Did you know that 3 in 5 consumers spend more on a brand (Source: McKinsey & Company) after signing up for a paid loyalty program? A well-designed loyalty program is meant to drive sales through repeat businesses, but brands aren’t focused only on that anymore. Loyalty programs build long-term and strong customer relationships, ultimately boosting your bottom line. eCommerce stores, in particular, must implement these programs to differentiate themselves and create a dedicated customer base.
In this article, we will explore loyalty programs in detail with the top 10 loyalty program examples you must check out in 2024.
Contents
What Is a Customer Loyalty Program?
A loyalty program (also known as a rewards program) is nothing but a structured marketing strategy. It is created to encourage existing customers to continue buying from the business for a long time.
These programs typically offer rewards and incentives such as discounts, points, exclusive offers, etc., in exchange for customer engagement, repeat purchases, or actions.
Loyalty programs motivate customers to return to your brand, improving customer retention and increasing customer lifetime value (CLTV). They also provide valuable data insights into customers’ preferences.
Why Loyalty Programs Are Important?
Loyalty programs are a strategic investment for eCommerce businesses that reap significant rewards. Here’s why loyalty programs are important to increase your bottom line:
Boosted Customer Retention
Although customer acquisition costs can vary depending on the industry of your eCommerce business according to First page Sage, customer acquisition costs are increasing at an alarming rate of 60% and more.
On the other hand, selling to new customers is only a 5% to 20% chance compared to selling to an existing customer with a 60% to 70% (source: Marketing Metrics).
Customer loyalty programs help retain existing customers, who are demonstrably cheaper to maintain and more likely to repurchase.
Research also indicates a 5% increase in customer retention can boost profits by up to 95%. Loyalty programs help achieve the same by incentivizing repeat businesses, boosting brand loyalty, and reducing customer churn.
Higher Customer Lifetime Value (CLTV)
Loyal customers aren’t just repeat buyers; they’re your biggest brand advocates. They spend more per purchase, are more receptive to upselling and cross-selling, and are more likely to refer your brand to others. Loyalty programs build stronger customer relationships, encouraging them to engage more deeply with your brand over a longer period, ultimately leading to a higher CLTV.
To calculate your customer lifetime value, follow the formula below:
- CLTV = Customer Value x Average Customer Lifespan
The result of this equation is a monetary value that indicates how much a customer is expected to spend with your business over its lifetime.
Data-Driven Insights
Customer loyalty programs provide adequate and valuable customer insights. By tracking purchases, preferences, and engagement levels, you gain greater clarity on your customer base. You can use this data to create personalized marketing campaigns, develop targeted promotions, and tailor product offerings to better meet customer needs.
Remember, understanding your customers on a deeper level allows you to refine your overall strategy and deliver a more relevant shopping experience.
Moreover, loyalty programs aren’t a one-way street. While your eCommerce business will have several benefits, customers too enjoy certain perks, including:
- Exclusive Rewards: Customer loyalty programs provide access to exclusive discounts, early access to sales events, and special offers unavailable to non-members. These exclusive perks nudge customers to join and remain engaged with your program.
- Personalized Experience: Most customer loyalty program examples are customized to your preference based on the customer data the businesses possess, making the offering all the more personalized and appealing.
- Sense of Community: Some programs create a sense of belonging by offering member-only forums, events, or experiences. This creates a community around your brand, strengthening customer loyalty and promoting positive word-of-mouth marketing.
How to Create a Successful Loyalty Program?
With a staggering 72% of global customers feeling loyalty towards at least one brand, converting these casual supporters into loyal advocates presents a massive opportunity. Here’s how you can turn the tide for your brand:
- Targeted Incentives: Identify what motivates your target audience. Do they prefer exclusive discounts, early access to new products, or personalized recommendations? Customize your loyalty program to offer rewards that your customers actually need.
- Seamless Integration: Make participation effortless. Integrate your program seamlessly with your existing platforms, such as websites, apps, social media, etc. This allows customers to easily sign up, track loyalty points, and redeem rewards through these sources. If you don’t have an intuitive website, we recommend using any of the wide range of free Shopify themes on Shopify to build a website that integrates seamlessly with your loyalty program. This ensures a user-friendly experience for your customers throughout their shopping journey.
- Personalized Communication: Use the customer data to not only personalize the offering but your communication as well. Send targeted email campaigns with relevant offers and highlight exclusive benefits of being a loyalty program member. Remember, for your customer loyalty program to be a success, you need to reach out to your customers in the way they prefer.
- Reward Engagement: Don’t just reward purchases. Incentivize other valuable customer actions, such as social media followers, product reviews, or referrals. This builds a more interactive and engaged customer base.
Additionally, if you’re looking to understand and gain insights into your competitors’ strategies and performance, Spy Shopify tools can provide valuable data to refine your own loyalty programs. You can also consider the BLOOP app by BSS Commerce. It enhances word-of-mouth marketing through an easy-to-use referral system, quickly launching your Shopify referral program and boosting sales.
By implementing these strategies, you can transform your customer loyalty program into a powerful tool for customer retention, increased CLTV, and, ultimately, long-term business success.
4 Types of Loyalty Program Examples You Need to Focus on in 2024
We already discussed how you can create a successful loyalty program. But what type of loyalty program would work for your customer base?
Here, we explore four key types of loyalty program examples that you can choose from.
#1. Tiered Programs
Tiered loyalty programs structure rewards across different levels based on customer spending or engagement. This approach encourages customers to increase their purchases or engagement to move up tiers, in turn receiving more valuable, progressively better rewards.
How Does it Benefit Your Business?
- Customer Segmentation: Tiered programs allow businesses to segment customers based on value, enabling more targeted marketing efforts and personalized rewards.
- Increased Spend: By highlighting the benefits of higher tiers with better rewards, businesses can encourage customers to spend more to achieve those levels.
- Enhanced Loyalty: The tiered structure creates a sense of achievement and status, creating deeper emotional connections and brand loyalty.
Apart from the above pros, another reason why customers prefer tiered programs is the transparency they offer. They already know what they will and will not receive. So, in order to attain a specific benefit, customers will be driven to make purchases of high price value.
For instance, Ulta’s Member (free) tiered loyalty program lets its customers know that they get a free gift during their birthday month but aren’t entitled to an additional $10 coupon. On the flip side, customers who climb up the tier to Platinum or Diamond get a birthday gift AND a $10 voucher. Hence, customers have the power to make purchase decisions based on this.
#2. Points-based Loyalty Program
Points-based programs are the most commonly adopted loyalty structure by companies. Customers earn points when they buy your product or service, submit a product review, or even through social media engagement. These loyalty points can then be redeemed for various rewards like discounts, free products, or exclusive experiences.
How Does it Benefit Your Business?
- Flexibility and Scalability: Points systems offer a fairly straightforward framework that can be easily adapted to your specific needs. You can adjust point-earning opportunities and redemption options to suit your brand strategy and marketing goals.
- Data-driven Insights: Tracking your overall customer point accumulation provides valuable data on buying behavior and preferences. This allows you to identify high-value customers and conduct targeted marketing efforts for other customers.
- Targeted Promotions: Point-based programs enable you to offer targeted promotions based on point balances. This approach encourages customers to participate actively and redeem points.
Note: Points-based programs come with expiration, which can be a demotivating factor for certain customers, especially those who struggle to accumulate points quickly enough.
A great points-based loyalty program example is Alaska Airlines. In fact, most airlines adopt this loyalty program type, which is also known as miles instead of points. The Mileage Plan of Alaska Airlines is a customer-centric approach that helps passengers earn a specific number of miles for every flight based on fare class purchases. Passengers can then redeem these miles for flights, hotels, food, etc.
#3. Gamified Loyalty Programs
In a gamification loyalty program, you can utilize elements of game design – like points, badges, leaderboards, and even challenges, to make earning rewards more engaging and interactive.
This approach taps into your customer’s natural desire for competition, recognition, and achievement.
How Does it Benefit Your Business?
- Increased Engagement: Gamification comes with a fun element, encouraging customers to participate more actively. Leaderboards and challenges spark a sense of competition, driving them to complete tasks and earn rewards.
- Enhanced Brand Recall: The immersive and interactive nature of gamified programs creates a more memorable brand experience. Customers are more likely to remember a program that feels like a game or a challenge.
- Valuable Customer Data: Like the other loyalty programs, gamified programs can also help you collect valuable data on customer behavior. By analyzing challenge completions, leaderboard rankings, and preferred in-game activities, you learn more about your customers.
Rewards with Xbox leverages this technique, where users can earn reward points by playing games, shopping for games, and completing quests. These points can then be redeemed for an Xbox Gift Card, sweepstakes entries, a controller or console, or can even be donated.
#4. Experience-based Loyalty Programs
Finally, we have experience-based programs. Experiential rewards focus on offering unique and memorable experiences as rewards rather than traditional benefits like discounts or free products. This approach taps into the growing consumer desire for authenticity and connection, offering value that goes beyond simply saving money.
How Does it Benefit Businesses?
- Enhanced Customer Loyalty: Experiential rewards create lasting memories with a deeper emotional connection with your brand.
- Positive Brand Differentiation: Experience-based programs help you stand out from the competition. By offering unique and exclusive experiences, you create a buzz around your brand and attract new customers.
- Valuable Customer Data: By tracking which experiences are most popular, you get to know your customers’ desires and can adapt your offerings accordingly.
Experiential reward programs are more complex and expensive for businesses to implement. However, they help build long-term relationships compared to that of a tiered program.
The most common experience-based loyalty program examples include that where customers gain the opportunity to go on a dream vacation or meet their favorite celebrity.
Another great loyalty program example for experience-focused rewards is from House of Diesel. The program offers customers at the Penthouse level a private shopping session with the brand’s denim expert. The value of this experience goes far beyond a price tag.
10 Successful Loyalty Program Examples for Inspiration in 2024
We discussed a few successful loyalty program examples above, and now, let us explore some of the popular and successful loyalty programs out there for inspiration:
#1. Banana Republic’s Points
Banana Republic offers a points-based program redeemable across all Gap Inc. brands (Banana Republic, Gap, Old Navy, Athleta). Customers earn points with every purchase, adding flexibility and encouraging brand exploration within the Gap Inc. portfolio.
How Does it Work?
The program offers two tiers for card members and non-card members.
A member, even a non-card member, enjoys several benefits, such as free, fast shipping for orders above $50 and 1 point for every dollar spent (applicable on all forms of payment). One hundred points is equivalent to $1, which is redeemable in all four brands.
The card members, in addition to the above, get a 20% discount, and 5 points for every dollar spent through the Banana Republic Rewards Credit Card.
#2. Victoria’s Secret Credit Card
Victoria’s Secret Credit Card Program is a co-branded rewards loyalty program example, which can be explicitly used for Victoria’s Secret purchases.
Cardholders earn points on purchases, enjoy exclusive access to sales events, and receive perks like free shipping and birthday rewards.
How Does it Work?
Customers can apply for either a VS card or a PINK MasterCard. On approval, customers can enjoy $25 off on their first purchase, and 10 points for every $1 spent. When you use a Victoria’s Secret Credit Card at VS or PINK, you also get a $10 reward for every 2,000 points. All Victoria’s Secret card members are upgraded to their Silver tier, meaning one can enjoy all the features of the Silver tier, at no additional cost.
Customers can also get $10 off as birthday rewards in the Silver tier and $15 in the Gold tier. Likewise, members can enjoy anniversary rewards as well. You also get additional points for spending on dining, travel, and streaming services.
#3. Dunkin’ Rewards
Dunkin’ Rewards program enhances the purchase experience through a mobile app. Loyalty program members can earn points for each purchase. Points can be redeemed for Dunkin treats at the store, while the app personalizes rewards based on purchase history.
Dunkin’ At Home Extras is a loyalty program similar to the above, where customers who purchase Dunkin’ products at the grocery store can collect points to redeem later.
How Does it Work?
Program members can earn 10 points for every $1 spent (applicable only on qualifying purchases in-store or on the app). Once they have enough points, they can redeem them for food or beverages. For 150 points—which is $15 spent—members can get one espresso shot added to a drink, three munchkins, or six hash browns. To get a full free coffee, members need to have 500 points.
Moreover, members who visit more than 12 times in a month can earn 12 points for every $1.
The At Home Extras works by simply uploading the receipt on the Dunkin’ app and collecting 10 points for every dollar. If the customer is also a member, they can avail themselves of a $5 discount with the first receipt uploaded, bonus offers, birthday offers, etc.
They do have different ways to earn points, so be sure to check them all out.
#4. Amazon Prime
Amazon Prime membership is not often considered one of the loyalty program examples, but it is. The membership is an optional choice for Amazon eCommerce store users, and it offers tons of benefits, deals, and even access to streaming services such as Prime Video and Prime Music.
For frequent online shoppers, the combined value proposition makes Prime membership a worthwhile investment, driving customer loyalty and retention.
How Does it Work?
A Prime membership costs $14.99/month or $139/year if paid annually. For students and government assistance recipients, Amazon introduced Prime Student, which costs $7.49/month, and Prime Access, which costs $6.99/month.
The benefits of these memberships include free delivery for over 300 million products, same-day and one-day delivery options, and exclusive access to deals on Prime Day, including Amazon Fresh and Whole Foods Market, both online and in-store.
You get many more benefits with the Amazon Prime membership, and you can learn more about it here.
#5. Starbucks Rewards
One of the most popular examples of loyalty programs is Starbucks Rewards. It uses a tiered structure based on “stars” earned with purchases. The mobile app allows customers to order and pay directly, creating a streamlined buying experience. Stars can be redeemed for free drinks, food items, or exclusive merchandise.
How Does it Work?
Customers can download the Starbucks app or create an account through their website to get started. When purchasing any Starbucks products, you can pay via card, cash, or even through the app to collect stars. Once the user has earned enough stars, you can redeem it for food or beverage. The minimum of stars needed to redeem against an item is 25 stars, where one can get a free shot of espresso, non-dairy milk, or even a dash of your favorite syrup for your drink.
Freebies are just one of the many benefits Starbucks Rewards offers. Members also get birthday bonuses and free coffee or tea refills.
#6. IKEA Family’s Membership
Next in our top loyalty program examples is the IKEA Family. This free membership program offers more than just discounts. Members enjoy exclusive discounts on furniture and accessories, free access to workshops and events, and even free coffee and tea! These benefits create a sense of community and exclusivity, encouraging repeat business and a deeper connection with the IKEA brand.
How Does it Work?
Anyone can sign up for the IKEA Family at no cost. Simply sign up online and verify your email. New members can also enjoy $20 off on their in-store purchases of $50 or more. Members get the following perks:
- Free shipping on small orders of $50 and above.
- Significant discounts on large-size orders.
- Year-round member-only offers.
- Access to exclusive national offers
- 90-day price protection
- Buyback and re-sell options
- Free coffee or tea for every visit.
#7. XPLR Pass (The North Face)
The North Face is a popular apparel brand, and their XPLR pass is a one-of-a-kind rewards program that is perfect for outdoor adventure lovers. It rewards purchases with points redeemable for discounts and offers exclusive benefits like early access to new products, member-only testing, and free shipping.
How Does it Work?
Since it is a free membership, customers can easily sign up by creating an account on The North Face’s website. Members get a 10% discount on their first purchase online and earn 1 point for every $1 spent. Member customers also get access to limited edition collections and are even eligible for member-only testing, where they can test the products to see their adaptability, feel, and look and return them if they don’t like them.
Birthday shoutouts, gifts, access to exclusive deals and events, and the opportunity to test out unreleased products are some of the reasons that make this particular loyalty program example unique.
#8. AdiClub (Adidas)
Adidas’ adiClub program features a point-based loyalty program structure combined with a tier-style structure. Members earn adiClub points, and as the points increase, so do the benefits and levels. The best part of this program is that, by simply signing up, members earn their first points, meaning instant benefits.
How Does it Work?
Customers can sign up anytime through the AdiClub page and become members. In addition to the instant benefits, members get exclusive perks, including access to products and discounts, before non-members do.
The ad club tier comes in four levels, each with unique features.
The points collected can be redeemed for experiences, discounts, and partner vouchers for entering giveaways and purchasing products.
#9. My Decathlon
Decathlon, a leading sporting goods retailer, offers a unique membership program to ease the sporting experience and reward sports enthusiasts’ passion for fitness.
How Does it Work?
Decathlon membership is entirely free to join. Create an account on their website or mobile app. Once a member, they can unlock a suite of benefits that enhance their shopping and sporting journey, including:
- Easy access to workshop services
- The return policy is applicable for 365 days, even without a receipt
- Product traceability for warranty support
- Free Decathlon click-and-collect option
- Expert sports tips
Each purchase results in certain points, and you automatically receive 50 points when you create an account. These points can then be converted to vouchers to be used in online or offline stores.
#10. Capital One Walmart Rewards Card
The Capital One Walmart Rewards Card is a co-branded credit card designed specifically for frequent Walmart shoppers. It offers a combination of rewards and benefits tailored to maximize users’ savings at Walmart and beyond.
How Does it Work?
This card offers a tiered cashback reward system:
- 5% cash back: Earn the highest rate on Walmart.com purchases, including pickup and delivery.
- 2% cash back: Get rewarded on in-store purchases at Walmart, Walmart gas stations, restaurants, and travel expenses.
- 1% cash back: Earn cashback on all other purchases made anywhere Mastercard® is accepted.
Other features include no annual fee and flexible redemption options. Unlike some programs, your cashback never loses its value.
You can also choose how you want to use your rewards in the following ways:
- Get a check or apply it as a statement credit.
- Use your rewards directly at checkout on Walmart.com.
- Redeem for gift cards from Walmart or other retailers.
- Enjoy flights, hotels, and more with your rewards.
Final Thoughts – Best Loyalty Program Examples
The above 10 best loyalty program examples reveal key strategies to implement for your own brand, enhancing customer engagement and retention. Successful programs utilize tiered structures, point systems, gamification, and experiential rewards, all emphasizing personalization and customer-centricity.
Everything starts with understanding your customers and their needs. This helps create a program that customers want to join without feeling pressured. Moreover, a well-designed loyalty program should offer consistent value, personalized experiences, and meaningful rewards. By adopting the above insights from leading programs and embracing future trends, you can build loyalty initiatives that are meant to last.
