10 Customer Loyalty Programs Taking the World by Storm
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.
What is a customer loyalty program?
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.
What are the most common types of customer loyalty programs?
- Point-based loyalty programs – the most common program type in which customers collect points (or other currency) that translates into rewards (discounts, perks, and more). Works best for incentivizing quick, low-value purchases.
- Tiered loyalty programs – the best type of loyalty program for long-term member benefits and engagement. This type of reward programs begin with base-level rewards, which increase in value as customers progress to next levels. These programs work well when paired with higher-value purchases, such as flights or luxury brands.
- Paid loyalty programs – paid programs may seem counterintuitive, however, as proven by the Amazon Prime service, customers are ready to pay a small fee for a better shopping experience, priority delivery, or a fixed discount with every purchase. This type of program works best for frequently purchased goods.
- Value loyalty programs – these programs drop monetary incentives in favor of values important to the given audience. These could include things like charity donations, planting trees, and other value-focused interactions. They work best for businesses with a clear societal or environmental mission and sustainability goals ingrained in their strategy and brand image.
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.
10 examples of the best customer loyalty programs (ever)
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:
- Information is made fun and digestible to cater to the shrinking attention spans.
- Mini-tasks are assigned to Ambassadors in the form of “Missions”.
- Completed missions give customers value and also create value for the brand. The whole journey is gamified with points. Points for missions depend on the effort required for completion. For example, writing a review is worth 1000 points.
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:
- Simple and well-explained program rules through FAQs and a loyalty calculator where members can calculate how many points they can earn for particular actions.
- Valuable and non-monetary benefits for members, all presented as exclusives.
- Different membership levels to attract customers to engage more (40% of customers would pay extra for an enhanced tier of membership).
- Dedicated helpline to support members with the redemption of benefits.
- Easy and smooth user experience with no unnecessary complications.
Sephora Beauty Insider
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?
- Sephora’s program is much more than just monetary perks. It relies heavily on the atmosphere of exclusivity and privilege.
- Even if a customer doesn’t purchase from Sephora often, the simple fact of being an Insider allows them to receive member-exclusive discounts and products.
- Customers have access to limited edition products, unavailable to regular shoppers.
- Customers can choose how to use the points they collect.
- Customers have access to free beauty tutorials – education lets Sephora promote more products and shorten the decision-to-purchase process.
- Uncomplicated loyalty rules – you spend money and get rewards in return. It doesn’t get any simpler than that.
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?
- Offering payment options via a mobile app made it easier for customers to consume Starbucks products. Mobile app payments are incentivized by double points multiplication.
- Fun freebies and cute gifts all year round, including birthday treats and free refills.
- Mobile pre-ordering has enabled customers to grab their orders fast, without having to dwell in the queue.
- Having the loyalty scheme on the mobile app ensured that it was always at hand (which was, at the time when Starbucks started the program, an innovation).
- Incorporating elements of gamification has made it more engaging for customers (Bonus Star challenges, Double Star Days and exciting games).
- Allowing customers to earn rewards when they invite friends to join increases brand awareness and user acquisition within the loyalty program.
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?
- To keep up with the demand for mobile-first loyalty, their program is accessible through a loyalty app.
- A&F sends monthly loyalty updates with member balance and an exclusive discount attached. Other examples of personalized communication include birthday and anniversary emails with special gifts and offers.
- Powerful exclusivity-focused copy makes customers feel special and noticed.
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:
- Seduced – the basic level to which everyone has access, without the need to purchase anything. Members can enjoy annual gifts, sample products, and access to limited edition products simply for being a member. Members can also choose their favourite eye shadow, lip gloss or lipstick for a complimentary gift, provided that they return six empty containers.
- Devoted – by spending $150 annually, on top of all the advantages of tier one, members get expedited shipping and pre-access to new collections.
- Obsessed – the highest class of the membership, which can be unlocked after a member spends $500. It gives access to exclusive limited editions, improved samples, the opportunity to shop before anyone else, a couple of makeup applications and expedited shipping on top of all other benefits.
What’s great about MAC Lover program?
- Transparent program structure with a nice copy to explain it all.
- Immediate reward when joining the program minimizing the negative impact of gratification delay.
- Loyalty program benefits are tied to other campaigns and programs run by the brand. For instance, members get improved tracking of the containers they returned as a part of the Back to MAC campaign. Connecting other initiatives with a loyalty program makes for a much more holistic experience.
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?
- An interactive landing page that clearly explains how to collect points and how to spend them.
- Clear points to discount exchange ratio: $5 off for 100 points, $10 off for 200 points, $20 off for 400 points, $30 off for 500 points, and $50 off for 800 points.
- Plenty of earning actions to collect points.
- Referral program is incorporated into the loyalty campaign, lowering the customers acquisition costs and helping with customer retention at the same time.
The Body Shop
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?
- Heartwarming copy that focuses on inclusivity and community rather than privilege and ego-centred exclusivity. This approach fits The Body Shop’s brand image much better.
- After browsing through dozens of similar tiered programs, it is refreshing to see a program committed to simplicity and flat structure.
- Of course, the highlight of The Body Shop’s loyalty program is the possibility to donate rewards to charities, making customers feel good about shopping with the brand. If your business is big on societal and environmental issues, charity donations are a must-have for your next customer loyalty program.
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. We wrote a whole article about this program so be sure to check it out.
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?
- Every order qualifies for a 5% cashback. This approach is beneficial for customers, however, if you are concerned about your loyalty budget, feel free to add a minimum order amount needed for cashback.
- Cashback works through all shopping channels – through the app, website, or even in-store.
- To protect their campaign budget, cashback can be spent within 30 days – encouraging members to come back to buy something else.
What makes a customer loyalty program “the best”?
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:
- Analyze what your customers actually want – you need to run some tests, measure the results and adjust your loyalty program features based on the collected data. You can analyze what your competitors are doing or run an internal survey among your trusted customer base to learn what they think. You can also try running a pilot program first and optimize it as you go.
- Adapt your loyalty scheme rules on demand – it is crucial to have a loyalty program management system that has easily modifiable rules and does not need much IT development if you want to change anything.
- Measure results – your loyalty program management system should provide data instantly, preferably in well-organized reports to help you find the best approach. If you are not sure which metrics to track, check our free loyalty calculator.
Voucherify is a loyalty management software that can support you with all the above-mentioned features and more.
Build a world-leading loyalty program with Voucherify