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7 Proven Customer Loyalty Programs That Work

  • Conversion Rate Optimization

Turning customers into brand loyalists is no easy feat. For one thing, you need a predictable and repeatable strategy for incentivizing customers to buy from you over again…

And that’s where customer loyalty programs come in.

With the right initiative, you can turn first-time buyers into repeat customers, and keep your brand top of mind.

In this post, I’ll show you seven customer loyalty program examples from top brands that you can model to drive more sales, improves customer retention, and builds stronger relationships with customers.

Let’s dive in.

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9 Customer Loyalty Programs You Can Model

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What Is a Customer Loyalty Program?

A customer loyalty program or rewards program is a marketing strategy that rewards loyal customers that frequently engage with a brand.

By rewarding recurring engagement, you can increase customer loyalty and ensure continuous growth for your business. The idea behind an effective loyalty program is that the more loyal customers are, the more rewards they’ll get.

There are different types of rewards programs, and in this post, I’ll share seven you can consider for your online store.

1. The Points Program (The North Face)

The points system focuses on the principle that the more you spend, the more points you get in return. 

Every time a customer makes a purchase, they get a certain amount of points depending on how much they spent. 

One example of a customer loyalty program that follows the points program is by The North Face:

The North Face makes it easy for customers to understand how the rewards program works:

Customers earn 10 points for every $1 they spend online and in retail stores, and five points for every $1 they spend in their outlets. Then, customers can put these points towards future purchases.

To increase customer engagement even further, The North Face has also developed an app where users can manage their account, buy new products, check their point status, redeem rewards, and more.

By rewarding customers with redeemable points, you increase your customer’s average order value and encouraging them to invest in your brand—meaning they’re less likely to switch to a competitor.

Takeaway 

Use software like Smile.io to implement a point system both online and offline if you have physical stores. Your points system must be easy for customers to understand and calculate (e.g., $1 is one point). That way, customers can see the immediate value and don’t need to calculate the number of points each purchase gives them.

2. The Paid Program (Barnes & Noble)

Paid programs involve inviting customers to pay a monthly or annual fee to join your VIP member’s club.

For this type of loyalty program to be effective, you need to market it to existing customers or frequent buyers. After all, new customers are unlikely to join a rewards program unless you’re a big, recognizable brand.

Most importantly, though, a paid program must include member-exclusive benefits. Otherwise, it will lose its value. 

Take Barnes & Noble, for instance:

Their VIP program costs $25 a year, and it offers discounts, free shipping, and other benefits.

But how do you get people to pay $25 to join a loyalty program? 

By showing the value of your program compared to the cost, as Barnes & Noble do:

When the value of your loyalty program outweighs the cost, people will join. And if they don’t? You can give them a final nudge by using testimonials from existing members to trigger social proof:

Takeaway 

When offering a paid program, show customers the program’s value outweighs the cost. It also helps to use social proof from existing members to emphasize that value.

3. The Charity Program (The Body Shop)

Not all loyalty programs include discounts.

You can incorporate your business values into a program to build a stronger relationship with your customers. In fact, if you structure a loyalty program around mutual values, customers are more likely to become brand loyalists.

The Body Shop has nailed this approach by making animal welfare part of their program.

Besides earning rewards and getting VIP benefits, members have another unique benefit:

They can choose to donate their rewards to Born Free USA (a charity for animal welfare).

Similarly, a core value of The Body Shop is environmental responsibility:

The Body Shop’s customers share these values, which makes the donation option even more valuable to customers.

This type of program creates a unique opportunity to connect with your customers on a deeper level, which strengthens your relationship with them.

Takeaway 

When offering exclusive membership benefits, consider making your company’s value one or more of the benefits. If they’re important to you, they’re likely to resonate with your audience, too.

4. The Tier Program (e.l.f.)

The tier system focuses on levels of loyalty. Put another way, the more loyal your customers are to your brand (read: the more they buy from you), the greater the rewards they’ll receive. 

Offering tiers in a loyalty program is a great way to engage customers and keep your brand top of mind. Further, tiers play on aspects of gamification where members reach higher levels, the more they “play.”

Take this example from e.l.f.:

Their Beauty Squad loyalty club has three levels:

  1. Extra,
  2. Epic; and
  3. Icon

The more points a member has, the more exclusive the rewards they can get. 

If you want to motivate members to reach higher levels of a tier program, include percentages for each tier, indicating how many members have reached each level.

This drives members to reach a higher level to gain social status among members that belong to that tier and give them something to aspire to.

Takeaway 

Create a program that allows members to ascend based on customer loyalty. Base your tier program on points, how often people buy, or other important engagement metrics. Finally, offer greater exclusivity and benefits the higher members ascend.

5. The Progress Program (Nike)

Progress is a great motivator.

The more people believe they are nearer to achieving a goal, the more committed they are to their efforts to achieve that goal.

This is known as the endowed progress effect, and it’s an effective psychological trigger you can use in your loyalty program to encourage repeat engagement.

A great example of this comes from Nike, who promotes an active lifestyle:

Nike has several different training apps to help members reach their training goals.

The Nike Run Club and the Nike Training Club apps reward users with badges and other rewards every time they reach a new milestone such as finishing your first 5k.

This is a great example of how you can use progress to encourage engagement.

Nike also knows that the more success their customers have with their training, the more loyal their customers will be. 

Why?

Because people always link their success to the person or brand that made the difference.

For example, if you want to learn to speak a new language and you use software like Duolingo to do so, you’ll attribute any success you have to the platform.

Similarly, Nike helps customers get better training results, and their customers attribute these results back to the brand.

Takeaway 

Encourage progress through your loyalty program and help users get closer to reaching their goals. It’s important that you position your product as a key “ingredient” in reaching these goals. When your product helps your members with their goals or challenges, they’ll buy more from you.

6. The Community Program (Sephora)

When talking about customer loyalty programs, we can’t leave out Sephora.

Sephora has a comprehensive loyalty program (Beauty Insider) that offers many different benefits:

Besides using both a point system and a tiered program, Sephora’s loyalty program also gives members exclusive access to a community of like-minded people.

In this community, members can connect with each other, find inspiration, sign up for exclusive events, and more.

Sephora has used its loyalty club to build a brand community where users can interact with each other and Sephora. 

By creating a platform like this, Sephora has access to a lot of consumer insights that they can use for product development as well as other aspects of conversion optimization. 

Takeaway 

Create a platform where members can interact with others to share ideas, get inspiration and feedback, and more. This type of program will work for any brand as long as you encourage conversations that are relevant to your brand and products.

7. The Subscription Program (Bean Box)

There’s a new type of loyalty program in town…

…it’s the subscription program.

This is not your traditional loyalty program where rewards and benefits are offered.

Rather, you offer your products on subscription.

Take Bean Box, for example:

To increase customer loyalty, Bean Box offers different types of coffee beans as subscriptions, and customers don’t have to worry about running out of coffee. (I’ve seen what happens when the coffee machine at the Sleeknote office breaks down. It’s NOT a pretty sight.)

By selling coffee as a subscription, Bean Box increases the lifetime value of their customers. And as of writing, they use a “Save 20%” incentive to get customers to choose the 6-month plan over the one-month plan.

After all, inviting customers to commit for 6-months has more value to Bean Box than if customers only shop once.

Takeaway 

If your product is suitable, offer it on subscription. Consumers are looking for convenience, and the quicker and easier they can get their hands on what they need, the better. You can incentivize prospects to choose a subscription over a one-time purchase by offering a discount on your subscriptions.

Free Downloadable Bonus

9 Customer Loyalty Programs You Can Model

Get access to our bonus resource “9 Customer Loyalty Programs You Can Model in 2019” to get inspiration for a customer loyalty program of your own.

Conclusion

Offering customer loyalty programs is a great way to get more loyal customers and keep your brand top of mind. 

The key to making it work is understanding your customers and improving how you provide value to them. 

What type of loyalty program are you using? Have you seen other amazing examples of loyalty programs? Leave a comment below.

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