7 different types of Loyalty programs designed to retain customers.

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Types of Loyalty programs

7 different types of Loyalty programs designed to retain customers.

Customer loyalty programs are more prevalent than ever and across all sectors. The evolution of digital technologies has placed the customer in control, dictating to brands what they want and expect from them.



This has led to a shift towards data-driven marketing and customer-centric strategies, often facilitated through an integrated loyalty program.
A combination of technology and innovative marketing has seen the creation of many types of loyalty strategies, designed to engage and retain customers.



Although the strategies have different fundamentals the objectives are the same,


Understand, Reward, Engage, Retain customers and in turn increase profits and frequency of customers purchase.


Some of the most popular loyalty programs include;


1. Points programs – The most common loyalty program. Points systems encourage frequent spend by offering customers the ability to earn points relative to their transaction spend.
Points can be stored and redeemed against rewards, discounts, gifts and customer purchases. This type of loyalty program is best suited to businesses that have frequent, short-term purchases.


2. Tier system – The tier system encourages repeat purchases and higher value purchases in order to avail of more valuable rewards and benefits.
Basic participation entitles the customer to a basic reward. Customers must increase and more frequently to move up the loyalty tiers to avail of the different benefits or rewards.
This loyalty program works best for high commitment and high priced businesses. A great example is the Sephora makeup brands loyalty program.


3. Non- Monetary program – Popular for certain target audiences. Understanding your customers means understanding their values and lifestyle.
Depending on your brand and your target audience values you may offer a non-monetary reward as a result of your customer purchase.



For example, Toms, the footwear brand, donate a pair of shoes to an underprivileged child in South America as a result of a customer’s footwear purchase.
This type of program allows brands to connect with their audience in a different way and can leave a profound effect on the customer.


4. Reward partnerships – This type of program see a brand partner with other brands to offer their customers discounts with the associated brands.
This provides customers with benefits beyond what the brand can offer. This type of program is best suited to brands with no customer-facing store or a brand that doesn’t interact with customers regularly such as insurance companies.
5. Gamification – A new phenomenon. Adding a game to your loyalty program can be a compelling tool for customer engagement.
In order to run a successful loyalty game, the prizes need to align with your target audiences wants and desires and the odds should be no lower than 25%. Ensure maximum engagement with customer make sure the game is simple and easy to interact with.



The best example to date is Topaz Energy Play or Park loyalty game. https://www.playorpark.ie/
6. Loyalty card program – is an incentive plan that allows businesses (often in retail) to gather important information about its customers such as, demographic and transactional information.
Customers are offered product discounts, coupons, points toward products other rewards in exchange for actively using their card in store. The loyalty card program creates repeat business by offering participating customers something that is not available to non-participating customers.


Spar My Rewards is a good example http://myspar.spar.ie/


7. Gift card – Adding gift card functionality to a retail store is a great method for ensuring business for your store. Gift cards can encourage brand advocacy and assist customer acquisition.



Read different Loyalty case studies from a range of sectors https://www.azpiral.com/loyalty-program-case-studies/

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