Fostering customer loyalty nowadays involves more than just offering great service. It implies that you must first give and then ask. It also requires ongoing dedication, resources, and knowing how to create a loyalty program.
Reports from businesses with loyalty programs show that top-performing programs achieved a 15% to 25% annual increase in revenue from customers who actively used the programs.
Our guide contains actionable tips on how to create a customer loyalty program that resonates and delivers tangible results. We’ve also included real-life examples of successful loyalty programs to inspire you.
Let’s start by understanding what the industry defines as a loyal customer. Customers displaying ongoing loyalty are those who:
Now that we have a clear picture of what a loyal customer is, let’s see how a loyalty program fosters these behaviors. A customer loyalty program, often referred to as a rewards program, is a marketing action that rewards customers for frequently interacting with a brand. It aims to motivate customers to continue buying or using a service.
Loyalty programs tap into psychological principles like reciprocity and status-seeking behavior. They create a sense of exclusivity and belonging among customers.
✈️ Example: Airlines offering elite status tiers with exclusive lounge access and priority boarding. This is a good tactic for appealing to customers’ desire for recognition.
Loyalty programs are a win-win for both businesses and customers.
Follow these steps to create a unique loyalty program and unlock its full potential:
If you want to create a winning loyalty program, you must understand your customer base and build a program that speaks directly to their interests.
Gather data to learn what incentivizes your customers’ continued engagement. The following strategies will help you in that endeavor:
Establishing clear goals provides direction and purpose to your loyalty system. These can include increasing repeat purchases or enhancing customer lifetime value.
Use the SMART framework to effectively define your goals:
When deciding on a loyalty program, exploring the various types available is essential. Each offers unique benefits and incentives for customers to engage with your brand:
This is one of the most common and straightforward loyalty programs. Customers earn points for each purchase, which they can later redeem for discounts, gifts, or other perks.
👍 Best use case: Businesses with frequent, short-term purchases, such as retail or e-commerce.
Max Tang, CMO at GEEKOM, described how his company leverages point systems:
“At GEEKOM, we created a point-based program that rewards not only purchases but also referrals, social engagement, and product feedback. We segmented our audience based on purchase history, identifying top customers and offering them personalized incentives.
Customers who earn 1,000 points, for example, can redeem free accessories like SSD upgrades for our mini PCs or gain early access to new product launches. This approach increased our repeat purchase rate by 30% in six months and our referral traffic by 25%. Beyond increasing revenue, the program improved our relationship with customers, who valued the tangible benefits they received.”
Tier systems categorize customers based on their loyalty or spending level. They offer increasingly valuable rewards as customers move up the tiers. This system is designed to create a sense of exclusivity and prestige.
👍 Best use case: Businesses offering premium services or products like airlines, hotels, or luxury brands. It also works in industries where the value of a customer’s purchase is high and there are clear differences in the service levels or products that can be given as rewards.
These are also known as subscription-based loyalty programs. Customers pay a fee to join and, in return, get access to exclusive benefits or experiences. This upfront investment creates a sense of commitment, urging customers to make repeat purchases.
👍 Best use case: Businesses that can offer valuable, exclusive benefits that justify the subscription cost, such as e-commerce platforms, premium retail brands, and services that can offer continuous value over time.
These programs don’t reward customers only for their purchases. They also reward them for actions that align with the company’s values or contribute to social causes. These can include donations to charities, recycling initiatives, or other socially responsible behaviors.
👍 Best use case: Companies with a strong commitment to social responsibility or those targeting customers who value ethical and sustainable practices. It’s best for brands in the beauty, fashion, and food industries looking to build a community around shared values.
📝 Evaluate these options based on what resonates most with your customers and supports your business goals.
When designing rewards, consider your customer base’s unique needs and preferences. Then, tailor the rewards to create a loyalty program that offers genuine value.
Examples of loyalty and rewards programs to consider:
💑 Consider non-monetary incentives that can create emotional connections with customers. These can include personalized recognition, like a thank-you note or a social media shout-out.
Integrating technology and platforms is key to ensuring that you create a successful loyalty program. This involves selecting the appropriate software or platform to manage the program’s operations.
Consider factors such as:
☯️ Ensure that you can integrate your loyalty program within your existing sales and marketing tools. For instance, if you are a retail store, you may want to integrate your reward loyalty programs with your point of sale (POS) systems. This can help you automatically track customer purchases.
Make sure that both current and future customers are aware of the perks of your loyalty program. This means reaching out to them through various channels. At the same time, you want to make sure that the message is clear and enticing.
With the right marketing strategies in place, you can create excitement and drive engagement. Try out these strategies to promote your loyalty incentives.
Monitoring key performance indicators (KPIs) helps you understand how effective your loyalty program is.
Let’s say you’ve implemented a customer loyalty card program. Your goal is to increase customer engagement and repeat purchases. You’ll then want to track the following metrics:
📈 Analyze these metrics regularly to identify any areas that may need improvement. Be open to adjustments based on feedback and performance data.
This involves taking actionable steps to maintain the legal conformity of your loyalty program.
Here are three key actions to consider.
There are special considerations to keep in mind if you want to create a loyalty program for a small business. First, it should be easy to manage. Second, it should provide meaningful rewards to customers without overstretching the budget.
Stanislav Khilobochenko, VP of customer services at Clario, shared the basic principles of running a small business loyalty program:
“A loyalty program for small businesses is successful when it encourages consistent engagement. Begin by identifying your top customers and determining what keeps them coming back.
For example, a small direct-to-consumer brand I consulted had a simple tiered program in which frequent buyers received early access to products after five purchases and exclusive content such as “behind-the-scenes” stories. This strategy resulted in a 40% increase in repeat orders within a year by making loyal clients feel like they were part of an inner circle.
To start small, use simple tools like Google Sheets or free versions of loyalty platforms. Keep it personal — emailing individual thank-you notes or birthday offers can often generate more trust than large-scale promotions. Test rewards that complement your brand’s identity, such as product sneak peeks or VIP community access. Success comes from building connection, not complexity.”
Here are 10 creative ideas that don’t break the bank:
Here are two examples of small businesses with loyalty programs that boost their bottom line.
Image source: mirenesse.com
Mirenesse’s approach demonstrates how to create a loyalty program that can be creatively tailored to offer exclusive perks.
The beauty brand introduced the “Gold tier,” a premium membership tier. For a monthly fee of $10, customers can receive extra benefits beyond the standard rewards. This includes a reward point system and exclusive access to secret sales. Customers can also participate in product trials.
Image source: lucyandyak.com
The success of loyalty programs depends on how appealing their rewards are. However, how you market your loyalty program can make a significant difference.
Lucy and Yak’s approach is characterized by their distinctive tone of voice. Instead of simply earning points, customers accumulate “Yak points.” Also, rather than generic tier names like “Tier 1” or “Tier 2,” they named their tiers “Comfort Lover,” “Yak Enthusiast,” and “Dungaree Devotee.” This adds a unique touch that reflects their brand personality.
Big companies have also implemented loyalty programs. Here are some case studies showcasing successful loyalty programs implemented across diverse industries.
🤩 We’ve written a dedicated piece on successful loyalty program examples across various industries, so make sure to check it out here for more inspiring case studies and ideas.
Images source: costa.co.uk
Costa is a coffee shop chain renowned for its high-quality beverages and warm ambiance. It has built a loyal customer base through its exceptional service and commitment to sustainability. Costa Club, its loyalty program, rewards frequent customers with perks and exclusive discounts.
Images source: thebodyshop.com
The Body Shop is a global beauty brand. It is renowned for its ethical and sustainable approach to bath and body products.
Its “Love Your Body Club” is an exclusive loyalty program that rewards customers for their ongoing support and purchases. Club members earn points for every pound spent, which they can redeem for various rewards.
Image source: lego.com
Lego is a renowned brand that produces construction toys loved by children and adults alike. Its exclusive loyalty program is called Lego Insiders. It is designed to reward Lego enthusiasts for their purchases and brand engagement.
Image source: mailchimp.com
Mailchimp is a leading email marketing service provider. It has an intuitive loyalty program tailored for marketers and digital agencies.
Several contenders are available for customer loyalty software. Let’s check out three of the top choices.
Image source: apps.shopify.com
LoyaltyLion is software designed to help businesses of all sizes build and maintain customer loyalty. Its intuitive platform offers a range of features to engage customers and drive repeat purchases.
Smile.io is a versatile customer loyalty platform. It offers a wide range of features, including point-based rewards, referral programs, and VIP tiers.
Image source: yotpo.com
Yotpo is a leading customer loyalty platform that drives brand advocacy. It offers a suite of solutions, including loyalty programs, reviews, and referrals.
Building customer loyalty is a journey, not a destination.
Stay patient and refine your loyalty program over time based on feedback and data insights. Embrace a culture of continuous improvement by adapting your loyalty initiatives to the evolving customer needs and market dynamics.
Iustina is a curious copywriter with an analytical mind and a demonstrated history in the advertising industry. She likes mixing words with data and is passionate about human behavior. When she's not at her work desk, you'll probably find her enjoying refreshing tea flavors, spilling stories on paper, or binge-watching true-crime documentaries.
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