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The Ultimate Guide to Loyalty Program Rewards – Frameworks & Examples
Kate Banasik
Kate Banasik
January 5, 2024
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The Ultimate Guide to Loyalty Program Rewards – Frameworks & Examples

‍In times of inflation, loyalty becomes a vital lifeline, providing stability and reassurance amidst economic uncertainty. With returning customers spending  67% more over time than first-time customers, choosing the right loyalty rewards can make or break your rewards program.

However, coming up with a rewards catalog that is at the same time aligned with your business goals (or even more importantly, budget) and provides value for customers is not easy. Luckily, with the following article, I will equip you with a list of both standard & more creative loyalty program rewards examples to make your program more engaging in 2024.

How to identify and prioritize the best loyalty rewards for your program? 

Loyalty benefits come in all shapes and sizes with each industry fighting for customer attention with a different set of sticks and carrots. If you're feeling stuck on how to find and implement rewards for your customer loyalty program, below you can find a framework for choosing the right benefits for your program. 

Three key dimensions let you measure the impact of your loyalty rewards:

  • Direct effect on customer loyalty
  • Implementation cost (with associated soft fraud risk)
  • Differentiation from other loyalty programs

1. Direct effect on customer loyalty

This dimension measures how well your loyalty rewards program encourages customers to keep coming back and buying again. It looks at things like how often customers stick around, how often they buy, and how happy they are with your program. By studying these factors, you can see how much a specific reward helps build lasting relationships with customers.

2. Implementation cost

It's important to weigh rewards costs against the expected benefits from increased customer loyalty. Also, it's crucial to consider the risk of soft fraud, where customers exploit loopholes to gain rewards unfairly. One common example is transferring points between different accounts to accumulate more rewards. Fraud like this poses a significant problem for retailers, amounting to a $100 billion issue in the industry.

3. Differentiation from other loyalty programs

Let’s not kid ourselves – every brand now has a loyalty program or is building one. That’s why it’s so important to make your rewards program stand out to keep customers coming back. This means making your rewards different and attractive compared to what others offer. You need to look at things like the types of rewards you offer, how special they are, whether they're personalized, and how easy it is for customers to use them. 

Example of a loyalty rewards framework

What are the most popular categories of loyalty rewards?

There are plenty of ways to categorize member benefits, however, I’d suggest the following high-level overview when you’re building your rewards catalog:

  • Service-based benefits
  • Value-based benefits
  • Emotional-based benefits

To extend this even further, let's delve deeper into each category and explore some reward examples from each:

1. Service-based benefits 

These benefits provide tangible services or added convenience that make members' lives easier. Some examples here include:

  • Scan & pay functions restricted to program members.
  • Local click & collect or BOPIS options.
  • Priority customer service.
  • Free shipping & extended warranties. 
Example of a service-based loyalty benefit from IKEA

2. Value-based benefits

These benefits offer financial savings or increased purchasing power, making membership feel worthwhile. Some examples:

  • Discounts and coupons.
  • Member-only savings.
  • Discounted memberships, priority access, and bundled offerings with other brands.
Example of a value-based loyalty benefit for Lidl

3. Emotional-based benefits

These tap into members' desires and aspirations, fostering a sense of belonging and appreciation. Examples:

  • Recognition and rewards such as exclusive swag or merchandise.
  • Experiences and opportunities such as access to events, VIP experiences, early product trials, and behind-the-scenes content.
  • Charity initiatives such as member-driven causes, charitable partnerships, and opportunities to give back.
Example of an emotional benefit from the Body Shop

Ideally, your rewards catalog should include at least one reward from each category to cover the most popular customer expectations related to their membership – from convenience, through plain savings, and arriving at VIP treatment. 

How to protect a loyalty program budget with loyalty rewards redemption limits?

Brands need to be strategic about loyalty rewards, ensuring they deliver value to customers while remaining financially sustainable. Thankfully, there's a secret weapon in your arsenal: strategic limitations.

Loyalty benefits – breakdown of limits

Let's explore the most common ways to limit reward redemptions:

  • Expiration – give rewards a shelf life to encourage timely redemption and prevent them from becoming dead weight in your system. Choose between dynamic ("X days after receiving") or static ("active within a specific period") options.

  • Stacking – decide if rewards can be combined with other offers. No conjunction? Fine. Maybe they're stackable with anything? Or perhaps just with specific promotions? Tailor it to your goals.

  • Application schedule – control when rewards become active. Offer them instantly, after the next purchase, or from a later purchase onwards. Even consider tier-based availability or anniversary-linked periods.
  • Applicability – define which items rewards are valid for. Full price? Markdown? All of the above? Strategically target specific categories to drive desired sales behavior.
  • Discount application – choose between pro-rata, lowest-priced item, or tier-based discount methods. Add an extra incentive for top customers based on historical spending.

  • Minimum spend – set a minimum purchase amount to activate rewards, encouraging higher transaction value. Decide whether tax is included or excluded.
  • Maximum quantity – limit the number of redemptions per program member, preventing reward abuse and ensuring program longevity.

  • Redemption rules – decide if rewards can be used multiple times, and if so, set annual or purchase-based limits. Consider allowing partial redemption or voiding the remaining value.

These limitations are tools, not handcuffs. Use them carefully to achieve your program goals without stifling customer experience.

What to keep in mind when choosing loyalty program rewards?

If you are launching a rewards program, regardless of the industry, there are a couple of things you should think about when deciding how customers can earn rewards and the rewards themselves.

1. Give members a choice

Customer preferences will differ per customer. Offering a one-size-fits-all reward structure can leave many customers feeling unsatisfied. If you don’t know enough about your customers yet, a rich rewards catalog is a good starting point. Eventually, you will gain enough valuable insights into customers’ preferences by analyzing redemption patterns and survey feedback to tailor the rewards catalog better. 

To additionally emphasize the individuality of your rewards catalog, try the following:

  • Highlight the power of choice as a key benefit of your program. Phrase it like "Redeem your points for rewards you desire" or "Choose from a diverse catalog of options tailored to your interests."
  • Instead of just points and a generic catalog, consider offering tiered programs with personalized reward options each.
  • Utilize customer data to suggest relevant rewards based on purchase history, demographics, and online behavior.
  • Offer diverse options within popular categories like experiences, merchandise, discounts, and donations.
Example of a loyalty rewards catalog from Sephora

2. Update loyalty rewards more often than not 

Some rewards may make sense in the summer, some in the winter. You should update your loyalty program rewards offering seasonally if your rewards are bound to a specific season, for example, offering sun lotions as a gift in the summer and thermoses in the winter. You can also make your retention-focused promotions seasonal. For best practices, follow our blog post on this topic.

3. Analyze reward redemption rates

Do not trust your gut when it comes to which loyalty reward performs best and motivates your customers most. Analyze the use of loyalty rewards, which ones are redeemed, and which ones are not, and change your offering accordingly.

Start from:

  • Monitoring the percentage of points or rewards that are redeemed. High redemption rates indicate valuable rewards.
  • Tracking redemption rates by reward type: Analyze which categories (e.g., discounts, experiences, donations) are most popular.
  • Segmenting customer data and comparing redemption rates across different demographics to identify preferences based on age, income, or past purchases.

Try out the Voucherify loyalty calculator >

4. Personalize loyalty rewards

If you have enough data collected about members, you should offer personalized rewards. Offering different loyalty program rewards for different customer segments is a good starting point, especially in B2C, where the customer base is probably giant, and 1:1 personalization may be complex. If you have a powerful promotion engine that allows you for 1:1 personalization of the rewards and the messaging, you should go for it. Nothing makes such an impact as a gift fully personalized to you, like a gift card with your name on it, for your favorite product category or a free product that you often order anyway. If your brand has fewer customers, you can choose the rewards manually to fit the client and adjust their value to their annual spending level.

You should never follow the approach of “set it and forget it” when it comes to loyalty rewards. Change up the loyalty rewards and rules regularly to see what works best.

Examples of the best loyalty program rewards per industry

‍1. Loyalty rewards for fashion brands

The fashion industry thrives on innovation, and loyalty programs are no exception. Here are some exciting examples of how brands are pushing the boundaries:

  • Exclusive access – offer members early access to sales, product launches, fashion shows, or VIP events, creating a sense of exclusivity and excitement.
  • Styling sessions – host personalized styling consultations with in-house stylists, helping members elevate their wardrobes and feel confident.
  • Member-designed collections – invite members to submit design ideas or vote on new product concepts, fostering a sense of ownership and community.
  • Member-only events – create online or offline spaces for members to connect, share style tips, and participate in brand discussions.
  • Sustainable rewards – offer rewards for eco-conscious actions like recycling old clothes, returning unwanted items, or choosing sustainable materials.
  • Virtual closets – develop a gamified platform where members curate virtual wardrobes, earn points for completing challenges, and unlock exclusive rewards.
Example of a fashion loyalty rewards from H&M

2. Loyalty rewards for beauty & wellness brands

The beauty industry is all about transformation and personalization, and beauty loyalty programs should reflect that. You can try ditching the tired points-for-discounts model and explore some more innovative ways to reward your loyal customers:

  • Virtual makeovers – offer personalized video consultations with makeup artists, complete with product recommendations and virtual try-on experiences.
  • Exclusive masterclasses – host online or in-person workshops led by industry experts, teaching new techniques, skincare routines, or product knowledge.
  • Personalized beauty profiles – help members create profiles with skin concerns, preferences, and allergies, enabling them to share experiences and receive relevant recommendations.
  • "Try & Review" programs – allow members to sample new products and share feedback, fostering brand loyalty and creating authentic marketing content.
  • Refillable packaging rewards – incentivize eco-conscious choices by offering discounts or exclusive benefits for using refillable products. Also reward members for returning empty containers for recycling, promoting sustainability and closing the loop.
Example of loyalty rewards for beauty from Sephora

3. Loyalty rewards for retailers

Retail loyalty programs are often stuck in a rut of points and discounts, failing to truly engage customers. But with a little creativity, retailers can unlock innovative reward structures that surprise and delight their customers:

  • Technology-enabled convenience – use various technologies to power features such as scan & go, AR try-ons, AI-powered recommendations, and more. 
  • Interactive wishlists – allow members to create interactive wishlists that friends and family can contribute to, boosting gifting sales and social engagement.
  • AI-built shopping lists – allow members to quickly compile shopping lists based on their previous purchases. 
  • Skill-building workshops – offer members free or discounted workshops on DIY projects, home improvement, or other relevant skills.

4. Loyalty rewards for healthcare brands & pharmacies

Building trust and fostering long-term engagement in the healthcare industry requires more than just discounts on prescriptions. However, with innovative thinking, there's an opportunity to create programs that truly benefit patients:

  • Health challenges – motivate healthy habits with engaging challenges like daily step count or completing educational modules.
  • Personalized health coaching – offer discounted or loyalty-funded access to personal health coaches who guide nutrition, exercise, and self-care. Allow patients to access quick consultations with pharmacists to ask questions and address medication concerns.
  • Telehealth consultations – reward participation in virtual consultations with doctors or pharmacists for chronic condition management or preventive care.
  • Healthy grocery discounts – partner with healthy food retailers to offer discounts on fresh produce, lean proteins, and whole grains, supporting dietary goals.
Example of loyalty rewards for healthcare from CVS

5. Loyalty rewards for the travel industry

The travel industry thrives on creating unforgettable experiences, and its loyalty programs should reflect that. Ditch the tired "miles and points" model and explore these innovative travel rewards:

  • Early access to exclusive experiences – grant members first dibs on unique tours, cultural events, or behind-the-scenes access at popular destinations.
  • Personalized trip planning – Offer curated travel itineraries based on member preferences, travel styles, and past trip data, creating a bespoke experience.
  • Member-led travel groups – enable members to organize or join group trips based on shared interests, fostering community and connection.
  • Carbon offset rewards – provide members with options to offset their carbon footprint from travel with points or loyalty program contributions.
Example of a loyalty benefit from Marriott

6. Loyalty rewards for the automotive industry

Automotive loyalty programs should prioritize customer retention due to the infrequent nature of car purchases, growing online information availability, and heightened industry competition. Here are some examples of loyalty program rewards:

  • Exclusive test drives & early access – grant members first dibs on test driving new models, attending unveiling events, or participating in closed-course driving experiences.
  • Personalized performance upgrades – offer discounted or loyalty-funded access to performance upgrades like custom tuning, accessory installations, or track day experiences.
  • VIP service and support – provide dedicated customer service lines, priority appointments, or complimentary loaners during maintenance, exceeding expectations.
  • EV charging station network access – partner with charging networks to offer discounted or free charging for electric vehicle owners, promoting sustainable driving.
Example of loyalty rewards from Suzuki

7. Other industries

  • Food & beverage loyalty rewards – early access to new menu items, members-only dining events, priority restaurant reservations, free cooking classes or workshops, or complimentary meal delivery services.
  • Sport clubs loyalty benefits – VIP seating for home games, early access to game tickets and club merch, meet-and-greets with athletes, signed sports memorabilia, or complimentary sports club magazine subscriptions.
  • Pet supplies loyalty rewards – free pet grooming or spa services, priority pet training sessions, personalized pet tags or accessories, or partner discounts with pet services brands.
  • Fintech & banking member benefits – premium credit card upgrades, better interest rates, members-only investment workshops, priority customer service hotline, or complimentary credit score monitoring.
  • Gaming loyalty rewards – exclusive in-game skins or cosmetics, members-only gaming tournaments, complimentary game expansion packs, free beta testing access, or in-game currency or loot boxes.

  • Telco benefits – tailored data plans, priority customer support, free international roaming data, or complimentary Spotify or Netflix subscriptions.
  • Mobility loyalty rewards – priority pickup upgrades, early boarding and check-in, free ride day once a month, a free round-trip ticket after a certain number of trips.

How to drive redemption of rewards in the loyalty program?

A low redemption rate of rewards may indicate several underlying issues, such as:

  • Irrelevant rewards: Customers might not find the rewards appealing or valuable enough to redeem.
  • Difficult redemption process: Complex procedures or hidden restrictions can discourage use.
  • Lack of awareness: Customers might not even know they have rewards or how to redeem them.
  • Punishing expiration dates: Tight deadlines can pressure customers to use rewards prematurely or miss out altogether.

There are four key verticals to analyze when you’re trying to boost the redemption rates of loyalty rewards: awareness, relevance, limits, and analysis

Here is how to improve all of these verticals:

1. Loyalty rewards awareness:

  • Regularly remind customers about their rewards and how to redeem them.
  • Communicate clearly about reward terms and conditions.
  • Make the redemption process simple and convenient.
  • Offer multiple redemption channels (online, in-store, mobile app).

2. Loyalty rewards relevance:

  • Offer a diverse range of rewards: Cater to different preferences and budget levels.
  • Personalize rewards based on customer data and behavior.
  • Partner with other brands to offer unique and exciting rewards.

3. Loyalty rewards limits & expirations:

  • Consider extending expiration dates based on customer engagement.
  • Offer reminders and notifications well before rewards expire.
  • Provide options to partially redeem rewards before expiration.

4. Loyalty rewards analysis:

  • Track your redemption rate regularly and analyze the reasons behind low performance.
  • A/B test different strategies to see what works best for your audience.

Bonus Tip: Consider the "gamification" approach – add game-like elements like challenges, points, and badges to make redemption more exciting for members.

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