Turning random shoppers into loyal buyers isn’t easy. Especially in times when people are having a hard time committing to anything. But the reward for focusing on loyalty is far too enticing to pass up – less need for expensive customer acquisition campaigns and more revenue overall, as loyal customers spend 30% more on average than new ones.
But customer loyalty is a two-way street. If you want to retain customers for longer, you need to give something valuable back. To make that happen, you need to adopt a thorough approach toward customer loyalty as your core principle. This is where customer loyalty programs come in. If you do things the right way, you will not only gain happy, loyal customers but also build a much stronger brand image. But how to do this?
The exciting thing about customer loyalty is that there is no one correct way to approach it. In this post, I’ll cover 10 examples of the best (in my opinion) customer loyalty programs and explain what makes these rewards programs so exciting and worthy of making the list.
But let’s start from the beginning.
A customer loyalty program is a type of retention-focused marketing strategy that actively rewards customers for frequently interacting with your brand. The bulk of loyalty programs targets repeat purchases as a key success benchmark. But a well-designed loyalty program can also attract new customers, reactivate inactive ones, or help you collect invaluable zero-party customer data.
Because loyalty programs are so common, it takes a lot to differentiate your brand. The key to creating customer loyalty is differentiation, so offering your customers unique experiences that they can’t find anywhere else.
Now that you know the most popular types of customer loyalty programs, you are ready to jump into examples of the ones that customers love.
Learn more: Explore 9 types of loyalty programs
The best customer loyalty scheme won’t pop out of the box. You, your business and your audience are unique. To design a perfect rewards program, you need to lay the groundwork for it first. User research, testing, and iterating are usually the best starting point.
I have something up my sleeve to make this painful research a little easier – a quick analysis of the fantastic (yet sometimes overlooked) loyalty programs up to date. I have listed the reasons why customers love them, which makes for a great loyalty checklist you should consider when planning your next loyalty campaign.
If you already have a loyalty strategy in place, but need some inspiration on how to present it all – check our Loyalty UX & UI Guide.
Kaya is an Indian beauty clinic which offers treatments in India and the Middle East and sells beauty products in retail outlets. Kaya Smiles loyalty program supported Kaya in establishing its brand, especially in the UAE, where the skincare competition is quite fierce. They have created a brand image focused on customer care and transparency – necessary ingredients to establish one of the best loyalty programs in the cosmetics industry.
After 12 months of the program running, Kaya has seen 20% of their highest-value loyal customers signing up. Close to 50% of users promoted Kaya on their timelines – a huge win, considering the estimated reach of authentic brand advocacy. Their online presence also grew up to 12 times, with over 1000 new online reviews coming in. Around 3% of the highest value customers also created user-generated content, trusted far more than branded content.
In the time of digital transformation, Kaya’s loyalty program has also evolved – they released the Kaya Ambassadors Program, an online gamified value-exchange platform. The key features of the Kaya Ambassador online platform are as follows:
Points can be used to redeem attractive rewards – priority appointments, exclusive previews, or special event invites. A sense of competition is created via leaderboards where members can see how they are doing.
Members loved the following aspects of the Kaya Smiles program:
Sephora is an American cosmetics retailer with one of the most popular loyalty programs up to date. No loyalty blog post is complete without at least mentioning their world-renowned customer loyalty program, taking the cosmetics world by storm since 2007 (!).
Sephora’s Beauty Insider reward system allows members to choose benefits that suit them best. Members earn one point for each dollar spent. Points are redeemable for standard rewards like gift cards or higher-value perks and products, such as $50 000 giveaways. Some other examples of these are limited-edition products, in-store beauty tutorials, as well as a variety of products in different sizes that are not available to regular shoppers. Sephora gamified their program with different levels (Insider, VIB, Rouge) with different points multiplication rules and rewards, incentivizing members to climb the loyalty leaderboards for better rewards.
Sephora’s Beauty Insider program has grown wildly popular. It boasts more than 17 million members that make as much as 80% of Sephora’s annual sales. But why do customers love it?
My Starbucks Rewards helped Starbucks back in 2012 to climb back up from the recession, and it continues to help them after the pandemic. But Starbucks’ loyalty program has not only brought additional revenue to the company. Their customer loyalty program tracks customer buying behaviour which Starbucks converts into usable data that allows them to modify their products according to the current demand. It is a great example of how a loyalty program can help your business collect invaluable zero-party data directly from customers. Something we wrote about here.
So why has My Starbucks Rewards loyalty program rocketed Starbucks sales?
Abercrombie & Fitch is an American fashion retailer. Their loyalty program, myAbercrombie, is a fantastic example of a powerful copy focused on exclusivity and privileges that come with joining the program. Its tiered structure works best for fashion brands aiming at long-term engagement. VIP members (those who spend at least EUR 600 in a year) earn loyalty points faster and receive invite-only experiences, on top of member pricing, exclusives, and birthday gifts available to the standard members.
As reported by A&F, the program gives the company new ways to interact with customers and learn about who they are and what they expect from their brand. Which is a great perk of loyalty programs, outside direct metrics like repeat purchase rates or overall revenue increase.
What made myAbercrombie program a success?
At one point, Shell had a loyalty program that offered discounts for buying merch branded with the Shell logo. BP rewards outperformed Shell because they gave away discounts on fuel. What is the point of a loyalty program if the consumers are not interested in rewards?
That’s exactly the issue that cosmetics company MAC tackled with their online, tier-based loyalty program. From the beginning of the customer journey, MAC makes sure that customers see the value the program brings. Becoming a basic member is absolutely free and gives valuable perks. This marketing strategy infuses brand loyalty amongst the users as MAC starts building customer loyalty straight from the first experience with the brand.
Their tier-based customer loyalty offers are structured as follows:
What’s great about MAC Lover program?
Loyalty programs don’t have to rely on the scent of exclusivity. Tesco Clubcard is a good example of that. Tesco positions itself as an affordable retailer of everything every day. Given their brand context, Tesco needs to focus more on the monetary gains that come with joining the program rather than brand-specific experiences.
At some point, Tesco Clubcard offered a 1-3% discount each time you shop. Nowadays, points can be redeemed in restaurants, cinemas, and other activities, making it an example of a hybrid program with a point-based structure and partner support as besides Tesco stores, points can also be collected via participating partners.
Why is Tesco Clubcard perceived as one of the best loyalty programs in retail? The audience is mainly price-conscious, and the best way to keep them around for longer is to provide them with immediate benefits. Tesco brought the loyalty scheme to the next level by adding the “boost” tokens – they motivate the customers not to cash out all their rewards on the next shopping, which makes them stay with the brand for longer.
I promise this is the last example of a point-based loyalty program with tiers, but as you can probably guess, these comprise the bulk of loyalty programs due to their clear and easy structure. Chubbies is an American swimwear company with a cheeky and lighthearted brand image.
Their loyalty program checks every point form a successful loyalty program checklist. Members can join any time and start earning points for plenty of engagements – from purchases (1 point per $1) to following Chubbies on Instagram or leaving an online review. The program structure is split into three tiers. Interestingly, levels can be achieved in two ways – by earning points or making referrals. Chubbies offers two kinds of rewards – monetary (discounts) and non-monetary (pre-access, monthly specials).
What do I like most about Chubbies' loyalty program?
It’s high time to explore more creative approaches to customer loyalty. The Body Shop took a CSR-focused turn with their Love Your Body Club, which acts more as a community than a standard point-based program. The standard rules are quite simple to follow: members get 15% off their first purchase, earn 10 points per each £1 spent, and get a £5 voucher each time they get 500 points. Other rewards include a heartwarming birthday gift, exclusive offers, and early access to special editions.
What’s the twist, then? Known for its commitment to sustainability, The Body Shop lets members donate their reward vouchers to one of their partner charities.
What’s refreshing about Love Your Body Club?
Would you ask customers to pay a fee for joining your loyalty program? Well, that’s what the Polish branch of Zooplus did. Their approach paid off because customers tend to appreciate more things they invest in. Similarly to the Amazon Prime program, the Zooplus cost reduction loyalty program targets frequent shoppers with a promise of -3% off every purchase. The cost of joining the program varies but averages at around 10 PLN (around $2). After joining the program, customers get each purchase 3% cheaper.
The Zooplus program is an example of a simple but effective way to increase customer loyalty. The fixed discount is a fantastic incentive to keep customers coming back and re-purchase, especially since they already "invested" something. The crucial element of paid programs is to carefully balance out the cost of joining versus offered value. Another important aspect is to present this kind of program when customers are in the spending mood, so in the cart view or at checkout. These kinds of programs also work best for services and brands that sell items that need to be re-purchased or re-filled often. Occasional shopping won’t cut it.
The last example of an interesting customer loyalty program I’ve stumbled upon recently is Pomelo Perks. Pomelo Fashion is a DTC fashion brand targeting Asia. They launched a Pomelo Perks cashback rewards program. Cashback is taking the world by storm as it lets customers spend and save money at the same time, providing direct value for the program members.
What to learn from Pomelo Perks?
Today, the most successful customer loyalty programs are engaging and retaining customers by building emotional connections, offering valuable benefits, and making participation in the program effortless.
Free or automatic membership, easy-to-understand rules, gamified and personalized experiences, and valuable rewards (often non-monetary) are some of the key elements that make up any successful loyalty program.
To reach the best outcomes with your next customer loyalty program, you should:
Voucherify is a loyalty management software that can support you with all the above-mentioned features and more.
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