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As a Shopify store owner or marketer, you’ve probably had your fair share of headaches coming up with the right rewards in your customer loyalty program. Namely, rewards that deeply resonate with your customers but don’t break your budget.
It’s an important balance to strike. According to Bond’s 2023 brand loyalty report, the top driver of customer loyalty (in the U.S.) is “[the brand] making me feel valued/important.”
In addition to the pressure of ensuring customers feel valued, customer acquisition costs are higher than they’ve ever been. In a press release, SimplicityDX said its research indicates that “in 2013, merchants lost on average $9 for every new customer acquired, but today merchants lose $29, a 222% rise in the last eight years.”
However, there is a solution that addresses these issues — a finely tuned loyalty program with custom rewards tha make customers feel valued and important, boosting customer retention, which in turn helps to offset customer acquisition costs.
While there is a place for the standard “points = discount/$ off” type of loyalty program, a brand that wants to lean into building a strong relationship with its customers must consider custom rewards.
The benefits of putting in the effort to know your customers’ wants/needs pay off significantly — here are some stats and research points that show just how powerful a personalized loyalty program with custom rewards can be:
This external research shows how beneficial personalized loyalty programs can be, and using custom rewards can help you realize these benefits. But what reward options can you use?
The rest of this article will show you ten different custom reward options that you can implement in your loyalty program. We recommend trying multiple to compare how custom rewards perform, then using your data to cater to your specific audience and drive more meaningful engagement.
One of the best ways of introducing unique rewards is by offering experiences over products and services (or discounts). The primary benefit of this approach from the brand’s perspective is that it’s much less likely to impact your product margins. But from the customer perspective, it’s about building a relationship that isn’t purely transactional.
A great example of a brand using this approach is AU Vodka’s “Gold Gang Loyalty Program“. They have a tiered loyalty system, Copper, Bronze, Silver, and Gold, and they offer at least one experience-based reward in every tier:
Since these benefits are tiered, the Gold members get access to every preceding tier benefits.
Whether you’re using a loyalty program or not, you should maximize your customer data to offer them curated, personalized product bundles based on their preferences (if you have them) and purchase history.
However, with a loyalty program in place, you can make the offer much more enticing with point-based rewards for purchasing a recommended bundle. Stores in the beauty, fashion, and health/wellness industries are most likely to pull off this strategy — such as Esmi Skincare.
Esmi has a loyalty program called “GlowGetter,” which offers points for many engagement activities. However, it leans heavily on promoting product bundles.
Within a year of launching their program, Esmi Skincare saw their average loyalty member spending double, which was then 3x more spending on average compared to non-members.
One way to help your customers feel even more valued is to give them “first dibs” — a chance to buy new or limited-edition products before the general public.
If you’ve ever felt the pain of seeing a product you wanted to sell out quickly and having to wait for a restock, you’ll understand the power of offering loyal customers the first dibs.
I’ve personally had this experience as a loyalty program member of Bulldog Skincare. The brand released two new sets of products that were unlike other products it previously sold (Anytime Daily and End of Day skincare bundles) — but as a member, I got an early heads up, and you can bet I added them to my cart, being a sucker for routine-based skincare products.
I mentioned this type of reward in the introduction as being particularly great because a lot of customers will pay extra to shop (and stay loyal) to a brand that aligns with their customers’ personal values and related causes.
But to add more data — Deloitte’s Sustainable Consumer research shows “one in four consumers are prepared to pay more for brands that commit to environmentally sustainable and ethical practices.”
So, cause-related rewards not only help build stronger emotional relationships with your customers, they also have the effect of increasing your customer’s spending potential.
One brand that successfully uses this approach is Edgard & Cooper, a pet food brand. Customers can use their loyalty points (belly rubs) to give a meal to a shelter dog or plant a tree.
If you want your customers to engage with your program with specific activities, you can gamify the experience and rewards or use a challenge-based approach.
Research from the International Journal of Information Management identified several factors of gamified loyalty program engagement, including “intrinsic motivations” and “extrinsic motivations,” i.e., presenting and rewarding challenges, which help to increase engagement.
The above example, Edgard & Cooper, also use this method to great effect, presenting brand activities as “challenges” to earn “belly rubs” and earn your way to the next tier of loyalty.
As a result of their loyalty program, Edgard & Cooper achieved a 22% lift in average order value (AOV), a 35% increase in active customers, and a 38% increase in their retention rate.
Our example of AU Vodka in the first custom reward idea used a tiered loyalty approach and offered experiences in each tier — but you can also use loyalty tiers to have customers unlock a wider range of personalized rewards as their loyalty level increases.
However, another example of a brand offering custom rewards in their loyalty program tiers is Greenpan, a cookware brand, that in their highest tier offers “surprise rewards”:
Adding this element of secrecy and exclusivity is what makes Greenpan’s tiered loyalty program particularly effective.
Another custom reward you can offer that doesn’t tie directly to product profit margins is customer recognition or VIP treatment.
We got a small taste of this type of reward in AU Vodka’s Gold Gang program, where they offer free priority delivery for Gold members. However, you can also offer dedicated customer support lines or exclusive discounts.
The purpose of recognizing and rewarding loyal customers with this type of reward is to address the top drivers motivating loyalty, i.e., feeling valued or important and the desire for relationship building.
While these types of rewards suit nearly every vertical, brands in the fashion industry typically use VIP treatment rewards to great effect.
For example, Free Fly, an outdoor clothing brand, uses a tiered loyalty system that offers free shipping, early access to sales, and exclusive email support that guarantees a 1-hour response during business hours.
Having a subscription-based loyalty program (note: not a premium program customers pay extra for, but a loyalty program that offers rewards specific to customers subscribing to products) is a powerful tool for customer retention.
One way to make them even more effective is to offer subscription upgrade options as a custom reward. For example, you can offer free or discounted upgrades to higher product subscription tiers or offer discounts on upcoming subscription orders.
One brand that uses this approach is AATU, another pet food brand, which has my sister as a loyal customer to help feed her three pugs.
In their “ambassador” loyalty program, members can use points to earn £5/10/15/20 off upcoming subscription orders or first-time subscription orders (if they’ve previously bought products ad hoc).
Another type of custom reward you can offer incorporates elements of social recognition, allowing customers to share their rewards or achievements on social media to help foster brand advocacy.
Two of the easiest methods of creating these types of rewards are offering points in exchange for social media engagement and having a built-in referral program.
One brand that uses both of those options in its loyalty program is The Pulse Boutique — which rewards customers for following the brand on social media, creating reviews, and referring friends and family.
Since their program launch, The Pulse Boutique has seen a 39% uplift in returning customers, a 19% increase in AOV, and crucially, the program has driven $200k in earned rewards purchases.
This last idea is cheating a little bit, as it isn’t specifically a type of custom reward you can offer but rather a tip for helping you build better custom rewards overall. To understand your customer’s preferences and better tailor your rewards, you need to gather customer input and feedback.
Of course, the method that will give you the most direct answers is to ask your customers for specific feedback. You can do that by including a feedback form in a post-purchase follow-up email, in a regular check-up loyalty email, or as a widget on your loyalty page.
This approach will give you important zero-party data to work with, which can be a mix of qualitative text responses and quantitative satisfaction survey-style responses.
If you’re having trouble getting responses to your feedback forms, you can conduct a context analysis using customer reviews (also zero-party data), which can give you a general overview of customers’ thoughts and feelings.
Using your customers’ feedback will help you develop a loyalty program with rewards that are truly customized to your unique audience.
Using custom rewards in your loyalty program is one of the best ways to create a bespoke program that addresses a lot of the top drivers of loyalty motivation found in industry (and academic) research, as well as helps your brand gain plenty of benefits in return, such as:
However, to build such a bespoke loyalty program, you’ll need to use customer rewards software that offers reward customization.
With LoyaltyLion, you get the benefit of having default loyalty reward options (if you want to build something quickly) and the flexibility to create your own custom rewards that align with your brand and customers. If you’re ready to offer your loyalty members custom rewards, check out LoyaltyLion’s pricing to find the right plan for you.
