What Is a Loyalty Program? 4 Best Examples (2024) - Shopify (2024)

Brands are always fighting for customer loyalty in highly competitive markets. Some seven out of 10 US consumers consider loyalty programs a leading factor in sticking with a brand.

Most loyalty programs fall into one of four categories: points, tiers, paid and value-based.

Learn how loyalty programs work and how they can help your business, plus discover examples to inspire your own loyalty strategy.

What is a loyalty program?

Loyalty programs reward a company’s repeat customers with discounts, free offers, and other incentives to encourage customers to make repeat purchases.

How do customer loyalty programs work?

With a loyalty program, companies can offer points or benefits to customers. In return, customers redeem points for discounts, free products, rewards, or insider perks. The goal is motivating repeat purchases and building trust between customer and business.

People will go the distance for brands they love, but they want perks in return. Some 60% of US shoppers wanted discounts for joining a loyalty program. The same poll found that respondents expect to earn points and rewards, and about 33% want exclusive or early access to products.

Running a customer loyalty program means giving something, be it discounts, sales, or early access. The payoff can be huge. Benefits can include:

• More customer referrals. People tell their friends and family about great programs. More referrals equals more loyal customers.
• Higher customer retention. If people find value in your customer loyalty program, they’ll likely stick around longer.
• More sales. Want a higher average order value? A 2022 survey found that 79% of US consumers said loyalty programs impacted their likelihood of maintaining business with a brand. Another poll found that 80% claim to purchase more frequently from a brand after joining its loyalty program.
• Brand advocacy. A successful loyalty program can turn regular customers into brand advocates who evangelize your brand through word of mouth, a low-cost marketing strategy compared with paid ads.

Types of loyalty programs

Not every loyalty program is the same. There are different types of rewards programs you can use to build customer loyalty and earn repeat business. Here are some of the most popular:

1. Points-based loyalty programs

Points programs are the most common type of rewards programs. They let customers accumulate reward points they can redeem for freebies, cashback, perks, etc. Rewards customers don’t just earn points from purchases. They can also earn loyalty points by sharing on social media, leaving reviews, having a birthday, or through gamification.

2. Tiered loyalty programs

Tiered customer loyalty programs are memberships where customers get different benefits depending on their rank. Businesses often rank membership into groups depending on metrics like sales or engagement.

These customer rewards programs give customers a goal. The higher their tier, the more exclusive the rewards.

3. Paid loyalty programs

Paid loyalty, or fee-based loyalty programs, give customers immediate and ongoing benefits for a participation fee. These fees can be recurring or one-time.

Paid programs may require proof of value to get signups, but they can gain higher customer value from members. The most common example of a paid loyalty program is Amazon Prime. While it seems like a hard model to mimic, paid loyalty can suit many different business models.

4. Value-based loyalty programs

The idea behind a value-based loyalty program is to connect with customers on a deeper level. It involves donating a percentage of purchases to charity or welfare programs. You can allow customers to choose from different charities or have just one that aligns with their values.

This program doesn’t actually reward customers, but it holds a special place for them, as the rewards benefit society.

Not sure where to start? Ask customers what they want from a rewards program. You can easily run a survey or poll with your customer base to find out. Then create a rewards program accordingly.

Successful customer loyalty program examples

Blume

Bodycare retailer Blume uses a points system called Blume Bucks in its loyalty program, dubbed Blumetopia.

It’s pretty straightforward: Customers can earn Blume Bucks by following the brand on Instagram, placing an order, or telling friends about Blume. They can redeem their Blume Bucks for merch, free products, and other gifts.

LIVELY

LIVELY is clothing and accessories brand with a tiered rewards program. Customers are automatically enrolled in the program when they sign up for a LIVELY account. They earn points through activities such as following the brand on TikTok (10 points) or purchasing an item in-store (30 points).

Loyalty members can apply points to purchases. For example, 100 points equals $10. They can also redeem them for products like totes, socks, and clips. LIVELY’s rewards program has different tiers based on annual spend:

• Insider: $1–$124
• Inner circle: $125–$324
• VIP: $325+

The more spent, the better the perks. For instance, VIP members get free expedited shipping, upgrade offer discounts, and a customer care text service.

Mirenesse

Mirenesse is Australia’s leading sustainable and cruelty-free cosmetics brand. Its loyalty program, Love Rewards, includes two tiers: Gold and Onyx.

The Gold tier earns two points for every $1 spent. It includes benefits like free shipping on all orders, double points for activities, a 200-point joining bonus, and conversion of 100 points into a $5 store credit. The Gold tier costs $18 per month but includes additional perks like access to secret sales and the chance to be a tester for new products.

The Onyx tier is free. Members earn one point for every $1 spent. It offers a 100-point joining bonus, and members get a birthday surprise.

100% Pure

100% Pure is a popular skincare and beauty brand with a tiered reward system. Customers earn points by engaging on social media channels and writing reviews, redeemable for products on their site.

The program has three tiers based on spend per calendar year:

• Enthusiast: $0
• Activist: $250
• Revolutionist: $750

Benefits include early access to new products, free shipping, redeemable vouchers, and birthday gifts. Loyal customers earn points for actions like signing up for an account (50 points), writing a review (10 points), and engaging with the brand on Facebook and Instagram (20 points each).

Anyone can join the Purist Perk program and redeem points for discount code vouchers. Customers earn 15% off for 200 points at the Enthusiast level, and $20 off for 200 points at the Activist level. Discounts can be used during checkout and cannot be combined with other offers.

How to add a loyalty program for your business

Every business is competing for customer trust. One of the best ways to build this trust is by showing gratitude and providing unique experiences. Rather than spending your time finding new customers, you can start a loyalty program to grow the relationship with your existing base.

If you have a Shopify store, creating a loyalty program online is easy. Download an app like Smile or Yotpo from theShopify App Store and start today.

For example, with an app like Smile, you can create rewards points and referral programs that engage customers in your store. It helps you with everything from program design to setting up a thumb-stopping widget on your website to capture visitors’ attention and encourage them to enroll.

Customers will also have a rewards portal on their phones to manage their accounts, earn rewards, and redeem points.

Do things differently with your loyalty program

Over the last decade, customer loyalty programs and rewards programs have proven an effective way to improve customer retention rates, boost customer lifetime value, provide good customer service, and inspire brand loyalty.

A truly innovative approach to customer loyalty programs can create huge value for retailers.

Illustration by Rachel Tunstall