Hybrid loyalty programs: What they are and how to implement your own

Is your loyalty program stuck on repeat? Customers crave engaging experiences, and generic points systems just don’t cut it sometimes. Enter the hybrid loyalty program! By combining elements from different types of loyalty programs—such as points-based systems and tiered rewards—a hybrid loyalty program creates a more engaging and rewarding experience for your members. 

In this article we’ll explore how hybrid loyalty programs blend multiple features together to create a more captivating experience for your customers. We’ll also highlight the key benefits and potential challenges to consider before choosing a hybrid loyalty program for your store. 

What is a hybrid loyalty program?

A hybrid loyalty program integrates features from multiple types of loyalty programs to create a customized and engaging customer retention strategy. Think of it like a “mix and match” approach. Hybrid loyalty programs might combine elements from:

• Points-based loyalty programs: Customers earn points for purchases, which they can redeem for rewards.
• Tiered loyalty programs: Customers unlock exclusive benefits as they climb through loyalty program tiers based on their spending or engagement.
• Value-based loyalty programs: Customers are rewarded for actions that align with the brand’s values, such as social responsibility, sustainability, or community involvement. 
• Subscription loyalty programs: Customers who subscribe to regular product deliveries, for example, a monthly coffee subscription can unlock premium rewards.
• Referral programs: Customers receive rewards for referring new customers to the brand.

Due to their flexibility, hybrid loyalty programs are especially well-suited to brands with diverse customer bases. Take a fashion brand, for example, that caters to both budget-conscious students and fashion-forward young professionals with cash to spare. A points-based system alone might leave higher spenders who crave exclusive experiences, feeling uninspired. Conversely, a tiered-only approach could alienate students who see the top tiers as out of reach. Hybrid loyalty programs bridge this gap. They can combine points for everyday purchases with a tiered system that unlocks VIP experiences for customers exceeding a spending threshold. This way, all customer segments find value in the program.

The pros of hybrid loyalty programs

Hybrid loyalty programs pack a powerful punch when it comes to delivering benefits. Here’s why many brands choose to invest in them: 

Flexibility

Hybrid loyalty programs offer huge amounts of flexibility. Unlike one-size-fits-all models, they allow you to craft a loyalty program that seamlessly integrates with your unique business goals and customer base. Imagine a sporting goods brand with both casual and professional athletes as customers. A hybrid loyalty program could offer points for all purchases, while also incorporating a tiered system with exclusive discounts on high-performance gear for serious athletes. This flexibility ensures all customers feel valued and motivated to participate.

Higher engagement rates

A well-designed hybrid loyalty program can significantly boost your engagement rates. Customers are much more likely to engage with a loyalty program that offers diverse benefits, whether that’s earning points for discounts on future purchases or achieving higher tiers to unlock early access to sales. By diversifying both your rewards and your earning opportunities, you’ll motivate your customers to stay actively engaged with your loyalty program. 

Differentiation 

Hybrid loyalty programs help brands stand out from their competitors. By offering a unique combination of rewards and benefits, you can create a loyalty experience that’s fresh, memorable, and truly reflects your brand identity. This will make you stand out to new customers, and foster rock-solid loyalty with existing customers who already love what your brand is about. 

The cons of hybrid loyalty programs

While the benefits of hybrid loyalty programs are certainly appealing, it’s important to acknowledge the potential drawbacks before diving in.

Cost

Implementing a hybrid loyalty program can be more expensive. Developing a loyalty program with multiple reward structures, gamification elements, and loyalty tiers typically requires more upfront investment than simpler points-based programs. Furthermore, if out-of-the-box loyalty platforms don’t have the capabilities to support your vision, you’ll need to invest in a custom-built solution instead, and this is where costs can escalate.

Operational complexity

Hybrid loyalty programs are more complex to design and manage. Integrating different elements such as points systems, tiered rewards, and gamification requires careful planning and ongoing evaluation. This includes setting thresholds for tiers, defining point earning and redemption rules, and most importantly, conducting a thorough cost-benefit analysis. Striking the right balance between attractive rewards that incentivize participation and healthy profit margins is vital. 

Communication

Thanks to the complexity we just mentioned, communicating the details of a hybrid loyalty program to your customers can take some additional effort. The more complex the program, the more detail is necessary to explain how it works and what benefits customers can expect. This might involve developing comprehensive FAQs, creating explainer videos, or training your customer service team on the nuances of your loyalty program. 

Examples of successful hybrid loyalty programs 

Sephora’s Beauty Insider

Sephora’s Beauty Insider program combines a points-based system with loyalty tiers to engage members across various spending levels. Customers earn points with every purchase, unlocking increasingly valuable perks as they climb through the tiers. For instance, spending $350 annually grants access to ‘VIB’ status, which includes exclusive gifts and 15% off sales events. Spending $1,000 a year elevates customers to ‘Rouge’ status, offering additional perks such as first access to new products.

This hybrid approach appeals to a wide range of customers, from casual shoppers who make occasional purchases to dedicated beauty enthusiasts striving to reach the Rouge tier. By offering tailored rewards and exclusive benefits, Sephora effectively motivates all customers to stay engaged and loyal.

Nordstrom’s Nordy Club

Nordstrom’s Nordy Club is a standout example of a hybrid loyalty program, merging points-based rewards with loyalty tiers, then taking things one step further with their ‘Cardmember exclusives’ initiative. 

Nordy Club members earn points for purchases, but the number of points varies depending upon payment method and member status: basic Members and Influencers earn 1 point per dollar, Cardmembers earn 2 points, and Ambassadors and Icons earn 3 points per dollar. Points translate into ‘Nordstrom Notes’ which can be redeemed against future purchases, driving more repeat revenue for the brand.

The loyalty program’s tiered structure offers increasing benefits based on annual spending. Influencer status is achieved with $500 spent annually, Ambassador status with $5,000, and Icon status with $15,000. Each tier unlocks exclusive perks, from personal double points days to early access to sales and invite-only events. 

On top of this, customers can unlock even more benefits by becoming a Nordstrom Cardmember. Cardmembers get $80 in ‘bonus notes’ and automatically get access to all the exclusive Nordy Club benefits. 

By combining points, tiers, and Cardmember exclusives, Nordstrom caters to a wide range of customer spending habits and aspirations, motivating all different kinds of shoppers to come back time and time again. 

Astrid & Miyu’s loyalty program: Astrid & You 

Astrid & Miyu’s loyalty program, Astrid & You, is a great example of how a hybrid loyalty approach can really pay off. By combining a points-based system with value-based actions and tiered rewards, they’ve managed to boost customer engagement and sales in a big way.

Astrid & You members earn 5 points for every £1 they spend, which they can use for discounts on future purchases. Plus, as they spend more, they climb through tiers—Astrid and You, Rose Gold, Silver, and Gold—each offering better perks like early access to sales, previews of new collections, and birthday discounts. The loyalty program also incorporates value-based elements, as members can earn 1,000 points for recycling their old jewelry with the brand.

Since revamping their loyalty program to include the above features, Astrid & Miyu have seen a 40% increase in total revenue, with their redeeming members now six times more likely to make a second purchase. This success shows how effective hybrid loyalty programs can be. By giving customers multiple ways to earn rewards and appealing to different motivations, brands can unlock significant revenue growth.

Final thoughts 

Hybrid loyalty programs offer a powerful way to enhance customer engagement and differentiate your brand in a competitive market. By combining the best elements of various loyalty strategies, you can create a flexible, engaging, and unique loyalty experience that keeps your customers coming back for more. Keen to create loyalty experiences that genuinely connect with your customers? Discover how easy it is with LoyaltyLion.