Types of loyalty programs

Customer loyalty programs reward customers who repeatedly interact with a brand. It’s a customer retention strategy that encourages customers to continue buying from your brand rather than competitors. The more a customer buys or engages with the brand, the more rewards they earn.

Here are a few common types you can adapt for your ecommerce store.

Points based loyalty

Points programs are the most common type of rewards programs. They let customers accumulate points they can redeem for freebies, cashback, perks, etc. Customers don’t just earn points from purchases. They can also earn points from sharing on social, leaving reviews, having a birthday, or through gamification.

Tiered loyalty

Tiered loyalty programs are a type of membership where customers get different benefits depending on their rank. Businesses often rank membership into groups depending on certain metrics like sales or engagement. These rewards programs give customers a goal. The higher their tier, the more exclusive and better rewards they’ll receive.

Paid loyalty

Paid loyalty, or fee-based loyalty programs, give customers immediate and ongoing benefits for a participation fee. These fees can be recurring or one-time.

Elements of a successful paid loyalty program:

  1. The benefits clearly outweigh the fees, which encouraged sign-ups.
  2. Members stick around for more experiential advantages, like personalized experiences and members-only content.
  3. Engagement levels are high. Good paid programs have a continuous flywheel of interaction that elevates the program's value.

Value loyalty

The idea behind a value-based loyalty program is to connect with customers on a deeper level. It involves donating a percentage of purchases to charity or welfare programs. This program doesn’t actually reward customers. But it holds a special place for them, as the rewards are used to benefit society.

Source: https://www.shopify.ca/blog/loyalty-program

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