent, repeat purchases without worrying about inconveniences such as taxes and shipping.
• Partner with another company : Think of other companies that would be a good fit. For example, if you sell hiking backpacks, consider forming a loyalty program with a maker of hiking boots. When customers receive value that’s relevant to them but goes beyond what your company alone can offer, it shows that your business really cares and understands their needs. Businesses can also grow their network to reach their partners’ customers. Companies with multiple brand names may also have a joint program, like The Key Rewards , for Pottery Barn, Williams Sonoma, and West Elm, to mention a few.
• Offer distinctive rewards: A bonus for purchasing a company’s products need not be a discount on future purchases. Customers who spend at a certain threshold could receive free tickets to events, or subscriptions to other products and services. Remember, too, that two-thirds of customers are more willing to invest in brands that take stances on social and political issues they care about. Customer loyalty programs can tap into this sense of altruism — for example, a percentage of every purchase could go to charity.
• Come up with a unique name : The name of your loyalty program should stand out from the crowd to draw interest. For example, Sephora’s Beauty Insider Program, with a clever spin on VIP, they include a level named VIB (Very Important Beauty Insider).

What are some types of customer loyalty programs?

Refer a friend.

• Lyft : Drivers in this rideshare company are able to get a $10 bonus for referring passengers.
• TheSkimm : Readers of this online, easy-to-read newsletter who convince their friends to take up a subscription win referral points and prizes.

Make the switch

• NerdWallet : Customers who switch banks or open a new account and meet eligibility qualifications can receive a cash reward.

Join our community

• REI : This outdoor merchandiser offers customers membership benefits known as an Annual Dividend. This represents their share of the company’s annual profit. The more the customer spends, the more they contribute to a mentality of “everyone wins.”

Brand pairings

• Starwood and Uber (no longer running) : Customers who linked their Uber account were previously able to earn points toward accommodation in Starwood hotels – a loyalty partnership that made sense for travelers needing hotel and transportation services on the road.

Shop at our partners

• AAA : Members who take out car insurance are entitled to fringe benefits.

The whole point of starting a business isn’t simply to make customers happy during the very first sale. It’s to entice them to return and keep buying products that drive revenue — and then spread the word to new loyal customers. Customer churn isn’t cost-effective; on the flip side, repeat customers spend more on the brands to which they are loyal — and they spend more often. They also issue priceless word-of-mouth referrals to their friends and colleagues.

For more insights and trends from more than 4,100 marketing leaders worldwide, check out the Salesforce “ State of Marketing ” report.

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Examples of Effective Loyalty Programs for Business Growth

Posted by Kevin Yun | Jan 31, 2023

Image source: "two men playing beside two women", by Felix Rostig , licensed under Free to Use

A loyalty program is a rewards system that incentivizes customers to continue doing business with a company. These programs typically work by allowing customers to earn points or rewards for each purchase they make, which they can then redeem for discounts, free products, or other perks. The goal of a loyalty program is to build customer loyalty and increase customer retention, which can ultimately lead to increased sales and profits for a business.

How Can Loyalty Programs Help Your Business Grow?

Loyalty programs have numerous benefits for businesses of all sizes. Some of the key benefits of customer loyalty programs include:

• Increased customer retention : By providing customers with incentives to continue doing business with your company, loyalty programs can help you retain customers and reduce customer churn.
• Increased customer engagement : Loyalty programs can encourage customers to interact with your brand more frequently, leading to increased engagement and brand awareness.
• Improved customer satisfaction : By offering rewards and perks to customers, you can help increase customer satisfaction and build stronger relationships with your customers.
• Increased customer lifetime value : By retaining customers and increasing their engagement, loyalty programs can help increase the lifetime value of each customer, ultimately leading to increased sales and profits for your business.

10 Examples of Companies Who Got Their Loyalty Program Right

• Starbucks Rewards : Starbucks Rewards is one of the most well-known loyalty programs in the world. Customers earn stars for each purchase they make, which they can redeem for rewards such as free drinks or food items.
• Sephora Beauty Insider : Sephora's Beauty Insider program rewards customers with points for purchases, but also offers exclusive events, personalized recommendations, and free samples to members.
• Amazon Prime : Amazon Prime is a subscription-based loyalty program that offers free two-day shipping, access to streaming services, and discounts on select products to members.
• Hilton Honors : Hilton Honors rewards travelers with points for each stay at a Hilton property, which they can redeem for free stays, room upgrades, and other travel-related rewards.
• Target Circle : Target Circle rewards customers for their purchases with rewards and exclusive offers, while also giving members the ability to vote on which local charities Target should support.
• NikePlus : NikePlus rewards customers for their purchases with rewards and exclusive offers, as well as access to personalized training programs and experiences.
• Sephora Flash : Sephora's Flash loyalty program is a fast, easy, and flexible way for customers to enjoy free two-day shipping and other benefits.
• Walgreens Balance Rewards : Walgreens Balance Rewards allows customers to earn rewards for healthy habits, such as tracking their fitness goals and filling prescriptions.
• Ulta Beauty Rewards : Ulta Beauty Rewards allows customers to earn rewards for their purchases, as well as receive access to special offers and free samples.
• Dunkin' Donuts DD Perks : Dunkin' Donuts DD Perks rewards customers for their purchases with free drinks and food items, as well as special offers and discounts.

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What Are the Different Types of Loyalty Programs & Which One Should You Choose?

• Points-based Programs: Points-based programs are the most common type of loyalty program. Customers earn points for each purchase they make, which they can then redeem for discounts, free products, or other rewards.
• Tiered Programs: Tiered programs are similar to points-based programs, but customers are placed into different tiers based on their spending and rewards are adjusted accordingly. For example, a customer who spends more may receive more rewards or have access to more exclusive perks than a customer who spends less.
• Subscription-based Programs: Subscription-based programs require customers to pay a fee to become a member and receive benefits such as free shipping, access to exclusive events, or special discounts.
• Cash-back Programs: Cash-back programs offer customers a percentage of their purchases back in the form of cash or credits. These programs are typically tied to a specific credit or debit card and rewards are automatically applied to the customer's account.
• Punch Card Programs: Punch card programs are a simple way to reward customers for their loyalty. Customers receive a card with spaces that are punched each time they make a purchase. After a certain number of punches, the customer can redeem their card for a reward.

Which One Should You Choose?

The type of loyalty program you choose will depend on your business goals and customer needs. If you're looking to increase customer retention, a points-based program may be the best option. If you want to reward customers for spending more, a tiered program might be the way to go. And if you're looking to increase customer engagement, a subscription-based program might be the best choice.

How to Create a Successful Customer Loyalty Program for Your Business

Creating a successful customer loyalty program requires careful planning and consideration. Here are a few tips to help you get started:

• Define Your Goals: Before you create your loyalty program, it's important to define your goals. What do you want to achieve with your program? Do you want to increase customer retention, reward customers for their spending, or engage customers with your brand? Your goals will help you determine the type of loyalty program that's best for your business.
• Know Your Customers: Understanding your customers is key to creating a successful loyalty program. What do they value? What motivates them to make a purchase? Understanding your customers will help you create a program that resonates with them and motivates them to participate.
• Choose the Right Rewards: The rewards you offer should be meaningful to your customers and align with your business goals. Consider offering discounts, free products, access to exclusive events, or other perks that your customers will value.
• Make it Easy to Participate: Customers won't participate in your loyalty program if it's difficult to join or participate in. Make sure your program is easy to understand and easy to participate in.
• Measure Your Success: Once your loyalty program is up and running, it's important to measure its success. Collect data and analyze customer behavior to determine if your program is meeting your goals.

Loyalty programs are a great way to incentivize customers to continue doing business with your company. By understanding the different types of loyalty programs and creating a successful program that aligns with your business goals, you can increase customer retention, reward customers for their spending, and engage them with your brand. A well-designed loyalty program can have a positive impact on your business, so start planning and creating your program today.

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Rewards programs are a powerful tool for companies to incentivize customers and build loyalty. Whether you're a B2C company, a FinTech startup, or a B2B SaaS provider, there are plenty of ways to offer rewards to your users. In this blog post, we'll take a look at some examples of rewards programs.

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5 Effective Customer Loyalty Programs for Small Businesses

According to Invesp, it costs five times as much to attract a new customer than to keep an existing one. This is why it’s so important for small businesses to turn one-time buyers into loyal, repeat customers.

Customer loyalty programs can be your secret weapon: Mention Me’s 2021 Customer Advocacy Report found that 40% of customers are likely to buy again from brands that reward loyalty.

Let's take a look at the different types of customer loyalty programs, plus examples of each type from companies in several different industries, each selling different types of products.

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What are customer loyalty programs?

A customer loyalty program is a system where a business offers rewards to its customers who make frequent purchases. From a business perspective, it’s a tactic used to encourage customers to repeatedly buy from your business.

There are lots of different types of customer loyalty programs, like refer-a-friend programs that offer customers a discount if their friend signs up or makes a purchase, reward points programs, and programs that provide free perks. We’ll dive into these (and others) later in this post.

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The benefits of having a customer loyalty program

A customer loyalty program helps you build stronger relationships with your customers by rewarding them for buying your products or services. There are several important benefits of having a customer loyalty program:

Improving customer retention .

Encouraging repeat business.

Increasing customer lifetime value.

Building stronger relationships with your customers.

Increasing customer satisfaction .

Providing a differentiator with your competitors.

Boosting revenue.

Accenture found that members of customer loyalty programs typically spend, on average, 12% to 18% more than other customers .

For a small business — especially if you’re in an increasingly competitive space — a customer loyalty program that rewards returning customers could be what differentiates you from your (bigger) competitors.

Recommended Reading

How to Inspire, Measure, and Improve Customer Loyalty

Types of customer loyalty programs for small businesses (with examples).

There are lots of different types of customer loyalty programs that all work differently and offer different rewards or benefits for your customers.

Let’s look at five types of loyalty programs that are suitable for small businesses. And if you need some inspiration for creating a loyalty program for your business, we’ve hand-picked five great loyalty program examples below.

1. Customer loyalty points programs

Points programs are one of the most popular types of customer loyalty programs. Customers earn points when they spend money with your company, and they can redeem the points to get a discount on their next purchase or for other special offers.

The Atlas Coffee Club rewards program is a great example of this. Customers earn reward points for referring friends, buying gift subscriptions, each country they “visit” (receive coffee from), the miles their coffee travels, and the money they save by being a subscriber.

These points can then be used for free shipping, a discount on their next order, or even a lifetime discount:

Points programs like this build customer loyalty by encouraging repeat, regular purchases. But when offering rewards in exchange for points, there’s a fine line: You want to encourage customers to make repeat purchases to build up their points, but not so many that it feels like the reward points have no value.

If your customers need to accumulate thousands of points to qualify for a reward or if it will take them a really long time to do so (based on your average order value), then your points program may even deter customers from making that repeat purchase as they’ll never earn enough points for the reward.

2. Mission-driven customer loyalty programs

Not all loyalty programs focus on giving their customers discounts or rewards. A mission-driven customer loyalty program means that your customers feel like their purchase or use of your product helps to “make a difference” and improve the world we live in.

A great example of this is Whereby , who launched a program in 2021 to plant a tree for every video meeting that happens on their platform:

“Living a more climate-positive lifestyle is something we think we should all be thinking more about. Every conversation held on Whereby is one less journey to a meeting; so why not double down on that effort and plant part of a tree while you do it, too?”

Mission-driven loyalty programs can be more effective when you partner with a nonprofit organization that aligns with your mission. In Whereby’s case, they partnered with an organization called Brynk to plant the trees on their behalf.

This is a smart way for Whereby to differentiate itself from other brands in the space. It gets people to start using its product, and it creates a positive first impression by making customers feel like they’re doing good by using it.

3. Subscription programs

Subscription programs build customer loyalty by turning customers into repeat purchasers. A subscription program often gives customers a discount compared to one-off purchases or offers exclusive products, content, or services that aren’t available to non-subscribers.

If your small business sells products that are consumable and suitable for repeat purchases (food and drink, health and beauty, cleaning products, or even clothing are popular choices ) then subscription programs might be a good customer loyalty program for your company.

There are lots of different subscription programs out there (you might even already subscribe to one or two), but a great example is Birchbox , a monthly beauty subscription box.

Birchbox offers plenty of benefits to all their subscribers, plus an added incentive for customers to stick around with their VIP loyalty program. This VIP program is only activated once a customer has been a subscriber for six consecutive months, which encourages long-term customer retention.

4. Community programs

All of your customers have one thing in common: you. But they will likely have plenty of other things in common as well — similar interests, hobbies, and challenges. A community program brings together like-minded customers to engage with and learn from each other (and your company).

One example you might not expect is bank Monzo :

“At Monzo, our community is at the core of what we do. We wouldn’t be who we are without the engagement, enthusiasm, and feedback that you bring to our online forum, the events we host, and our social media channels.”

Monzo has created a community where their customers can share product feedback and ideas, chat about related topics (financial news, fintech, and all things money), and even share insights on their competitors.

Community programs don’t offer your customers any tangible reward like discounts, special offers, or even reward points. Instead, they offer a chance to connect with like-minded people.

From sharing tips on how to use your product to learning from each other, customer communities can make a real difference to your customers’ lives and be a real differentiator compared with other companies or products in your space.

5. Refer-a-friend customer loyalty programs

Refer-a-friend loyalty programs are exactly that: They reward customers for referring friends, family, or colleagues, giving them discounts or special offers.

One company that uses a refer-a-friend loyalty program is Mahabis . Interestingly, they offer slightly different referral offers for different regions. For their U.S.-based customers, they offer a 10% discount for you and your friend, whereas in the U.K. it’s a £10 discount.

These programs are a great way to build trust with potential customers, especially for ecommerce or DTC companies that don’t have a brick-and-mortar store for customers to visit and check out the product before they buy. Mention Me found that consumers most trust brand recommendations from their friends .

Get started with a customer loyalty program for your business

We know that offering a loyalty program is a great way to keep your customers coming back for more and turn one-time purchasers into real advocates for your business. But as a small business owner, you won’t have the same resources to invest as big companies, so it’s important to find a loyalty program that works for you.

The first step to setting up a customer loyalty program is working out the right type of program for your business. This means you need to understand your customers: what motivates them, their buying habits, and how they get value from your company.

As you’ve seen, there are lots of different options to choose from, but once you’ve got a program set up, you can evaluate and optimize it over time to get the best results for your business and your customers.

Like what you see? Share with a friend.

Emily byford.

Emily is a B2B SaaS content marketer. When she’s not writing, she loves cooking and is a keen (indoor!) rock climber. Find her on Twitter or at ek-byford.com .

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Retail | How To

How to Create a Customer Loyalty Program in 7 Steps

Published April 18, 2024

Published Apr 18, 2024

REVIEWED BY: Brigitte Korte

WRITTEN BY: David Rivera

Your Privacy is important to us.

This article is part of a larger series on Retail Management .

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• Step 1: Define Customer Behaviors to Reward

Step 2: Select Rewards that Create Incentive

Step 3: choose a loyalty program structure.

• Step 4: Choose Between Software or Manual Application

Step 5: Brand Your Loyalty Program

Step 6: train your associates.

• Step 7: Monitor & Adjust

Why Create a Customer Loyalty Program?

Bottom line.

A customer loyalty program is a customer-facing marketing strategy designed to create incentive for people to continue to choose and engage with your store, ultimately creating brand loyalty. This guide will walk through the seven steps for how to create a loyalty program.

Key takeaways:

• A good customer loyalty program will encourage people to visit and buy from your store time and time again, driving your sales and increasing brand loyalty.
• Loyalty program software can be integrated into point-of-sale (POS) systems and ecommerce sites.
• There are many different kinds of loyalty rewards and program structures; choose the best for your business type or model.
• Train your staff to promote the program well and adjust it as needed based on results.

Step 1: Define the Customer Behaviors to Reward

In general, in a customer loyalty program, a customer performs an action and then they get a reward. To ensure you get the results you want, you need to define the goals of your loyalty program so that it promotes specific shopper behaviors and boosts targeted areas of your business.

For example, say you want to bolster your online reviews to boost trust and traffic to your ecommerce site. Either manually or using loyalty software , you can structure your loyalty program so that members get rewards each time they write a product review.

Some behavior that you could offer rewards for include:

• Writing referrals
• Spending a certain amount of money
• Interacting with your brand on social media (e.g., tagged photos, comments, likes, follows)
• Buying a specific product
• Shopping on sales days
• Leaving product reviews
• Uploading a photo
• Visiting your store a certain number of times
• Sharing your store online

The goals of your loyalty program will ultimately determine what actions you will reward. Once you have determined this, the next piece of the puzzle is to decide what those rewards will be.

A desirable reward or incentive for customer actions will make people want to interact and spend at your business and will foster their loyalty.

For example, say you sell flowers. In this case, a reward of a mini bouquet would be a great prize to motivate your customer base, whereas an Amazon gift card would likely be a less effective reward.

Consider what will excite your customers when choosing a reward incentive. Try:

• Store credit
• Small gifts
• Gift cards (to your own store or others)
• Exclusive products
• Exclusive deals or offers
• Moving up in membership tiers

Now you need to select a customer loyalty program structure, which defines exactly what actions reap benefits and what those benefits are .

Did you know?: Customer loyalty programs are key for starting your retail business as it can grow your customer base and drive sales. In fact, a popular statistic in the loyalty landscape says that a mere 5% increase in your customer retention can increase your revenue by anywhere from 25% to 95%.

Here is a list of seven different kinds of loyalty programs that you can choose from, the ends that they each serve, and examples of where they have been successful.

Points Program

Best for: Businesses looking to target large spending and/or specific customer behaviors.

The points program is the most popular kind of loyalty program used today. It offers points to customers based on how much they spend or specific actions that they take (like signing up for newsletters or leaving product reviews). Customers can then redeem their points as store credit or other prizes.

A great example of a successful points loyalty program is the Soludos brand’s Sunshine Club. When customers sign up and become a member in this program, they will start to receive 10 points for every dollar spent on the Soludos site. From there, they can redeem their points for money off future purchases. As a result, Soludos increased their customer spend by 32.8% and repeat purchase rates by 39%.

The Soludos Sunshine Club is a great example of a successful points program. (Source: Soludos)

Look for a software program with a customizable incentives and rewards option so that you don’t get pigeon-holed into a rigid points structure that can’t serve your business’s evolving needs.

Cash Back Program

Best for: Businesses looking for a simple program structure that promotes spending.

In a cash back program, you offer customers store credit based on how much they spend. This program is similar to the points program in that it rewards a specific customer behavior. In this case the loyalty action is defined as “the more you spend, the more you earn.”

One example is the TJX rewards program through TJ Maxx. The program is simple: When you use your TJX card at a TJ Maxx store, you get 5% cash back in store credit. This program promotes larger purchases in pursuit of rewards, and is easy for customers to understand and follow.

TJ Maxx offers cash back in the form of certificates that can be redeemed as store credit. (Source: TJ Maxx Rewards – Synchrony)

Punch Card Program

Best for: Businesses that rely on a steady stream of regular customers or those wanting to promote frequent purchases.

A punch card program is another loyalty structure in which you tally people’s purchases and offer a free reward once the customer reaches a certain number. This structure specifically promotes frequent visits and the cultivation of “regular” customers.

For example, Aviano, a small coffee shop located near a hub of businesses, has a loyalty program that offers a free coffee for every 10 you purchase. The small shop is constantly flooded with people and has a steady stream of regular customers from the surrounding areas.

Aviano offers a customer loyalty program that rewards repeat customers. (Source: Cherry Creek North)

People want their rewards program to be digital. Get rid of the paper card and offer a digital punch card system, like the one from CandyBar .

Tiered Program

Best for: Businesses with a customer base interested in exclusivity and gamification.

A tiered program is a loyalty program structure where you create different levels that customers can reach once they meet a threshold of points. As customers move up the levels (or tiers), they get access to better and more exclusive rewards and offers.

Tiered programs are typically paired with a points program, and use exclusivity and gamification to incentivize customers to make purchases.

Gamification: The process of introducing game elements—like competition and scoreboards—into areas where they are not typically found, like your loyalty program.

REN, a clean beauty brand, has a tiered rewards program called “Clean Collective Rewards” where customers can move through Ally, Advocate, and Activist tiers as they purchase clean beauty products and interact with Ren’s social media. As members move up the ranks, they get access to better deals and exclusive offers and promotions. With this incentive in mind, Ren’s loyalty program has seen major results.

REN’s team saw a 68% increase in customer spend by loyalty members, and its member repeat purchase rates also grew, reaching values that were 63% higher than guest visitors. Not only that, members who redeemed these loyalty rewards also purchased from the brand nearly two and a half times more frequently over the course of a year, compared to non-members. As a result, REN generates 38% of its total revenue from loyal customers.

Ren uses a tiered membership program to breed loyalty to its brand and products. (Source: Milled)

Coalition Program

Best for: Businesses in shopping centers or those that would otherwise benefit from sharing a customer base with other brands.

A coalition program is a loyalty structure in which customers can get access to deals from two or more businesses in exchange for shared user information. For example, say your store is on a busy street of shops and you all decide to join a coalition loyalty program for the neighborhood. So, if a customer signed up for a loyalty program at one of the shops, they would be signing up for the neighborhood coalition of loyalty programs.

In this strategy, groups of shops will hold events for their loyalty members, like combined sales, special parties, or coalition-wide offers. In certain coalitions and with certain software, individual stores are also able to hold their own sales and market to the shared coalition customer base.

An example of a coalition customer base is the Pearl Street Rewards Program in Denver. Pearl Street is a popular shopping street filled with shops and restaurants. Many of the stores work together in a shared loyalty program that gives members access to neighborhood-wide deals and invites to special events.

Premium or Fee-Based Program

Best for: Businesses offering premium deals, subscription-based services, or large incentives/rewards.

In a premium or fee-based program, members pay an upfront fee to join and then get instant access to special rewards and deals.

This structure rewards customers with instant gratification and motivates loyalty. Be sure, however, that you offer rewards that are in line with the price, or customers may begin rethinking their premium memberships. However, over three quarters of consumers who are thinking of canceling their premium loyalty membership (because they feel they’re not getting enough value) would still want to be enrolled in a brand’s free loyalty program.

Take the wholesale retailer Costco, for example. Costco charges $60 annually for a shopper card that gives members access to its deals and merchandise. Costco is able to offer such exclusive items at such low prices that people are willing to pay the membership fee to gain access to all that the superstore has to offer.

Costco offers different premium memberships that give shoppers access to all its deals. (Source: Groupon)

Hybrid Programs

Best for: Businesses using loyalty software with customization options or those otherwise looking to combine loyalty structures for maximum appeal.

Hybrid loyalty programs offer a combination of several different kinds of loyalty structures. For example, as we covered earlier, points and tiered structures are typically used together, and you might also see coalition and punch cards, or premium and tiered.

For example, Blue Coast gym offers a punch card membership to all its loyalty members. Additionally, as members take classes, they gather points that can be redeemed for gym gear and apparel. Blue Coast did not confine itself to a single structure—it was creative and tried a combination of loyalty program ideas .

Step 4: Choose Between Software or Manual Application to Run Your Program

Once you have determined how you are going to structure your loyalty program, it is time to decide whether you want to run your program manually or with loyalty program software. For manual applications, you will track when customers perform loyalty actions, and then manually award them the points or rewards.

On the other hand, loyalty program software can integrate your loyalty program with your existing POS system and ecommerce site and then track member actions, keep member information on file, automatically award points or other rewards, send out outreach messages, and run reports on your program’s success. With certain software programs, you can even create automatic messages that go out with set triggers. For example, you can align your marketing initiatives with promotional messages to your loyal customers, so each time you hold a sale or event, an alert goes out via text or email.

When looking at loyalty software, some things you will want to consider include:

• Flexibility of rewards structure: Some programs let you choose how you want to structure your loyalty programs and some have a set structure already. Look at the types of loyalty programs the software can support and how flexible you can be in designing it.
• Price: Most programs scale their pricing either based on the size of the business or the number of available features. Understanding how pricing works will help you understand cost-effectiveness.
• Customization: Different software have different visual customization capabilities, from how things appear on your website to the messages you send. Consider how much branding you want for your program when considering software.
• Integrations: You will definitely want to integrate your loyalty program into your website and POS system and different software will have different integration capabilities.

Our top pick for loyalty software is LoyaltyLion for its flexible reward structure options, branding capabilities, and POS and ecommerce integrations. You can read more about our other top loyalty program picks in our guide to the best customer loyalty program software .

In addition to choosing a rewards structure that will incentivize people to shop and spend at your business, you also have to check that your loyalty program is cohesive with the rest of your brand.

Did you know?: The consistent presentation of a brand has been shown to increase revenue by up to 20% .

Here are a few elements that you can customize to keep your loyalty program on brand.

• Rewards currency: Rather than simply calling them “points,” brand your rewards currency. If you own a plant shop, for example, your points could be called “seeds.”
• Interfaces: If you are presenting your loyalty program online, be sure that the customer portal, the rewards tracker, and any other customer interfaces are consistent with the rest of your brand and website aesthetic.
• Messaging: If you are sending out texts, emails, or displaying text on posters, be sure that you present information in your brand voice.
• Merchandise: Consider offering branded merchandise to your loyalty members.

A great example of a loyalty program that has been branded seamlessly from top to bottom is Chewy, a pet supply online retailer. Chewy offers a loyalty service where you can make an account and get access to its auto-ship feature and great pet supply deals. Chewy’s entire branding concept is that it cares about your pet, and it has designed every aspect of the brand to demonstrate this.

From deals “to help care for your best friends” to personalized pet birthday letters with special offers—Chewy knows how to create a loyalty program that speaks to its brand image.

Chewy sends out birthday cards for its loyalty members’ pets’ birthdays. (Source: Chewy)

You can use outreach marketing strategies like email and text campaigns to offer special rewards or simply to remind members of your business. Send out these messages by hand or use a loyalty program software that allows you to send out messages en masse, and be sure to tailor the message to your brand.

Tons of options exist for marketing methods that promote a loyalty program. You can contact people to let them know about events or sales, offer deals, send out surveys, remind them of their rewards opportunities, or to invite them back. Keep your brand voice in mind when crafting these messages, and be sure that you are creating something that will be compelling to your members.

Mango, a women’s clothing brand, has a great text and email marketing program. To join the loyalty group, you provide your information in exchange for a coupon code. Then the brand can send you messages about new collections, sales, and survey requests.

Send out messages via email or text to keep your customer in the know and promote engagement. (Source: BigCommerce)

While you are the one that creates and oversees your program, your employees will be the ones implementing your program day-to-day and pitching it to potential new members.

Be sure that you train your employees not only on all the terms of the program, but also on how to present it to new customers, operate any interfaces so they can answer questions, and troubleshoot any problems. You will also want to create a written protocol for your training initiative so that managers and other staff can implement the training as well.

For example, you can use a training checklist to be sure your team is checking off all the skills new associates will need to explain and promote your loyalty program. Checklist items should include learning your program’s terms, shadowing more experienced members who implement the program well, and coming up with their own spiel for introducing the program.

Step 7: Monitor & Adjust

You’ll need some sort of reporting mechanism to ensure that your loyalty program is actually producing the results you want. If you are trying new strategies,offering new incentives, or simply want to gauge your program’s success, you should create a means of tracking your program over time.

Most loyalty program software have built-in reporting systems for you to use. In addition to showing program performance over time, many can also report on customer behavior and journeys. This gives you insights on how you can target customers with specific methods to increase engagement and boost loyalty.

When looking at loyalty programs or creating your own reporting infrastructure, consider the key retail metrics that are most important to you for understanding your program. A few examples include:

• Customer behaviors
• Customer retention rate
• The number of members
• Customer segmentation
• Offer performance
• Conversion rate
• Average transaction value (This will increase if customers engage with your loyalty program)
• Individual employee sign-ups

Whatever metrics you choose to measure, use reporting insights to make adjustments to your program that will help it prosper.

Use reporting tools within loyalty software to get insights into your customers and program performance. (Source: Annex Cloud)

The main purpose of a customer loyalty program is to make people want to consistently buy from your brand because they’ll get rewarded for doing so. Approach these loyalty programs with a win-win mindset. Both you and your customers should feel like you’re getting a great deal out of the exchange.

Here are some of the benefits your business can reap from implementing a customer loyalty program:

Improved Customer Engagement and Retention

Having a well-designed loyalty program can improve customer engagement with your brand and convince customers to go back to your products and services again and again. This not only serves to potentially increase profits in the short term, but can also help revive customer interest if they begin to wander to competitors or if their spending levels drop.

Attract New Customers

A good loyalty program can also attract new customers to try out your offerings, and possibly become loyal and consistent buyers themselves. If your current customers are impressed by your loyalty rewards and truly feel like they are winning every time they stay loyal to your brand, they are more likely to recommend you to others. Your current customers essentially become marketing agents that bring in new buyers—and more revenue.

More Consistent Sales

If buyers latch onto your loyalty program, they’ll purchase products more consistently—especially if you design the program to reward them for doing so. This not only leads to greater total profits but also makes monthly or yearly earnings more predictable. That in turn can lead to more reliable financial reserves that can carry your store through lean times or seasonal difficulties.

Frequently Asked Questions (FAQs)

Click through the following questions to learn more about how and why to implement a customer loyalty program.

Why should I implement a loyalty program?

A loyalty program will improve customer engagement and retention, gain you new customers and additional marketing, and make profits more consistent and reliable over time.

How do I implement a loyalty program?

Define customer actions or behavior you want to reward; select rewards that create incentive; choose a loyalty program structure; decide between software automation or manual application; brand your loyalty program; train your staff; and adjust the program as needed.

What should I look at to know how to adjust my loyalty program?

When monitoring your program’s performance and deciding where and how to make changes, you can look at metrics like customer retention rate, loyalty offer performance, conversion rates, average transaction value, and overall number of members.

Customer loyalty programs play a huge role in driving your business. From how you brand your interface to the rewards you offer to the overall structure—you should take care to create a loyalty program that is in line with your brand and will speak to your customers. Use the guide above to walk you through each step of crafting your loyalty program and watch as customers come back again and again.

About the Author

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David Rivera

David Rivera is a Retail Staff Writer at Fit Small Business focusing on point-of-sale systems. Since 2016, he has produced and optimized content for a variety of industries including ecommerce and luxury retail. For the past couple of years he has focused more closely on ecommerce and retail topics as well as point-of-sale systems.

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9 Successful Customer Loyalty Program Examples

Loyalty is one of the most admirable traits in business. As an entrepreneur, you need to strive to nurture loyalty in your clientele by offering incentives that motivate them to stick around.

While it’s true that the goal is to always reap maximum reward, sometimes, playing the long game is the best strategy.

As Henry Ford would say, “ Business must run at a profit, else it will die. But when anyone tries to run a business solely for profit…then the business must die as well, for it no longer has a reason for existence. ”

Having some loyalists by your side ensures that your business is always in operation. It is through customer loyalty programs that you can grow your audience and enhance your bottom line. Intrigued? Let’s have a closer inspection of what it all means.

What are Customer Loyalty Programs?

A customer loyalty program refers to a marketing approach that identifies and rewards customers who buy or engage with a brand continually.

You can offer incentives like perks, and graduate customers from one loyalty level to another. Oftentimes, when such goodies are offered, customers usually become regulars. The relationship can flourish so much up to a point where some elect to become brand promoters .

Some of the benefits you can give your clients include rewards, coupons, free merchandise, and early access to new products.

Importantly, you need to define your goals before you establish a customer loyalty program. If you happen to design a customer loyalty program centered on discounts, you’ll attract cheapskates. To avoid facing your downfall too early, you need to focus on attracting the right prospects. With that kind of thinking you’ll be able to develop profitable relationships in the long run.

While it’s true that monetary rewards are a great way to begin your campaign, you shouldn’t put all your energies there. Instead, try to understand the needs of your customers first, then, you’ll find it easy retaining them.

Some of the top brands in the world are quite adept at developing customer loyalty programs.

Here’s a review of the ones which caught our eyes.

9 Examples of Successful Customer Loyalty Programs

1. uber’s uber rewards.

Uber decided to lead from the front as the first ridesharing app to come up with a rewards initiative. Having already tasted success with their referral-only program, they decided to take things up a notch.

After launch, Uber Rewards concept received plenty of media and customer attention for all the right reasons.

Their program is beautifully tailored all round. Newbies can get up to speed on the initiative since there’s a dedicated page that demonstrates to customers how they can earn points.

The set-up is all-encompassing meaning that riders using Pool, UberX, and Eats can all benefit. The customer loyalty program has various progression steps. Riders can transition through Blue, Gold, Platinum, and Diamond tiers and gain access to awesome perks. Depending on the achievement unlocked, riders can access upgrades to UberBlack and quickly gain points.

With this kind of set up, it’s easy to see just how Uber has managed to keep ahead of the competition. Riders love the rewards they get because they’re already onboard to receive the gifts.

You can do the same for your clients by providing incentives on services that they frequently enjoy. It’s a great way to build loyalty.

2. Spikeball’s SpikePoints

If you haven’t already, we’d suggest trying out Spikeball. Having featured on the celebrated show, SharkTank, the volley-ball inspired moniker has worked in their favor. The show offered a great launch pad for their success. So impressive was the reception that the management decided to reward their fan base with incentives.

After deliberation, they launched their own customer loyalty program named SpikePoints. Since conception, the program has been able to give loyal customers plenty of reasons to keep supporting the brand.

Their initiative features various ways through with customers can earn points. The VIP tier is one of their most impressive offerings. Members are classed as Recreational, Intermediate, or Premier. For each segment, Spikeball awards members with different rewards.

Premier members are usually the ones who benefit the most from the deal. This is because they not only enjoy 5 points for every dollar they spend, but, their social shares and product reviews also gain a significant bump totaling about twice what Recreational members earn.

The exclusivity offered in the different classes is a brilliant concept in that fans usually work hard to enjoy the same benefits. In this way, Spikeball keeps the conversation going with members of their community. The members are usually eager to enjoy the game and get rewarded while at it.

In your bid to launch a loyalty initiative, it’s imperative to have a model that allows customers to track their points in real time. Doing so is sure to motivate fans to check out your offerings on the regular.

3. SweetLegs Rewards

Despite having started their rewards initiative not long ago, SweetLegs have gone ahead to establish one of the most impressive customer loyalty programs.

From the off, they set their eyes on building a deal that appreciated every one of their customers. They used a universal approach meaning that their rewards were available to customers after a transaction. This appealed to many since you didn’t have to buy in bulk or buy often to benefit.

The key behind their success is all thanks to the fantastic work they put into devising a VIP strategy that works. They made different layered tiers for their customers. Normal customers were rewarded with 3 tires, while bulk distributors earned 4 extra, exclusive tiers.

Having pointed that out, it’s worth noting that the biggest reward resides at their top level. This is where SweetElite distributors have access to fantastic perks like an all expenses getaway.  You can come up with a similar tier system to provide your clientele with different buying options.

4. North Face

The North Face employed a clever concept for the customer loyalty program.

The more customers spent, the more points they were able to garner.

This became a big hit among their clientele because every time they purchased something from the store, they were awarded points. The “VIPeak” name was coined to further entice their followers to participate.

With a concise explanation on their page, they’re able to illustrate how their program operates. Customers earn 10 points for every dollar they spend at their premises. With both online and retail stores at their disposal, it’s super convenient for customers to access services. Those who shop at their various outlets get rewarded with 5 points for every dollar spent.

Since these points can be utilized for future purchases, the whole idea promotes continued engagement. They also devised a smart app where user can check everything right from the dashboard.

This kind of investment has seen the North Face gain a mass following. Many customers see the points they are awarded as investments on their end. Customers can quickly determine just how much their points are worth because everything is written out in black and white.

5. The Body Shop

Body Shop came up with an innovative idea for their business. Eager to tap into the trust reserves of their customers, they came up with one of the most distinguished customer loyalty programs. Cognizant of the fact that customers are likely to become brand loyalists once you appeal to them on a moral level, they incorporated animal welfare in their strategy.

Other than getting rewarded and accessing VIP perks, members are also able to donate their rewards to charity. From the outside, this approach may seem like simply came about, however, nothing could be further from the truth.

The Body Shop has highlighted environmental responsibility as one of its core values. Since most of their clientele share the same values, the ability to donate resonates well with many of them.

This brilliantly designed concept allows The Body Shop to connect with customers on a deeper level. This works to their advantage since it encourages spending whilst keeping true to their values.

As you seek to develop your own customer loyalty program, it’s important to incorporate your brand values. Having shared values with your customers encourages them to stick around long after the first purchase.

You can choose to go the Nike route by partnering up with other businesses to reward your customers. Such partnerships are beneficial not only to your customers but also to your business.

Nike’s customer loyalty program offers exclusive benefits. Their partnerships with companies such as Headspace, Apple, and Classpass has seen them develop apps that live true to their agenda, inspiring athletes around the world.

Nike also has a number of other training apps which facilitate their members to achieve their training goals. You can choose to jog on the Nike Run Club app or do a couple of strength routines on the Nike Training Club app. Whatever it is you opt for, you’re assured of getting rewarded. This is because for every physical activity you undertake, you’ll be triggering rewards.

Because people love associating brands and people to their success, Nike has cleverly tapped into a gold mine. The more targets clients are able to unlock, the more likely it is for them to become loyalists to their products.

You can partner up with other businesses that can offer your members some degree of flexibility. Vitally important, ensure that you market your product as a necessary ingredient in achieving their set objectives. The more you’re able to help your members achieve their goals, the more likely they’ll keep buying from you.

Sephora has one of the best customer loyalty programs. Using both a tiered program and point system, their program enables members to have access to a community of individuals espousing the same beliefs.

Inside the community, members are free to socialize, sign up for exclusive events and get inspired to pursue a particular route.

They have smartly used their program to come up with a community whose members are constantly engaging. The entire move was a masterstroke since they are able to get insights about their business. They can put these tips to good use as they contemplate product development and optimization.

You can borrow a leaf from this concept by coming up with a platform that allows for free member interaction. Ideally, you want them comfortable enough to seek inspiration, share ideas and give feedback. It’s a great idea that can be embraced by different brands irrespective of industry.

8. Starbucks Rewards

Starbucks was clearly ahead of its time when they launched the My Starbucks Rewards program. The idea was to offer their customers an easy way to access the service, as such, they allowed customers to run it from their app.

To get points, they made it necessary for customers to order or pay straight from the Starbucks app. By centralizing operations in this way, they were able to get plenty of information about customer preferences and mannerisms.

They’re able to keep tabs on all the popular habits like frequently visited locations, go-to drink orders, and other favorites with ease. From the data collected, they’re able to work towards developing relevant perk.

If you’re able to come up with an app for your store, make sure you do. It a fantastic idea to centralize all customer data. Alternatively, you can opt to use a robust point-of-sale system that tallies up data.

9. Amazon Prime

Amazon’s Prime membership program is one of the best structured. Members pay either a flat annual fee or monthly subscription and gain access to unlimited free one-day delivery on millions of items. The membership also grants users access to other amazing bonuses like their music streaming service, unlimited reading, unlimited photo storage and Prime Day sales.

Through their Prime program, they’ve been able to distinguish themselves in the market. Customers are likely to choose Amazon thanks to the convenience of their system.

Offering customer loyalty programs is a fantastic way to attract loyal customers. Doing so also helps elevate your brand profile.

If you want to be successful at it, make sure you take time understanding your customers. Once that is sorted, you need to focus on enhancing your products. Through value addition, you’ll be able to register more sales and boost brand loyalty.

Having spent 18 years either running his own agency or an agency for others, Jason has strong expertise in both B2B and retail marketing, and has been working with large clients on how to bring campaigns to market.

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Customer Loyalty Programs: How to Create One with Examples

The goal for any major business is to generate loyal customers that keep coming back. One way to do that is with an innovative customer loyalty program .

Keeping your existing customers on board is a tough task in this competitive world. In recent years, customer loyalty programs have changed drastically, going digital, getting more effective, and offering unique experiences.

And a solid customer loyalty program can satisfy customers, increase customer engagement, and boost conversions.

What are customer loyalty programs?

Customer loyalty programs are a set of strategies enabling you to offer customers timely incentives based on their previous buying habits with you. This will encourage customers to continue using your products or service as they being to accumulate points or earning rewards.

Today’s customer loyalty programs should reflect the needs of modern customers.

Loyal customers aren’t just regular buyers anymore, they can:

• Bring in referrals through social sharing
• Spread a good word for you
• Stick with you and your brand
• Digitally subscribe to your offerings

Customer loyalty is the product of a good customer experience . So if you want to build an effective customer loyalty program, delivering a seamless experience and service across the customer life cycle should be a priority.

Traits of a modern customer loyalty program

• Offers a frictionless transactional experience to customers across all touchpoints.
• Embraces new technology to make most of customer data and personalized offerings.
• Provides value through affiliate partnerships and third-party contracts.
• Allows you to reward customers for repeat business.
• Brings you and your customers closer.

Let's take a look at how to create a customer loyalty program that works.

How to create a customer loyalty program: 8 steps

• Do your research
• Keep it simple
• Personalize for a better customer experience
• Rewards points - traditional yet effective
• Stay connected with your customers
• Market the customer loyalty program
• Choose incentives carefully
• Set up exclusive deals

1. Do your research

Starbucks claims their customer loyalty program played a vital role in creating a 26% rise in profit and 11% jump in total revenue for 2013’s second-quarter fiscal results.

To execute a successful customer loyalty program, your team needs to put in the research before any implementation begins. There are various ways to build customer loyalty , research will help you choose the one that best fits your business requirements.

Be clear on the objective of your campaign, analyze the nature and size of your business, and create a program that helps you accomplish your business goals. Don’t forget to take into account customer expectations, behavior, and current market trends.

Customer data can come from a variety of sources, like your website analytics, inventory history, sales, conversations, etc. The idea here is to truly understand customer behavior and therefore the sorts of campaigns your customers will respond well to.

By collecting and properly analyzing data, not only can you use it to design customer loyalty programs, you can even improve your products and services . In the end, this all helps in delivering excellent customer service .

2. Keep it simple

If you overcomplicate your loyalty rewards program , there is always the chance that customers won’t understand it. If that happens, it will just end up being ignored and forgotten.

Avoid this by making the process easy for customers to understand.

But not only that, make it simple for your customers to sign up to as well.

Create a system for earning points that's easy to track so the situation is clear. Give out points to customers on the back of purchases, explaining how they can redeem those accumulated points, whether or not those points expire, and if so, when.

Have a look at the JetBlue TrueBlue program for an example of how to set up an ideal type of loyalty program .

3. Personalize for a better customer experience

Artificial intelligence is helping companies craft more personalized loyalty programs. When companies invest in these technologies, they equip themselves with the tools to offer more proactive service.

Sephora is a great example of this. Research by Sailthru on the personalization capability of brands shows Sephora coming out as a winner because:

• Offers customers a seamless omnichannel experience, be it on the web, mobile, or in a brick and mortar store.
• Personalize their product with multifaceted content and description.
• Launched a tri-tiered “Beauty Insider” program for members only to earn rewards and gifts.
• Gives customers a product try-on with a virtual assistant , to help them find the perfect product for their skin type.

Personalizing customer experience doesn't have to be complicated. Many brands personalize experiences with the help of visual engagement tools, enabling them to assist customers by accessing their web or mobile browsers and collaborate on completing tasks.

4. Rewards points - traditional yet effective

The rewards you provide should make financial sense for your business, whilst simultaneously offering something your customers want. Whether you choose to offer your customers discounts on repeat purchases , free rewards, or even a combination of the two, always remember the most important rule: The rewards have to offer value to the customer.

Some grocery stores have partnerships with fuel companies to offer discounts on gas. As gas is an essential commodity and an unavoidable cost for many consumers, this is a very useful tactic. These customer loyalty programs often utilize special credit cards already used for getting discounts, with insightful sales data provided on the back of it.

5. Stay connected with your customers

Experian data shows emails targeted toward your loyalty program participants have 40% higher open rates, 22% higher click-through rates, 29% higher transaction rates, and 11% higher revenue per email.

It is an absolute necessity to stay in touch with your customers after creating your loyalty program and email campaigns are one of the best ways to do this.

Using an email campaign to let your customers know about renewals (if your customer loyalty program requires it), and special deals just for loyalty members , can make your program work better.

Message them about the campaign after a certain amount of time as a reminder. This helps build a positive impression of your brand. Below is a brilliant example of how to stay in touch with customers:

The company has demonstrated creativity with this “We miss you” campaign!

Another great way of connecting with your customer is through live chat . It allows you to inform customers about loyalty programs during conversations as well as building trust, increasing customer loyalty.

6. Market the customer loyalty program

No matter how great your customer loyalty program is unless your customers know about it, it’s not going to get you very far. Invest in marketing so your customers are aware. Make sure you create a marketing strategy that fits with your business.

Below are some of the ways you can go about it:

• Social Media
• Press Releases
• Newspaper Ads
• Outdoor hoardings
• In-store signage
• Send out a customer satisfaction survey
• Send email newsletter
• Develop a customer referral program
• Hold an online contest
• Publish distributed content

7. Choose incentives carefully

When deciding on the most appropriate incentives for your loyalty program, analyze the needs and behavior of your target customers.

Sometimes freebies devalue your product or services, so try and think of options that make incentives exclusive. However, simple gestures like free shipping are always a great incentive.

Experiential rewards are popular because they make customers feel good , adding value to their lives. They also help your business stand out from the crowd and generate long-term loyalty in your customers.

For instance, Starbucks has designed a fantastic loyalty program called My Starbucks Rewards . There are multiple ways to enroll in the program, including creating an account or downloading the Starbucks mobile app. For each purchase, you receive one “Star”.

8. Set up exclusive deals and discounts for your customers via social media

Your social media followers and email subscribers are all potential customers. Use social media and email newsletters to give your followers exciting and exclusive limited-time deals and discounts.

Try creating a unique hashtag for the offer. Provide a discount code and use the hashtag across all your social media, keeping it consistent during the campaign. You can easily track and tweak things based on how the campaign is performing.

This type of marketing campaign makes your customers feel like they are part of an exclusive club, and as a result, they will refer your business, providing new people to join your email list and follow you on social media channels.

Loyal customers bring long-term success

Done right, customer loyalty programs can boost profits and improve customer retention . This means they have the power to make a significant impact on your bottom line. Implement the right loyalty program for your customers, manage it well, and you can ensure long-lasting success for your business.

Have any of the tips above helped you create a customer loyalty program? Think we missed anything? Let us know in the comments.

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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

9 Perfect Customer Loyalty Program Ideas (With Examples)

by Emma Kimmerly

November 14, 2022

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Table of Contents

These customer loyalty program ideas will help you foster the loyalty of an existing customer.

If even your most loyal customers barely know about your loyalty program — or don’t have enough reason to sign up — then you might still struggle to keep them returning to buy more. That's where these customer loyalty program ideas come into play.

Here are a few dozen ideas you can use to ensure your loyalty program gets the engagement it deserves.

When To Add A Loyalty Program To Your Business

Your customer loyalty program will create a “stickier” brand by incentivizing existing customers to remain customers. 

But the question isn’t whether to add a loyalty program. It’s when to add one. Here are a few signs that you have the engaged customer base necessary to launch a program of your own:

• A good number of customers with three purchases. Some 88% of customers say they feel loyalty to a brand after about three purchases. Is it a hard and fast rule? No. But you should look at your customer base. If you have enough customers who have bought from you multiple times, you’ll know you have a foundation to work with.
• High conversion rates, but low retention. Maybe you have an established customer base, but the long-term value of your customers leaves a little bit to be desired. If you can convert web visitors into customers, but still struggle with long-term retention, a customer loyalty program might be the medicine you need.

Learn more:  New to Loyalty Marketing? Start Here

Customer Loyalty Program Ideas For Small Businesses

If building long-term customer loyalty retention was as easy as announcing a new program and saying, “here it is,” this would be a short article. But your customer loyalty program needs to meet your customers’ preferences, too. 

After all, customer loyalty programs are all about rewarding the customer behavior you want. And depending on your business, you might want different types of customer behavior. Here are some ideas for building different types of loyalty programs .

Points-Based Loyalty Programs

A points-based loyalty program gives customers the ability to accrue rewards over time. This has the advantage of being more affordable on your end. Rather than giving out a prize for every new purchase they make, a purchase might equal a set number of points. Enough purchases, over time, could trigger a reward.

Here are a few ideas for making this work for you:

• Points per dollar spent. The Friendbuy loyalty program features , for example, let you set “ten points per $1 spent”, or whichever amount makes sense for your business. This helps build loyalty because it gives a customer a little satisfaction even if they spend only a few dollars at a time. 
• Advertise loyalty points on a product purchase page. Want to push a specific product? Have it count for more loyalty points. Or add some oomf to a product page by advertising the rewards points a customer receives from the purchase.

Tiered Loyalty Programs

Customers always love a good upgrade. That’s what tiered loyalty programs offer. Rather than giving them linear rewards ($10 spent = 10 reward points), you give them a chance to expand their rewards over time. You’ll have to be careful about just how much you give away for the highest tiers — otherwise, you face a “be careful what you wish for” situation.

Here are some best practices:

• Limit your tiered rewards . For example, Casper once ran a tiered customer referral program by limiting one tier to a $200 gift card. They still wanted to hand out an evergreen $75 gift card, however, so they created separate tiers. Be wary of setting up tiers that give your customers the potential for compounding rewards beyond what they sink into your company. Make sure to check the math on your customer incentives so that your program continues to have a high ROI.
• Show customers what they can earn with your loyalty program. Take the image below. Cora outlines exactly how much customers can earn per referral — and when the upgrades kick in. Do the same with your loyalty program to dangle a carrot in front of your customer. Let them know ahead of time what they can expect.
• Make it exciting. Unlocking a second or third tier of rewards should be exciting. So push it! Make sure customers understand that when they engage more with your loyalty program, they’ll get more out of it. A flat rate of points-per-dollar spent simply isn’t motivating enough to inspire legions of fans to become VIPs. Give them the encouragement and the incentives to land themselves on the higher tiers.

Paid Loyalty Programs

Few incentives are as motivating as cold, hard cash. A paid loyalty program is especially great if you need to inspire more customer loyalty in a young brand. As your brand builds loyalty and familiarity, you might offer other incentives. But until then, grab attention for your loyalty program by offering substantial discounts or paid rewards.

• Use introductory offers. A 2020 McKinsey study found that paid loyalty programs made customers 60% more likely to buy, compared to “free” loyalty programs and their 30% rate. Sometimes, the best way to spark loyalty is to go big right out of the gate.
• Incentivize customers to use their on-platform dashboards. When you give customers their rewards, link them to their dashboards on your site. You want them to think of your site as a “homepage” for what they do online. This doesn’t only inspire loyalty, but decreases the friction to buying more from your brand down the line — simply because they’re already on your site.

Value-Based Loyalty Programs

What inspires brand loyalty? A lot of things. But near the top of the list is a value shared between a customer and a brand. Among millennials, 83% of customers prefer to link with a brand that shares their values. 

You can structure your rewards to reflect that. For example, TOMS shoes famously donated a pair of shoes to children for pairs its customers bought. 

• Choose rewards that align with your customers’ values . Maybe people don’t come to your shop because they want cold, hard cash. Consider what else would be incentivizing for the kinds of customers you do want to attract. Then give it to them.
• Ask for customer feedback. This is when the back-and-forth conversation comes in handy. Ask for customer feedback on every aspect of your brand, including your loyalty program. What is motivating your customers? What is making them click on other brands? Answer those questions, and you’ll customize a loyalty program that suits your audience.

Customer Loyalty Cards

If you remember that episode of Seinfeld in which Elaine keeps returning to a sub shop with mediocre sandwiches because of her loyalty cards, you’ll know the appeal here. She didn’t even like the subs! But she kept coming back for the promise of a free one. 

Hopefully, you’re not selling mediocre subs. But the appeal of the customer loyalty card is that it serves as a sort of “token” of your customer’s loyalty over time.

• Find ways to keep the customer invested. If your customer loyalty cards are digital, you can create visual references that show their progress over time. After all, which customer is really going to go to a competitor’s brand if they see 9 out of 10 boxes checked off on their customer card with you ?
• Remind them about the prizes. If your customer login page says “98% of the way to a gift card,” for example, you’ll inspire action on their part. Sometimes customers need these gentle nudges to remember that they have points with you. Send them email nudges or keep an active tally on their customer page.

Loyalty Program Discounts

A good discount is incentivizing for the customer, sure. But it has an added benefit for you: it keeps the customer’s rewards in-house. This means that even when the customer is rewarded, they might use that discount toward something you’re selling. And that’s an opportunity for cross-selling, upselling, and adding to your average order value (AOV).

• Give people digestible milestones. The “ten subs for a free sub” is a great example of this. That’s less than two weeks of lunch at the same restaurant. To make your loyalty program discounts work, give people digestible milestones so they’ll be encouraged by their progress — and more likely to take action.
• Dole out store discount codes. Take the example below. No, the points aren’t cold hard cash. They’re store credit and discount codes. But do they look any less rewarding when presented as part of a customer loyalty program?

Gamified Loyalty Programs

“Gamification” refers to modeling your loyalty programs on modern-day mobile and video games. These games have made a science out of keeping people’s interest. Rewards, upgrades, “ding” notifications that add satisfaction to tiny transactions. They all add up to making your customer’s journey that much more compelling. But how do you gamify your loyalty programs? 

• Small actions, small rewards. Imagine playing “Mario” without a few stars to collect along the way. It would be a drag. To inspire more action with your loyalty programs, start new customers off with small actions to create small rewards. 
• Create competition. The competitive instinct is part of what drives us to stick with our journey. If we see our names climbing up a leaderboard, for example, we’re motivated every time we “win.” Even a set of first-place through third-place prizes (like in the Nature Box example below) can inspire people to take more action.

Tie Credit Cards To Rewards Accounts

Sometimes, getting a loyalty program to work is as simple as removing any friction from your rewards plan. Customers already have credit cards in their wallets. Tie your loyalty program to their credit cards, and you’ve made it simpler for them to redeem their rewards.

• Encourage customers to save credit card information when they sign up to your loyalty program. Saved credit card information makes for a faster ordering process in the future. It reduces customer friction and gets customers much closer to one-click ordering from your store. 
• Give customers more options. Store credit is a nice reward. But if that’s the only reward your customers can redeem? Some might prefer something more direct. Take Sephora’s Beauty Insider rewards program , which lets customers choose how they get their rewards. 

Reward Tracking On Smartphones

A customer with a rewards balance on their account is one of the warmest possible leads. It’s money that’s burning a hole in their pocket. But sometimes, customers forget about your program. They may even forget they have rewards points built up in an account. 

The solution is to enable reward tracking on smartphones. If the average person checks their smartphone 96 times per day , it’s like giving your customers a subtle nudge almost every hour. Here’s what to do:

• Place your loyalty program in a prominent location in your app. Below, you’ll see an example from Thinx, which uses reminder emails and tracked referral invitations to create a simple output: “Total credits available for use.” Make sure it’s easy for customers to view their current status on your app, or even simply the mobile version of your website.
• Use push notification reminders — but sparingly. Push notifications can annoy us when they’re irrelevant or too salesy. But a push notification (via an email reminder) that reads: “You have $40 to spend — on us”? That’s a prompt that will bring your customers back.

How To Build A Customer Loyalty Program

Launching a new loyalty program isn’t as simple as setting up rewards, setting up the loyalty program software , and crossing your fingers that customers will respond. To reap the benefits of a loyalty program , you have to build your loyalty program in a way that draws in customers. We recommend the following loyalty program best practices :

Choose Unique Earning Events 

Your first step is to nudge customers over the starting line. We recommend using “unique earning events.” These events can be triggers for inspiring someone to sign up to your loyalty program, based on an action they’ve taken on your store. For example:

• Signing up for SMS marketing
• Purchasing a specific product, or from a specific category
• Downloading your mobile app

These actions usually require granting you permission to contact them. So use it! Prompt your customers with an invitation to join your loyalty program — and make sure you tell them what kinds of rewards they’re leaving on the table if they don’t sign up.

Set Up Easy-to-Use Points and Rewards Redemption 

Remember that note about reducing customer friction? Seek out a platform that makes points easy to redeem. If a customer builds up $100 worth of discounts with your store, but finds them impossible to use, you’ve probably lost their loyalty. But if they can find one easy button for converting discounts into purchases, they’ll keep coming back.

Create Personalized Member Dashboards 

Did you know 87% of customers are open to letting you track activity if they get more personalized rewards? That’s the power of customizing your rewards program to their needs. Friendbuy’s platform helps you build customized dashboards so customers can track their loyalty rewards balance, reward activities, and recent loyalty events they’ve completed.

Integrate Loyalty Into Your Customer Journeys 

Don’t simply set up a loyalty program and wait for customers to find it. Actively integrate it into milestones along your typical customer journey.

 For example, Friendbuy and Segment partner up to integrate a loyalty program push into events like app downloads or in-store purchases. You can further optimize these sign-in pathways by using Segment to examine your customer data. Find out where customers are most amenable to your loyalty program, then send them the prompt.

Set Your Business Rules

Every good program has rules. Your customer loyalty program will be no different. After all, you want to inspire customer loyalty — not inspire customers gaming your system. Here are some examples of rules you can set with Friendbuy:

• New customer validation / security rules
• Minimum purchase thresholds
• Caps on rewards
• Customer authentication and logins required

Provide Multiple Opportunities For Customers To Enroll

Do you know that old saying “all roads lead to Rome”? You should try to get your customer loyalty program to work a little bit like that. Don’t isolate it to one small sign-up button, hidden away on a post-purchase page. Keep experimenting with multiple touchpoints. That way, you’ll see which ones generate the most engagement.

Instead, sell the customer loyalty program at multiple interaction points. For example, 46% of Walmart’s referral revenue comes from a CTA placement on mobile web:

Make Data-Driven Loyalty Decisions

Let’s be honest. Your customer loyalty program probably isn’t going to be 100% perfect right away. But that’s okay. As long as you use dashboards like Friendbuy’s 24/7, easy-access dashboards, you’ll view whether you’re on track or not. You can also isolate key variables like revenue-per-member to see where you might need to spruce up your offerings.

Best Customer Loyalty Program Examples

Want a shortcut to building a successful customer loyalty program? Look at what’s worked for some of the top brands. 

• Sephora: the art of turning loyalty into luxury. Sephora’s famous “Beauty Insider Loyalty Program” knows that its products can be expensive. And it doesn’t fight that fact. Instead, they use a tiered loyalty approach to inspire customers to take short-term action with an eye on long-term rewards. For example, $350 spent in one year grants “VIB” (very important beauty) status to customers, while $1,000 spent in a year grants “Rouge” status. This gamification-style approach to luxury beauty products grants rewards access at multiple levels. This ensures no customer feels left out.
• Starbucks: personalization at scale. We’re all familiar with the loyalty punch-card you might get from a local business. Buy 10, get one free. The challenge for Starbucks is to take a scaled business and make a similar loyalty program feel personal. So Starbucks’ unique rewards include special birthday treats for customers, choose-your-own-freebies, and “Bonus Star” challenges for leveling up. The result: every customer’s loyalty experience is a unique one.
• Delta Airlines: integrating credit cards. There’s a lot to like about SkyMiles: miles that never expire, thousands of potential destinations. But Delta builds customer loyalty with a powerful incentive: linking your credit card use to the airline you fly. They offer tens of thousands of points just for signing up for a Delta credit card — and once you’re signed up, you earn Delta miles. It’s a powerful incentive for staying queued in the Delta “system.”

What do these customer loyalty program examples have in common? They get creative with incentives. They don’t expect brand recognition alone to draw in customers. They go out and get those customers by giving customers reasons for signing up, staying in, and feeling like VIPs.

Tips for Building Customer Loyalty

Use a platform like Friendbuy and you’ll be off to the races with a great customer loyalty program. But it doesn’t mean you can set it and forget it. Incorporate the following tips to incentivize customers to keep coming back:

• Provide Exceptional Customer Service. You can offer all the incentives you want. Ultimately, you earn customer loyalty with how you treat your customers. Invest in exceptional customer service to ensure low customer churn from your loyalty programs, increasing the lifetime value of each customer you convert.
• Share Positive Customer Experiences. Don’t expect customers to discover how great your loyalty program is. Show them! Post positive customer experiences to your blog, your social media platforms, and even your post-purchase pages.
• Reward A Variety Of Customer Actions. Don’t expect customers to be thrilled with a straight “$1 spent = 1 point earned” arrangement. Like Starbucks and Sephora, give them different tiers, different rewards, and different experiences to maintain their interest.
• Offer Unexpected Rewards. Starbucks’ different “freebies” are a great idea, and not just because people like freebies. Starbucks is a frequent destination in its customers’ routines. Different rewards mix things up for customers who are used to offering them their business, prompting greater engagement from people who might otherwise buy just a coffee every morning.

There you have it! Contact our sales team to learn how to set up a Customer Loyalty Program for your business.

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How to build a solid business case for your retail loyalty program

Launching or revamping a loyalty program can be a significant investment for an enterprise grocer, and it’s crucial to have a solid business case to convince the executive level.

What is a business case?

A business case is a document that makes a persuasive argument for a proposed business initiative or investment. It shows the expected benefits and costs of the proposed initiative, provides evidence and analysis to support the argument, and makes a recommendation for whether the initiative should be approved or not.

In the case of a loyalty program business case, it refers specifically to the benefits and costs of a new or revamped loyalty program.

What’s the difference between a business case and a business plan?

The key difference is that a business case is specific to a proposed initiative, whereas a business plan is focused on the entire business. While a business case focuses on a specific initiative, a business plan provides an overall roadmap for the entire business. A business case is typically developed to persuade decision-makers to approve or reject a specific initiative, while a business plan is typically developed to provide guidance and direction for the entire organization.

What are the benefits of preparing a business case?

Overall, preparing a business case can help increase the likelihood of a successful outcome for a proposed initiative or investment. It provides decision-makers with the information they need to make an informed decision, helps ensure that the proposed initiative is well-aligned with the overall strategy and goals of the organization, and provides a framework for accountability, risk management, and communication.

Here’s a breakdown of the benefits of preparing a business case for a proposed loyalty initiative or investment:

1. Decision-making:

A loyalty program business case provides decision-makers with the information they need to make an informed decision about whether to approve or reject the proposed loyalty initiative. It outlines the costs, benefits, risks, and potential ROI of the new or revamped loyalty program, making it easier for decision-makers to weigh the pros and cons and to make an informed decision.

2. Alignment:

Developing a business case helps ensure that the proposed initiative is aligned with the overall strategy and goals of the organization. It requires a thorough analysis of the organization’s goals, market trends, and competitive landscape, making ensure that the loyalty program initiative is well-aligned with the broader organizational context.

3. Accountability:

A loyalty program business case provides a clear and detailed plan for how the initiative will be executed, monitored, and evaluated. In this way, it help to hold stakeholders accountable for delivering the expected results, and provides a framework for measuring success and identifying areas for improvement.

4. Risk management:

Developing a loyalty program business case requires a thorough analysis of potential risks and challenges associated with the proposed initiative. Therefore, risks can be identified and managed proactively, reducing the likelihood of costly surprises down the line.

5. Communication:

A loyalty program business case provides a clear and concise summary of the proposed loyalty initiative, making it easier to communicate the proposal to stakeholders and decision-makers. It provides a common language and framework for discussing the proposed initiative, reducing confusion and ensuring that everyone is on the same page.

What executives are involved when presenting a loyalty program business case?

It’s important for the loyalty leader to identify the key stakeholders and ensure their input is considered throughout the process.

Generally, the loyalty program proposal would likely be presented to senior executives, such as the CEO, CFO, CMO , and potentially the Head of Customer Experience.

• The CFO will be interested in the financial projections and the potential return on investment.
• The CMO will be interested in how the program will enhance the customer experience and drive engagement.
• The CEO will want to understand how the program fits with the overall business strategy and aligns with the company’s values.

It’s also possible that other functional areas within the enterprise grocer may be involved in the process, such as the IT department , operations, and legal, depending on the scope and complexity of the program.

How to prepare a loyalty program business case?

By including these points in your loyalty program business case, a Loyalty Leader can demonstrate the potential benefits of the program and the investment required to launch or revamp the program.

Here are some key points to include in your loyalty program business case:

1. Overview and objectives:

Provide a brief overview of the current loyalty program (if any) and the objectives of the proposed program. Clearly define the purpose of the program, such as increasing customer loyalty, driving repeat business, or increasing sales.

Our organization currently has a loyalty program that is not performing well in terms of customer engagement and revenue growth. The objective of the proposed program is to increase customer loyalty and repeat business while also driving sales , making it a worthwhile investment.

2. Market research:

Conduct market research to understand your customer demographics, preferences, and behavior. This information will help you develop a program that meets the needs of your target audience and provides them with relevant rewards.

Our market research shows that our customers are primarily families with children and seniors, who prioritize convenience, quality, and affordability in their grocery shopping. They are also increasingly interested in sustainability, health and wellness.

3. Program structure and features:

Outline the program structure and features. This includes the types of rewards , how customers earn points , and any exclusive gamified features , benefits or perks.

Our proposed loyalty program will offer a points-based system where customers can earn points for purchases, referrals, and social media engagement. The program will also include exclusive benefits such as free delivery, personalized offers, and early access to sales. Rewards will include discounts, free products, and charitable donations.

4. Financial projections:

Develop financial projections to estimate the ROI of the loyalty program. This includes the costs of implementing and managing the program and the expected increase in revenue from increased customer loyalty and repeat business.

Our financial projections show that the loyalty program will cost approximately 10 million euro to implement and manage annually. However, we expect the program to generate an additional 50 million euro in revenue through increased customer loyalty and repeat business.

5. Competitor analysis:

Conduct a competitor analysis to understand what other grocers are offering in their loyalty programs. Highlight areas where your program will differentiate from the competition and offer greater value to customers.

Our competitors offer loyalty programs that focus primarily on discounts and rewards when they purchase specific products. Our program will differentiate by also offering points to customers that engage with our brand. Through a gamified program, we’ll be able to better communicate our values, unify the physical and digital shopping experience, and personalize every interaction to cater to our customers’ unique preferences.

6. Implementation plan:

Develop a clear implementation plan that outlines the timeline, resources, and responsibilities required to launch the program successfully. This should include the technology needed to manage the program, and any training required for staff.

Our implementation plan involves partnering with a third-party provider to manage the program’s technology and logistics. We will also invest in staff training and customer communications to ensure a seamless and effective rollout.

7. Risks and mitigation strategies:

Identify potential risks associated with launching or revamping the loyalty program, such as customer backlash or low adoption rates. Develop mitigation strategies to address these risks and ensure the program’s success.

Potential risks include low adoption rates, negative customer feedback, and technical issues. We will mitigate these risks by conducting a comprehensive marketing campaign, engaging with customers for feedback and insights, and having a dedicated support team to address any technical issues promptly.

Tips to present a solid business case

Here are some valuable and insightful tips to present a solid business case:

Start with a clear and concise executive summary:

This should be a brief overview of the proposal, highlighting the key benefits and value proposition of the loyalty program.

Define the problem or opportunity:

Clearly articulate the problem or opportunity that the loyalty program aims to address. Use data and analytics to support your argument.

Align with the overall business strategy:

Ensure that the loyalty program aligns with the overall business strategy and values of the enterprise grocer. This will help ensure that the program is seen as a strategic initiative rather than a standalone project.

Develop a strong value proposition:

Clearly communicate the value proposition of the loyalty program and explain how it will address the identified problem or opportunity. Be specific about the benefits and value that the program will provide to customers and the enterprise grocer.

Provide financial projections:

Develop detailed financial projections for the loyalty program, including costs, revenue, and ROI. Use realistic assumptions and provide a range of scenarios to show the potential impact of the program.

Leverage data and analytics:

Use data and analytics to support your arguments and demonstrate the potential impact of the loyalty program. This will help build credibility and demonstrate the program’s potential.

Cover risks and mitigation strategies:

Identify potential risks and challenges associated with the loyalty program, and develop mitigation strategies to address them. This will show that you have thought through the potential pitfalls and are prepared to manage them.

Present a clear implementation plan:

Develop a clear and detailed implementation plan for the loyalty program, including timelines, resources required, and key milestones. This will show that you have thought through the logistics and are prepared to execute the program effectively.

Be flexible and adaptable:

Be prepared to adapt and adjust your proposal based on feedback from the executives. This will show that you are open to input and willing to work collaboratively to achieve the best outcome for the enterprise grocer.

Practice your presentation:

Practice your presentation in advance, and be prepared to answer questions and address concerns from the executives. This will help you feel confident and prepared, and will increase the likelihood of a successful outcome.

FAQs: What executives might ask during a business case presentation

Here are some frequently asked questions that executives might ask the loyalty leader during their loyalty program business case presentation, along suggested answers:

How will the proposed loyalty program impact our current customer base?

Our loyalty program is designed to enhance the customer experience and provide more value to our current customer base. By offering personalized rewards and exclusive benefits, we believe our program will increase customer loyalty and retention.

How does the proposed loyalty program compare to our competitors’ programs?

We have conducted a thorough competitor analysis and have developed a program that differentiates from our competitors by offering a more personalized and holistic experience that reflects our customers’ values and preferences. Our program will also leverage the latest technology and data analytics to deliver relevant rewards and offers.

What are the potential risks and challenges associated with launching or revamping a loyalty program?

Potential risks include low adoption rates, negative customer feedback, and technical issues. However, we have developed mitigation strategies to address these risks and ensure a successful program rollout. For example, we will conduct a comprehensive marketing campaign to drive awareness and adoption, engage with customers for feedback and insights, and have a dedicated support team to address any technical issues promptly.

How will the loyalty program be managed, and what resources will be required?

We plan to partner with a third-party provider to manage the program’s technology and logistics, which will require ongoing investment. Additionally, we will invest in staff training and customer communications to ensure a seamless and effective rollout.

How do we measure the success of the loyalty program, and what are the expected financial returns?

We will measure the success of the loyalty program by tracking customer engagement, retention, and sales growth. We expect the program to generate an additional 50 million euro in revenue through increased customer loyalty and repeat business, which represents a solid return on investment for our enterprise grocer.

Next steps – after a business case presentation

After the meeting, the next steps would depend on the outcome of the discussion. The objective is to get approval from the board, executive team, external stakeholders or investors for the business case.

• If the executives approve the loyalty program proposal , the loyalty leader should work with their team to start the implementation process. This may involve working with the chosen third-party provider to set up the program’s technology and logistics, developing and executing a marketing campaign to drive awareness and adoption, and training staff on the new program and its benefits.
• I f the executives have some concerns or questions that need to be addressed before a final decision can be made, the loyalty leader should work with their team to provide additional information or conduct further analysis if necessary.
• If the executives reject the loyalty program proposal , the loyalty leader should ask for feedback and try to understand the reasons behind the rejection. Based on this feedback, the loyalty leader can make any necessary adjustments to the proposal and resubmit it for consideration or move on to exploring other potential initiatives.

Regardless of the outcome, the loyalty leader should communicate the result of the meeting to their team and stakeholders, and keep everyone informed on the progress and status of the loyalty program proposal.

If you’re a retailer and you’d like to talk about any of the ideas outlined in this article in more detail, please  get in touch with our team  – we’ll be happy to show you examples or talk through your brand’s unique challenges.

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Loyalty program implementation: a step-by-step guide

A recent survey by Yotpo found that nearly 68% of respondents would join a loyalty program of a brand that has impressed them with its customer experience. Moreover, 56% of respondents are willing to spend more on a brand they're loyal to , even if there are less expensive options available elsewhere. If you think your existing customers won't like your loyalty program or find it pointless, well, you may be wrong because they'll go the extra mile for appealing prizes and savings.

Each generation buys things online or offline and uses customer loyalty programs when available. Data shows that 71% of Gen X, 70% of Millennials, 63% of Baby Boomers, and 62% of Gen Z responded that they could choose a brand with a loyalty system over one without it.

We bet that some of your customers are from one of the aforementioned generations and expect the best shopping experience — you can make that happen with a personalized loyalty scheme.

A customer loyalty program will be able to push your business to another level if you're confident that your product is competitive and wildly popular with customers, and you have no significant quality, design, distribution, or price issues. After all, the purpose of a loyalty scheme is to support a product line worth investing in, or even an entire company, to gain a competitive edge.

Read this guide to discover that implementing a customer loyalty program can be a breeze when it's a well-thought-out process. We'll show you how to create a scheme with attractive offers, easy-to-earn rewards, and simple-to-understand loyalty rules. Stick to the 10 steps outlined in this loyalty program guide , and you'll end up with a high-performing and successful loyalty program.

Key takeaways

• Make sure your loyalty program stands out and brings real value to your customers to encourage them to join in.
• Set clear, achievable goals for your program to steer it towards success.
• Plan your expenses and revenue carefully to keep your program going strong and making profits.
• Get input from experts in different fields to make your program the best it can be.
• Study your audience and current loyal customers closely to tailor your program to fit their needs perfectly.
• Design your program with rewards and perks that match what your audience loves.
• Create a step-by-step plan with a timeline to roll out your loyalty program smoothly.
• Keep an eye on key metrics to see how well your program is doing and how engaged your customers are.
• Launch your program with a bang to get everyone excited and involved right from the start.
• Keep tweaking and improving your loyalty program as you go along to make sure it's always working its best for you and your customers.

1. Identify a unique value proposition 

Since you're reading this guide, you probably know the benefits of a loyalty program in the B2B or/and B2C sector , and you're set on creating one. Good for you! First, lay down the loyalty program foundations and its overall concept. This step is strongly connected to setting a loyalty program business definition and value proposition. 

The customer loyalty program concept must be consistent with your company's value proposition — it should offer the same unique qualities as your business . But what about the mechanics and logic of a loyalty program? Can it also remain unique when there are many imitators around? Not really. That's why you need to consider which way you want to go:

"Follower" way

Since it is relatively easy to research a competitor's offerings and test their program, this approach is to create an identical loyalty scheme that another player in the market has. If you present the program as a copy of something already existing in the industry, chances are it'll be equally successful.

"Something old, something new" way

This approach combines a proven solution (a copy of a competitor's program) with unique elements created just for your business — it's mainly about upgrading an existing and working system. Very often, a whiff of innovation in an industry is beneficial!

"Prime mover" way

This approach involves creating a fully personalized loyalty program from scratch. This can be a breakthrough in your industry, and you can become a trendsetter with your shiny new scheme.

Mirroring existing programs is straightforward if you have access to specialists who will efficiently analyze and inspect the inner workings of the designated loyalty scheme. In the following guide, you'll learn more about the options for creating a program according to your vision.

The loyalty program location

Next, focus on the geographic areas for your customer loyalty program and define a list of countries where it'll be launched first . You can always add more regions once your loyalty program grows in popularity. Also, consider languages, as one country may have multiple official languages. Lastly, decide what currencies your program will support because this will affect things like point value, multi-currencies, and currency conversion.

The loyalty program basic structure

Work with your team to develop an overview of the main theme of the program and its look and feel. Find an eye-catching and marketable name and logo for the system and all its elements, such as levels/tiers, loyalty points, member naming, and currency.

As you build the basic structure, think about two fundamental user journeys: The enrollment and opt-out processes . The enrollment process is related to encouraging customers to join the program and ensuring that the sign-up experience is smooth and risk-free.

On the other hand, the opt-out process involves describing the necessary steps a loyalty program member must take to leave the system. Letting customers go is the last thing you want, but you still need to treat the opt-out process equally. Also, you can use the opt-out inquiry to gather feedback on why the member wants to leave you and draw conclusions. 

Obviously, you'll have to craft many more user journeys, such as gamified profiling, friend invitations, in-store user identification, or combining showrooming with a mobile loyalty app . But you'll get there when your loyalty program is well-rounded. 

The loyalty program type

Deciding on the nature of a customer loyalty program will affect its logic and features. See a brief breakdown of the most common types of customer loyalty programs and determine which one suits your needs. Remember that each type brings different benefits but also technical limitations.

1. Point loyalty programs 

This program offers members points based on how much money they spend or what actions they take, such as leaving a review, rating a product, or signing up for an update newsletter. Loyal customers can then redeem their points for rewards from the rewards catalog or on other simple rules.

2. Spend-based loyalty programs

The program rewards customers who spend more money with targeted incentives designed to encourage repeat visits and even more spending. So, loyal customers feel that their behavior is reasonable, as they gain new exclusive benefits with repeat purchases.

3. Tiered loyalty programs

Tiered loyalty programs provide a structured pathway for customers to unlock enhanced benefits and rewards as they progress through various membership levels. This progression-based system encourages deeper engagement and loyalty by offering exclusive perks and privileges at each tier. By adapting to different levels of commitment, these tiered loyalty programs foster a sense of achievement and recognition among members, ultimately strengthening brand loyalty.

4. Paid/VIP loyalty programs

In the paid loyalty program, members pay a recurring and upfront fee to stay in the system and receive generous benefits or offers they can enjoy immediately. This loyalty program is chosen to establish an even stronger relationship with existing customers and recognize them apart from others.

5. Value-based loyalty programs

This program grants benefits and rewards to all members of the system unconditionally — it doesn't matter how much money they spend whatsoever. Such a program is designed to create an emotional bond with the brand so that customers spend more money and visit more often. 

6. Referral loyalty programs 

In this program, existing members invite their like-minded friends to join the scheme and are rewarded for doing so. New members become familiar with your offerings, and if they like them, they can generate buzz around your company and one day become loyal customers.

7. Multipartner loyalty programs

This program brings companies together to provide end-users with a one-stop shopping experience, for example, through discounts on tiles and tile adhesives or lamps and light bulbs. Your and your partner's offerings complement each other, and your loyal customers can find everything they need on the spot.

8. Coalition loyalty programs

It's a program based on combining two or more independent and non-competitive companies into partnerships to increase their influence in the market, for example, by offering product bundles of chips and sodas or milk and cereal. Depending on the requirements, companies can share a customer base, points collected by members, or all the logistics of a loyalty program.

9. Game-based loyalty programs

This program is based on a game engine and uses challenges, mini-games, or badge collection to engage customers. Members must regularly interact with the brand's touchpoints and repeat certain activities to keep their perks.

10. Hybrid loyalty programs

The hybrid loyalty program mixes several loyalty structures, such as points and tiers. It combines two or more program types to better tailor the loyalty experience and align the program with the business.

The loyalty program rewards

You should decide on a loyalty benefit offer depending on your business's industry and the level of customer involvement in your product (high or low). 

Ruby Camara of Sixth Continent commented to Referral Rock that if you encourage customers to earn credits, "you create a continuous buying circle" and "as a result, people keep coming back." This is because "consumers feel rewarded every time they make a new purchase, and companies grow their base of loyal, repeat customers."

Loyalty benefit offerings can be divided into two categories: Soft/hard loyalty rewards and instant/delayed rewards .

Soft and hard loyalty rewards

Soft rewards include various non-financial rewards and privileges that indicate a member's status. They refer to VIP treatment that long-term customers can enjoy, for example:

• Birthday gifts
• Instant prize drawings
• Commission-free upgrades
• Premium add-ons
• Early access to pre-sales 
• Personal support agent
• Exclusive access to product launches
• Meet-and-greet events

In contrast, hard rewards refer to clear-cut incentives, including points, discounts, rebates, freebies, and other items that boost engagement and encourage customers to make repeat purchases.

Instant or delayed rewards

Instant or delayed rewards have their basis in a psychological phenomenon associated with gratification . This category of rewards is closely related to issuance and scheduling.

Instant rewards are given shortly after the main product purchase to build a sense of belonging in the customer. The instant reward can be a discount, a price reduction at checkout, or a scratch card with a mystery prize. So, for example, you can give a 50% discount on coffee when a customer buys a $5 cookie.

On the other hand, delayed rewards , or so-called accumulation rewards, refer to rewards delivered after cumulative purchasing times (not during the transaction). For example, you can offer a customer a free haircut after every 5th visit to your salon.

You can also play around with limiting rewards to create higher demand and push customers further. So, you can try:

• No limitation . There's no specific limit on rewards, which most often take the form of a coupon, discount, or voucher with a fixed value. Treating members equally is the easiest way to build customer loyalty.
• Quantity limitation . The number of rewards is limited. This increases the value of the prizes, and people start competing to get them.
• Time limitation . Buyers must redeem their reward within a certain period. Otherwise, they simply lose their chance. Time limits motivate customers to earn points quicker.
• Seasonal limitation . Shoppers gain access to special rewards during holidays such as Christmas, Valentine's Day, Independence Day, or Halloween. Tapping into the festive mood is the best way to increase customer engagement.
• Status limitation . Rewards are issued according to the program member's status created through segmentation and member activity in the program.
• Money can’t buy. These types of rewards are unique and limited. Usually for the best segments or premium customers. 

Note that your benefits and reward offer must be of high value and meet not only pragmatic but also emotional , so-called "perceived values" to be compelling.

Verify that the benefit proposition is genuinely enticing to your membership base and that you aren't basing it solely on your beliefs. Also, read how Adam Posner, Customer loyalty and Program Specialist, commented on a compilation of six currencies loyalty program members care about . It's such an eye-opener that, ultimately, customers want more than just rewards.

Summing up, the conceptual and ideation phase is the most important. Be aware that there's always a risk of staying in your mental bubble while working on the system idea. Seek the support of an external specialist and consult on the program concept. Use casual advice to be directed to the latest industry trends.

2. Set clear and smart goals

Your program is just a tool in your hands and must have the same goals as your business. So, once you know the value proposition for your customer loyalty program and have its initial concept, it's time to define the objectives you'd like to achieve.

Define your goals very specifically — we mean it! This will incredibly increase the effectiveness of your program development. You can divide the objectives of your loyalty system into three types: Core, primary, and secondary . Be aware that this is just an example of goal differentiation. In fact, how you name and break them down is your choice.

Core loyalty program goals

Danny Meyer from Shake Shark brought up the amazing formula that successfully bringing a customer back depends on "finding the perfect mix of what you get at home" (comfort, recognition, knowledge of your preferences) and "what you can’t get at home" (excitement, an out-of-the-ordinary experience, a chance to share with new people).

So it'll come as no surprise that the main reason for implementing most customer loyalty programs is to boost customer retention, build trust, make a profit, increase revenue, expand market share, and foster brand recognition . In your case, it should be no different. After all, you're investing time, money, and effort to grow as a company, and a loyalty scheme is a means to that end.

Primary loyalty program goals

Your loyalty program's primary goals should be building customer relationships and converting them into long-term loyal members . For this reason, your primary goals (or tactical goals) could be:

• Acquiring new customers (customer acquisition as a goal often applies to multipartner and referral programs, in which the buyer base is exchanged between partners)
• Increasing customer loyalty and customer retention 
• Retaining customers and preventing outflow (customer churn)
• Increasing frequency of online/offline point-of-sale visits
• Building a robust loyal customer base
• Supporting the operations of other company departments
• Creating new external partnerships
• Developing new communication opportunities and building touchpoints with the brand

Secondary loyalty program goals

The secondary goals for your scheme are a byproduct of the ongoing work on the core and primary objectives. However, they're also important because they improve your company's workflow, strengthen communication, enhance product/service quality , and so on. The secondary goals (or operational goals) could be:

• Increasing the frequency of visits to online/offline points of sale
• Increasing the number of orders placed
• Boosting the purchase value
• Driving up the share of purchases of high-margin goods
• Reducing abandoned shopping baskets, returns, and drop-offs on delivery
• Increasing mobile loyalty app usage
• Developing documentation of solutions to customer issues
• Supporting public relations actions
• Improving the company's innovation
• Expanding company product/service categories
• Adding new customer feedback channels
• Improving product or service
• Building better marketing strategies or branding campaigns

The goals will follow closely from the first point in this guide, which is the value proposition and the type of program you choose. Additionally, for some companies, secondary objectives may be primary and vice versa.

The customer loyalty program is a long-term investment. It can bring you profits by using loyalty points as a currency, changing buyers' behavior, and providing more data about your target audience. All in all, your success depends on customer habituation to the loyalty program.

Customers enrolled in the loyalty system won't always immediately start doing what you expect them to do. You have to work hard to earn the customer's trust. This means that you can only achieve your goals if you educate, adopt, and befriend customers with the program. Then, you'll quickly reach your core, primary, or secondary objectives.

3. Plan your expenses and revenue

The next step is to build your business case, a financial model of expenses and revenues for the entire loyalty program release project. First, you need to consider the program's sources of funding. This must be a new, independent budget because the system requires a significant financial contribution, and you must have control over it. Consider whether you plan to fund the customer loyalty system from the marketing budget or a stand-alone budget that incremental revenue streams will cover.

Above all, the board must align the loyalty system with the company's strategy . If this is accomplished, the next step is to prepare the appropriate budget cases, which are divided into: implementing the loyalty program and running the loyalty program .

Costs of implementing a loyalty program

Creating a customer loyalty program remains a serious investment. Most companies are unwilling to share financial information about their customer loyalty programs. Still, on average, the cost per member per year can be estimated at $20-60 for B2C loyalty programs and $100-300 for B2B loyalty programs.

Having a well-planned budget before launching the program increases the chance of a return on investment. Let's look at management, technology, and marketing/promotion costs when implementing a customer loyalty program.

Management costs

Start by hiring people with loyalty-building skills to operate the program. Then, conduct in-depth crew training to ensure they know the system inside out. Create the necessary regulations and terms of participation in the program with the legal team. Don’t forget to prepare training materials and provide proper training for your staff. 

Take care of the information flow within the company and document the steps you take. This will be the perfect basis for analysis and corrections after the program's launch. A key part of the management costs includes selecting, ordering, and storing in the case of physical rewards, or signing appropriate agreements with digital reward providers.

Technology costs

The main technology cost is choosing the suitable implementation method and back office for the customer loyalty program. Decide whether you'll acquire bespoke technology, buy a license and pay a fixed or scalable recurring fee, or subscribe to a loyalty platform to run your system.

In addition, consider the cost of integration, consulting, front-end/back-end development, and employee training. Before launching the system, you should also figure out how users will access the program and whether you'll need a plastic card, a digital wallet, or a dedicated mobile loyalty app .

Marketing and promotion costs

The most critical aspect of marketing costs is to put together adequate advertising campaigns and online/offline promotional materials. Make an effort to let people know about your new investment. Before implementing your loyalty system, think about preparation:

• Pre-launch social media campaign
• Pre-launch teaser email
• Pre-launch SMS campaign
• Public relations and media notes
• Information to communities 
• Email announcing a brand-new loyalty scheme
• Welcome email
• Email with referral information
• Email with redemption information
• Email notifying the next level/tier
• Teaser page and on-site pop-up
• All other BTL or even ATL campaigns, depending on the scale of both the business and loyalty program.

These marketing materials must be catchy enough and engage the customer to stay in the program. Get creative and be bold! 

Costs of running a loyalty program

When the hardest part with the implementation pricing is done, the next part is the costs over the lifetime of the loyalty program. Here again, you need to be very strategic and consider three types of budgets: Management, technology, and marketing/promotion.

Your program is a "living" solution and needs people to maintain, run, and analyze new customer loyalty campaigns. Expenses for logistics, warehousing, partnerships, and cooperation with third-party organizations also fall into this cost category.

You can also contact members to ask them how they feel about the program, inform them of upcoming sales, offer them deals, remind them of reward opportunities, or invite them to revisit your store.

Ongoing technology expenses include the cost of maintaining the program if you've opted for a subscription model, as well as the cost of additional system integrations and program service centers. Nonetheless, your biggest expense is already in the past, unless you're planning further major iterations or patches.

Once you've grabbed attention and the first customers start to become members of your loyalty program, you can't rest on your laurels — spare no expense to promote the system in every communication channel. Constantly work on engaging marketing and promo materials and prepare:

• Teasers and countdown on the website
• Videos and captivating infographics 
• Engaging social media campaigns and contests 
• On-page banners linking to a rewards page
• Seasonal campaigns related to Christmas, Valentine's Day, Halloween, etc.
• Emails, SMS/MMS, and social media campaigns with updates and discounts 

Less predictable reward costs

Let's zoom in for more information on the cost of rewards, which can vary and be somewhat unpredictable . Typically, rewards as expense items are set by the company's board, and it's usually a percentage of the program's revenue. The loyalty program manager then ensures that the fixed rewards cost is within the budget scope.

Suppose that one point in your customer loyalty program is worth $0.5. Loyalty members can redeem points for a reward that costs you a total of $100. Now, take the price of the reward and divide it by the fixed exchange rate of loyalty points. As you can see, in this case, the price for the reward should be about 200 points so that you don't incur a loss.

Remember to monitor the point issuance on the market and set up a financial reserve for these points. Another thing is the point-price value . This is the number of points and their equivalent in real money that are required to get a certain reward. If the price is too high, customers will move away from your program quickly. Conversely, your margins will take a hit if the price is too low.

Lastly, orchestrate your loyalty point services around management, logistics, express shipping, extended warranty, multipartner rewards agreements, events in all shapes and sizes, and promotional activities (such as members-only content, videos with tips and tricks, or giveaways). Realize that rewards in your program may be fully or partially funded at the expense of your providers or partners.

After all that information about expenses, you're probably wondering what revenue will flow from the program. Data shows that a 7% increase in loyalty can raise lifetime customer profits by up to 85%. Additionally, Rob Markey, a partner and director at Bain & Company and founder of the firm's Global Customer Strategy and Marketing practice, said that those companies that offer meaningful customer loyalty programs increased their revenues about 2.5 times faster than others in their industry. 

It's time for a moment of truth: With a new program, proving who's a new customer and who has been using your services for a long time is quite a challenge. This is because both existing customers and newcomers can join the system. Most of those who participate at the beginning are your regular customers from the pre-program days.

Unless you have an eCommerce store (which has an extensive analytics section), you certainly don't know how customers behaved before the customer loyalty system. Now, though, the situation is about to change! After a year of owning the program, you'll be able to easily find out how your shoppers act, how often they interact with your brand, what the quality of visits is, and consequently, how much profit you make.

The build-or-buy dilemma

Many businesses have the same knotty question and wonder whether they need to build or buy a solution to implement a loyalty program. Well, there are three ways you can create your system. Cezary Olejarczyk, CEO/CTO at Open Loyalty, commented on LinkedIn that it's better to buy a good loyalty engine and focus on customer loyalty and engagement than to be stuck at the software development stage of yet another tiering or reward mechanism. Still, it's preferable to be aware of the options available, so let's move on.

In-house development

Developing a loyalty scheme using your own resources from the ground up is expensive. All the work involved in conceptualization, customer journeys, loyalty program trends, customer behavior, UX trends, wireframes, final design, development, rollout, and promotion of your solution is on your side.

That's why if you want to do it right, you need to involve a lot of experts, starting from the user experience designer, UI designer, frontend and backend developer, integration specialist, analyst, and ending with loyalty manager and marketers. Naturally, when a loyalty program is developed in-house, you have full control over the entire process. On the other hand, it takes a lot of time (it can take months or even years), resources, and personnel.

Custom development by an agency

To be honest, dealing with a third-party agency is quite similar to working with your in-house team. The difference is that you outsource the work to a company with the experts on board, ready to support you. You're in good hands if you find an agency with loyalty experience . The loyalty agency staff is eager to help you conceptualize a customer loyalty program, develop it, and manage marketing communications before and after the launch.

However, agencies are reluctant to share low-level loyalty program knowledge. This is probably due to the fact that they often have contracts with loyalty platforms and outsource off-the-shelf solutions. As a result, they're unwilling to let the program out of their hands, which means you don't have complete control over it and have to negotiate every change.

Customer loyalty software implementation

If you opt for fee-based SaaS loyalty software, very little work is needed to get your system up and running. The backend of the loyalty program is already configured and waiting , and the only thing you need to consider is the customer loyalty concepts and frontend area.

In addition, the company behind the SaaS loyalty program software has the knowledge, resources, and technology to set up and launch a loyalty scheme quicker than any previous approaches. Plus, you'll be instructed on how to use the platform to get the best results.

Your program can be ready from the get-go if the SaaS company implements a MACH loyalty program based on microservices, API-first, cloud-native, and headless approaches. You'll be able to add advanced features, such as gamification, omnichannel, IoT, VR/AR, multiple tiers, and gamified surveys along the way.

4. Bring specialists together under the program 

Another key element when implementing a program is to join the forces of different team members , so the system begins to run seamlessly. If you want to ensure a smooth loyalty program implementation and development, you should put together a project team made of: functional team members and management representatives.

Functional team members

Let's talk about the functional team first. You've got the loyalty program manager, whose job is to make sure everything lines up with the company's goals. Then, there are the customer loyalty systems specialists, who handle all the technical aspects to keep things running smoothly. The marketing automation manager is responsible for keeping those automated tools working seamlessly. Sales managers are here to ensure that strategies align with program objectives. IT specialists handle security and integration, while data analysts crunch the numbers for insights. Next up, there are finance specialists who manage the budget, and technical project managers to keep everything on schedule. Lastly, graphic designers add a visual touch to the program's interface and promotions.

Management representatives

Moving on to the management side, you've got the Chief Marketing Officer (CMO) providing strategic direction for marketing alignment. The head of retail ensures that the program is in sync with retail goals. The Chief Technology Officer (CTO) guides technology infrastructure and integration. The Chief Operating Officer (COO) ensures operational alignment with broader business processes. The head of content oversees messaging within the customer loyalty program. Other specialists, such as those in customer service, legal, and analytics, may also come into play based on specific needs.

See the must-have loyalty program roles you need to cover to be laser-focused when implementing the system.

Think carefully about who should be on board, as leaving out one link could lead to failure. Pawel Dziadkowiec, an expert in rewards and customer loyalty programs, zoomed in on a real-life situation where the purchasing department was skipped during the implementation of the system.

This caused considerable problems in logistics, as the warehouse and logistics department couldn't keep up with orders — they weren't prepared for such a growth. The program boomed quite quickly, with a 30% increase in customer demand for specific products. This resulted in shortages in the store and implied one thing — a failed start to the fiasco of the customer loyalty program. Shoppers had nothing to buy and were frustrated that they couldn't take advantage of the fancy discounts.

Pawel Dziadkowiec also places great emphasis on the top-down flow of information. Management must keep the involved employees well-informed of the plans . The bottom line is that you have to find all the relationships between the program and the departments in the company because the program may require, for example, more warehouse space, more delivery truck runs, or more sales staff, or bigger CS calls to customers. This is a well-known cause-and-effect chain that you need to be aware of.

Building the customer loyalty program requires support at all levels. Diversifying the team in this way and considering the different views of specialists ensures that there will be ultimate acceptance of your system concept company-wide.

On the other hand, by involving various levels of management, you're assured that you have the board's support, and they'll push your idea. At the same time, lower-level employees will find their footing in implementing the program and will be motivated.

5. Analyze the target audience and loyal customers of your loyalty program

Detailed customer segmentation is the heart of a successful customer loyalty program. Pawel Dziadkowiec, a loyalty expert, mentioned that major players use systems as a solution to gather information about their customers and identify them. They're aware of the profits they can make when they offer the right product to the buyer, and this is only possible if the data about the audience is refined and well-analyzed. Now is the time to dig deeper into your valuable customer data!

A database that contains detailed and correct information on your shoppers and visitors is a strategic weapon that will greatly influence your success. Use customer relationship management system data and target customers who want to build relationships with you . Your loyalty program audience can be a mix of these three groups:

• Members of the loyalty system
• Company employees, board members, and stakeholders.
• External partners of the loyalty program, such as media houses, external organizations, NGOs, and so on

Prepare different means of communication for each of these three groups to send the right marketing/sales messages to encourage interaction.

Fortunately, there's a lot of customer data that you already have or will have when the system is ready, such as:

• Sales statistics and RFM, that is, recurrence of previous visit (R), frequency of visits (F), monetary value, and volume of purchases (M)
• Speed of payment
• Customer profitability
• Assortment within customer purchases, meaning product categories, product features, number of goods, and reasons for selection
• Non-transactional statistics related to activities and visits meaning hits to the website/eCommerce, goods viewed, unpurchased items added to the shopping basket, promotional or referral posts placed, and so on
• Customers data related to geography, demographic, psychographics, and behaviors
• Customer loyalty over time

If you're doing audience research on your own and find it difficult to sift through extensive data, you can always start by finding answers to these questions:

• How much does the customer buy over [period]?
• What type of products do they buy?
• How often do they make purchases?
• Can we cross-sell them other products?
• How much profit do we make on their purchases?
• How quickly do they pay after deciding on a product?
• What is their opinion of our company and are they satisfied with our work?
• How could we enhance our relationship?

Don't rely solely on transactional data, as the actual image of your audience will remain blurred. Instead, try mixing it with other behavioral data. Understand the benefits of qualitative or quantitative research and conduct a customer satisfaction survey to collect customer feedback. You'll easily get answers to the question "Why?" — why customers choose you and why they stick with your brand. Also, you can engage customer service agents to learn how buyers behave at different points in the purchasing process.

Moaaz Nagori from Cloudlead explains for Referral Rock that the best way to gain loyal customers is through support. "Coupons and other monetary benefits are good but they’ll have short-term effects and are more applicable to maintaining loyalty, not driving it."

With a loyalty program in place, you can learn about customer behavior and regulate sales, for example, by directing traffic toward a product that isn't chosen very often. In addition, if you see a product performing poorly, you can launch a loyalty action and triple award points for its purchase.

You can also use your loyalty program to adjust logistics. Knowing that customers are buying more of a particular product will give you an idea of how much of it has left your warehouse and keep your inventory under control. 

In summary, use the data you collect to change customer behavior, market your loyalty program, and reach out to members with themes that pique their interest.

6. Develop a tailored loyalty program structure

Now it's time to technically conceptualize your loyalty system and develop the technological layer and mechanics of the program (rules).

Loyalty program technology layer

Integrate your customer loyalty program into your company's organizational structure — link it to all the CRM tools and databases you and your team use daily. The primary system that your loyalty program's back office should be connected to is your sales system , namely, the CRM, POS, transaction software, or other cash register system that handles your sales.

The second important integration is the one with the warehouse system, in order to have information about loyalty inventory (number of rewards in stock) or product inventory (number of products in stock).

Another noteworthy integration is the one with the communications module . Connect your program to communication systems to send responsive and personalized messages through the channels of your choice, such as SMS, emails, or push notifications.

Additionally, you can consider integrations with your analytics system . And you're in luck if you choose a loyalty platform to support your program, as it guarantees access to robust reports and analytics. 

The last integration is related to security and fraud control . Your loyalty system should enable the installation of filters to detect scammers, from customers to employees. This way, you can quickly detect any suspicious activity on a specific ID and account and then execute an algorithm designed for these cases, such as blocking the ID and sending an alert to the company's security team.

The number of integrations is unlimited, so customize them to suit your needs.

Loyalty program mechanics

You can step up the game using all the fancy loyalty rules or applying complex integrations of several IT systems, branched algorithms, virtual reality, or machine learning. Still, the truth is that the straightforward and clear mechanics of a loyalty system work like a charm, too!

Jeffrey Casullo, Senior Manager at Monitor Deloitte, said their upcoming annual Deloitte U.S. Consumer Loyalty Survey reveals that "simplicity and ease" are more important than "personalization" for loyalty users. 

Back to the mechanics, or so-called program rules. These contain a set of conditions and rewards. The conditions correspond to the goals of the loyalty program, which you established in the first part of this guide.

Loyalty program mechanics can be divided into general , segmented , or triggered , and they're determined by why a rule applies to the customer. 

General mechanics

The general mechanics are often referred to as the "basic rule" of the loyalty system because they govern how the program operates. It's usually openly published in the program's terms and conditions as the minimum reward level available to each member. An example of the general mechanics of a loyalty program might be: For completing any purchase, 5% of the cost is granted as bonus points for all loyalty accounts.

Segment rules

The segment rules are related to customer segmentation, usually by geographic, demographic, psychographic, and behavioral data. An example of segment rules for a loyalty program might be: During Children's Day, +500 points on June 1 for the customer segment: Users who buy children's clothing.

Triggered rules

The triggered rules are associated with the actions a person takes when interacting with your brand. An example of triggered rules for a customer loyalty program might be: Providing free delivery on every third purchase and a reward when the transaction reaches $200.

7. Set a roadmap for program implementation

When you have a deadline, then you're highly motivated to meet it. That's why you must create a timeline to get a complete perspective of your customer loyalty program implementation.

The first milestone is the basic tasks you need to perform in parallel. Since you're planning to launch a customer loyalty program, focus first on strategy and conceptualization. Then, prepare an annual plan for your system, during which you have to choose the system implementation method (using in-house resources, agency services, or a loyalty platform). This will also affect the functional requirements and architecture of your loyalty system.

Then, choose the mechanics and rules of the program and select integrations you can't go live without. Remember to test the system configuration and data mapping. At the same time, conduct training and instruction, select reward offer, develop documentation, and perform initial marketing and promotional activities.

The next milestone is the program rollout. This is when all the activities from the first milestone are triggered. There's no turning back now!

The third milestone is the first verification of program performance, which usually occurs after two weeks. You can validate that the scheme is playing its role and verify all KPIs, success metrics, inventory, transferred points, receipt cards, and app performance (if you have one).

The last milestone is the further development of the program and future steps. In the months after the system is released, you can think about expanding it — you already know what works for your customers. By focusing on this, you can conquer the market and the hearts of your customers.

Loyalty program implementation milestones. 

8. Identify KPIs and customer loyalty success metrics

Since you know what your main (primary and secondary) goals are, based on them you can create a set of metrics and KPIs that will tell you if you're moving in the right direction .

First and foremost, when you measure your program's success, look for indicators that show a steady flow of new members. This means that your program is attractive, relevant, and meaningful to customers.

Also, ensure that program members are actively redeeming their points for rewards. If too few members do so, it could indicate a problem with the availability of rewards or their desirability. Work on your promotion and send communications reminding members to redeem their points. 

Another vital metric is the average order value among members compared to non-members. If it's higher among loyal members, that's wonderful because they're your most valuable users and will generate the highest revenue for your business. The same goes for the customer lifetime value (CLTV) metric. You should see a higher CLTV value among loyal members rather than non-members.

Set of must-have loyalty metrics

Now, here's a compact set of must-have metrics that you should follow regularly:

• Number of loyalty program members
• Point issuance ratio
• Redemption rate
• Stock in-kind rewards
• Basket value, average order value, and purchase frequency 
• Incremental margin
• Customer retention and churn rates

We discuss them in depth in another article. Find out more about the metrics for your loyalty program . 

9. Kick-start your loyalty program

Generally speaking, it'll take six to twelve months to develop a customer loyalty program from the initial idea to full implementation. So, what should you do when the long-awaited day of the program launch comes?

The day before the release, you need to arrange a meeting with people from various departments responsible for the program's individual elements. Each person must report that they're 100% ready and able to run the program on their side . All eyes are ultimately on the loyalty manager, who's in charge of the overall program. If they also give the green light, the machinery can kick off. 

Organizational tasks before the launch

Let me once again remind you in this loyalty program guide of the following organizational tasks that need to be solved until the customer loyalty program is launched:

• Prove the robustness of your loyalty system concept.
• Specify the loyalty scheme's features in detail.
• Create a mission-driven team. Ensure that all employees involved in new or changed processes are self-motivated and well-trained.
• Integrate and configure the system. Formalize the necessary changes to IT, logistics, and service processes.
• Conduct user acceptance testing (UAT). Spend at least one month testing the system configuration to prevent loyal users from discovering critical errors or vulnerabilities.
• Create a workflow to eliminate technical and organizational bugs.
• Adjust logistics and reward management.
• Distribute communication materials at each point of sale.

The next day after the meeting, the loyalty program is launched at a selected time. At this point, all employees are truly energized as the system is finally about to go live.

First, there's the program activation — it runs a little earlier in the test version, and then it's switched to the production version. After that, you can communicate your new loyalty system to future program participants. Do this as early as possible through various channels to build awareness.

10. Audit your loyalty scheme regularly 

The final step in this guide is ensuring the longevity and ongoing success of your loyalty scheme. In most cases, companies should wait six to twelve months to see the program results. With KPIs and success metrics at your fingertips, you'll get access to reporting mechanisms, extensive documentation, and analytical dashboards that you can use to:

• Experiment with new loyalty strategies
• Perfect your loyalty system
• Evaluate program success and financial effectiveness
• Update your customer segments
• Clarify program objectives (also for customer segments and microsegments)
• Develop new reward offerings
• Evaluate the efficacy of individual incentives and promotions

Based on the experience of David Slavick, co-founder of Ascendant Loyalty, a system assessment should take about four weeks and provide a strategic roadmap with improvements ready for implementation. You should regularly perform a loyalty program audit to optimize your system, implement all necessary improvements, and reinforce member behavior .

You can reduce overhead and optimize your loyalty program & implement all necessary improvements . Eliminating all unnecessary elements and lowering costs is essential, mainly if the program absorbs a lot of resources. Optimization is also about improving program performance, especially if inaccuracies or bugs affect efficiency. You should also examine the customer pain points and target your next promotion to eliminate them. Then, start planning to relaunch the program in the latest reinforced version.

Besides, you can harness loyalty to create a genuine relationship between your customers and your brand and reinforce desired behavior . You're able to easily influence the actions of your most loyal customers and guide them in ways that lead to benefits for your business. By having the initial customer data, you're free to segment the database again for a deeper level of personalization.

Drive customer engagement by offering new, enriched incentives and promotions, and consciously reward customers for performing activities that align with your strategy. Be sure to integrate your marketing communications calendar to keep customers in the loop with updates.

Eventually, after implementing the program, you may find that you need to revise some of your business goals. Well, reality-check always happens. That's why measuring the indicators you set at earlier stages is essential to see the differences in their value.

A successful program launch? Use the loyalty program guide

Setting and fine-tuning rules, developing a loyalty system, registering new members, and collecting and analyzing data require professional effort and a considerable amount of time. Nevertheless, it's worth having this powerful marketing solution in your toolbox . A well-designed and well-funded program will later bring a significant economic return and improve the customer experience.

Once you kick off your scheme using this loyalty program guide, pay attention to non-financial indicators to avoid slowdowns and reduced effectiveness in the early stages. Focus on the number of people who have joined the program, the completion of member profiles, the ratio of points issued to redeemed ones, and other customer engagement metrics. These indicators confirm that the program has been launched successfully, is popular with loyalty members, and is growing at the desired pace.

Stay inspired and check out the Loyalty Program Trends 2024 report .

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Loyalty Program: Definition, Purposes, How It Works, Example

James Chen, CMT is an expert trader, investment adviser, and global market strategist.

What Is a Loyalty Program?

Loyalty programs, sponsored by retailers and other businesses, offer rewards, discounts, and other special incentives as a way to attract and retain customers. They are designed to encourage repeat business, offering people a reward for store/ brand loyalty (hence the name). Typically, the more often a customer patronizes the merchant—and the more they spend—the greater their rewards.

Key Takeaways

• Loyalty programs are offered by retailers and other corporations as a way to attract and retain customers.
• Loyalty programs offer rewards, discounts, or other special incentives and are designed as a reward for a customer's repeat business.
• Loyalty programs benefit companies not only by developing customer loyalty but by providing crucial information on how customers are spending and what products or types of offers are most appealing.
• While companies like Starbucks make great use of loyalty programs, some retailers such as Costco and Amazon rely instead on annual memberships.

How a Loyalty Program Works

Loyalty program incentives vary. Typical incentives include:

• advance notice of/early access to new products
• early access to sales
• free merchandise or enhanced services
• special services, like free or expedited shipping
• members-only discounts

To join a loyalty program—also known as a rewards program or points program—customers typically register their personal information with the company and are given a unique identifier, such as a numerical ID or membership card. They use that identifier when making a purchase.

Purpose of a Loyalty Program

Loyalty programs provide two key functions: They reward customers for their repeated patronage, and they provide the issuing company with a wealth of consumer information and data . While companies can evaluate anonymous purchases, the use of a loyalty program offers additional details on the type of products that may be purchased together, and whether certain incentives are more effective than others.

Loyalty programs particularly apply to high-volume businesses that thrive on return customers. And since it's more expensive to acquire a new customer than to sell to an existing one, the prospect of creating a loyal following is fundamental to adding value. When appropriately executed, repeat customers will help recruit new ones at a fraction of the cost of traditional marketing methods.

When these programs are integrated into the customer's everyday routine, they can cultivate true brand loyalty. Often, customers get invested in the program—and they will stick to a hotel, store, restaurant, credit card , or airline because of points or rewards they've accrued in its loyalty program, more than anything else.

Retail loyalty programs can trace their roots to the stamp or boxtop collection and redemption programs that date back to the 1890s. But the modern model was born with airlines' frequent flyer programs. American Airlines' AAdvantage, launched in 1981, was the first; United Airlines' Mileage Plus debuted shortly afterward.

Loyalty Program Example

Loyalty programs, like everything else, have joined the Digital Age. Interestingly, they are incorporating tech not just as a means of purchase things to get rewards, but as a source of rewards themselves: urging patrons to text or Instagram photos for points, or offering a discount if you shop via the merchant's new app.

The Starbucks ( SBUX ) Rewards program remains the default case study of how a brand can retain customers through interactive offers. The app operates much like any other rewards program, in that customers earn points (called "stars") to use for future coffee purchases. It differentiates itself from other loyalty systems by providing customers a convenient way to order ahead, pay in-store and even access exclusive music playlists. For the most part, the app solidifies Starbucks as a basic necessity for every coffee drinker. If you add funds via the app onto your digital rewards card, you'll "earn Stars twice as fast," Starbucks says.

Loyalty Program Alternatives

Loyalty programs aren't the only way to win customers' allegiance. Retailers like Costco ( COST ) and Amazon ( AMZN ) have achieved great customer loyalty through membership programs. Even though they carry an out-of-pocket cost, many shoppers happily pay the annual fees to access the variety of products, free shipping (in Amazon's case), and other perks and privileges offered by the two retailers. And for those who take advantage of all the available services included in a membership, the benefits can often outweigh the costs.

Starbucks. " Starbucks Rewards ." Accessed April 29, 2021.

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Top 13 Loyalty Program Templates to Nurture a Faithful Clientele

Gunjan Gupta

2007 : Sephora launched its first loyalty program known as “The Beauty Insider”. In this program, the brand provided exclusive services to its loyal and beauty-obsessed customers, allowing it to carve a niche for itself. 

2009 : The program extended and Sephora added another feather to its cap with “Very Important Beauty Insider”. This offer was made available to the most engaged members who spent more than $350 per year on Sephora and its shopping alley. 

2013 : The "Rouge" tier was added for customers spending $1,000 or more annually. With this tier, customers could receive invitations to special events, limited edition merchandise, and access to new products, thereby building a strong sense of brand advocacy. 

2016 and 2017 : Sephora saw the inclusion of Rewards Bazaar and transactional behavior with the inception of Beauty Insider Community, focusing on building a solid ground for a brand-customer relationship. 

Continuing to push its boundaries and not sitting on its laurels, in 2020, Sephora presented updated offers for online and offline purchases, allowing its loyal clients to exchange points for money. The biggest takeaway from Sephora is its varied choices of programs that it offers to its customers. 

Therefore, Sephora’s example tops all brand loyalty charts by empowering quick call-to-action and a string of brand advocates who love to spend and support. It also helped in boosting customer engagement and retention incredibly, making Sephora the leading beauty product provider across the globe. 

Hence, the key to business growth is customer loyalty, regardless of how big or how small a business is. 

But what are loyalty programs, and how to build them?

Loyalty programs are marketing strategies used by e-commerce brands to reward customers who frequently interact with them and cherish their services, just like Sephora, Starbucks, and other pioneers owning the global market today. Reward programs such as discounts, coupons, cashback, etc, are essential for ensuring customer loyalty and increasing revenue through repeat purchases; carefully scrutinized in a good plan. 

From stamp cards to point-based reward systems, loyalty programs come in all shapes and sizes, aimed at bringing customers back to the brand. This is what they help with: 

• Bringing new customers on board
• Reactivating dormant participants
• Retaining current customers and making them brand advocates
• Nudging them to make more purchases

Considering this, here are 13 loyalty program templates with unlimited perks to offer. Click and download them to turn your customers into brand advocates! 

Boost your brand loyalty prospects by using this template. As a complete deck with 24 fully-editable slides, it is a must-have resource to put to judicious use. Deploy this PPT theme to deliver your thoughts on topics like customer loyalty strategy, customer acquisition, steps to formulate a strategy, and many more. Each slide is customizable, helping you put together in-depth research results in front of your audience. 

Download Implementing Customer Loyalty Program PowerPoint Presentation

Demonstrate your brand excellence with the well-structured loyalty program example provided in this template. Use this complete deck to optimize your strategies that spur positive outcomes, similar to what Starbucks, Body Shop, and other big brands have to offer. This is a great design for subject matter experts to discuss topics like why we need a loyalty program, types of programs, how they work, etc. Therefore, this PPT design will help you communicate and encourage brand loyal behavior among your customers. 

Download Customer Engagement And Loyalty Program Whitepaper PowerPoint Presentation

This deck contains professional slides on customer retention strategies, impact, customer loyalty lifecycles, etc, which will be useful in mapping consumer behaviors. Deploy it as a use case to share your views on loyalty programs and building a robust plan for your organization. This design has enough receptivity to your needs, making it a great addition to your arsenal. 

Download Customer Retention And Loyalty PowerPoint Presentation

Address and evolve as a loyal organization by using this complete deck. It helps you map and portray various concepts of a customer loyalty program such as retention marketing, B2B customer lifecycle, CRM process, and many more. The most prominent feature of this creative bundle is that it is versatile enough to accommodate all changes to the design, color, fonts, etc. 

Download Customer Loyalty Lifecycle Program PowerPoint Presentation

Dispense qualitative and quantitative knowledge on various brand loyalty programs with this complete deck. Deploy it to share insights into the subject matter with in-depth research on topics like brand loyalty pyramid, brand loyalty inferences, brand resonance, and many more. With this PPT in hand, you will be able to meet your customer requirements and strategize your workflow, thus yielding positive results. 

Download Customer Loyalty Framework PowerPoint Presentation

Your loyalty program won't be worth the effort if it's not seamless and receptive to your needs. Smart utilization is also an important factor, which is taken into consideration while designing this template. It not only covers important facets of a loyalty program but also helps you enlist various channels for quick redressal of the issues associated with the plan. Therefore, download it now! 

Download Loyalty Program Advantages Analytic Dashboard Complete Deck 

Reward programs are not only about tiers and discount codes. You can, therefore, use this template to enlist all those plans and their extended details. Sales professionals and subject matter experts can also deploy this layout to showcase relationship-building steps and avenues by providing services like event hosting, sales for members, and others. 

Download Create Loyalty Programs For Relationships Marketing

Are you concerned about projecting the results of your recently introduced loyalty programs? If yes, then this template is the epitome of a successful projection and discussion. Deploy it to showcase the various KPIs concerning brand loyalty and its performance like sales by channel, average award by customers, etc. You can also highlight the result and present it in a conclusive format with this loyalty program dashboard template. 

Download Loyalty Program Performance Dashboard PPT

Promote customer loyalty with this infographic template. Reward your customers for their patronage with different loyalty programs to ensure a fulfilling experience. The empty space in this slide can be adjusted and infused with quality content to make it more impactful. 

Download Ultimate Infographic To Customer Loyalty Programs

Template 10

Utilize this template design to put together an effective proposal for top-level management and the board of directors, outlining the benefits of a loyalty program. Sales and marketing professionals can also deploy this uniquely designed slide to illustrate various facets of a well-structured loyalty program, such as customer highlights, reward status, last visit, and others. 

Download Category Share Loyalty Program Analysis PPT Slide 

Template 11

Communicate and share details of various loyalty programs and their individual benefits with this slide. Gen Z and millennials can benefit a great deal from this slide as it projects actionable steps for brand building and presents them in a conclusive format. This makes it easy to review and monitor the successful implementation of the program.

Download Loyalty Program And Benefits Early Excess PPT

Template 12

This is a strategic template that helps you in enlisting various prospects of a data-driven loyalty program. You can use it to highlight your loyalty program lineup as per your needs and requirements. It is also useful in showcasing the need for owning a customer-focused loyalty program, thereby proving to be an asset for subject matter experts.

Download Customer Loyalty And Reward Program Case Competition PPT Background

Template 13

Summarize various benefits of building a customer loyalty program using this single slide. It enlists points like retention, lift, shifts, etc, that you can customize. Jotting down extended details is also easy with this template at hand. 

Download Benefits Of Loyalty Program

The value of loyalty, and specifically integrated loyalty programs, is very much evident from Sephora’s hall of fame. They help in rethinking the way products and services are developed and brought to market. With these 13 templates, specially cut out for big brands, you are all set to survive and thrive in this hyper-competitive environment. Therefore, download the ones you like for crafting great customer experience silos with minimal effort. 

P.S. Are you still looking for ways to bring more customers on board? Learn from this guide featuring customer experience templates. 

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