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Done right, loyalty programs are a uniquely effective way to improve customer retention. Research from Accenture found that loyalty program members drive between 12 and 18% revenue growth each year.
There are countless examples of brands that have seen big results. Although many of them make it look easy, their success is down to a keen understanding of what makes their customer tick, and, by extension, what kind of loyalty program will resonate.
It’s not a one-size-fits-all approach, and the options for structuring loyalty offerings are ever more varied. The humble loyalty card is still often effective, but online loyalty programs present innovative and intricate ways to encourage and track loyal customer behavior.
So let’s dig beneath the shiny numbers of some of the world’s most successful loyalty programs and see what makes them work.
1. Sephora’s “Beauty Insider Program”
2. “LEGO Insiders”
3. Barnes & Noble
4. TheCHIVE
5. Astrid & Miyu’s “Astrid & You”
6. Amazon Prime
7. Lively
8. Pulse Boutique’s “Pulse Perks”
9. Annmarie’s “Wild and Beautiful Collective”
10. Pacifica Beauty
11. Mirenesse
12. REI’s “Co-op membership”
13. The North Face’s “XPLR Pass”
14. Lucy and Yak
15. Waterdrop
16. Nicce Clothing
17. Eat Bobo’s
18. MoxieLash Insider
19. 100% Pure
20. Spoiled Mama
21. Dr. Axe
There are four main kinds of loyalty program:
– Points-based
– Value-based
– Tiered
– Subscription-based
Each has been used to great effect. Here’s why the best have succeeded (and why others might fail).
Points-based loyalty programs reward customers with points for purchases, which can be redeemed for discounts, exclusive products or other rewards.
One of the most lauded points-based loyalty programs is Sephora’s Beauty Insider Program.
Using their points, members have the chance to test a range of “trial-sized” products and unique experiences – such as full-face makeovers.
This works particularly well in the beauty industry, where creativity and experimentation are so fundamental.
Sephora also capitalizes on the community-driven nature of the beauty industry — Reddit’s r/makeupaddiction community alone has over 4 million members — with its “Beauty Insider Community”, a space that lets beauty lovers find their inspiration and seek advice from other members.
The French brand stays ahead of the curve by getting one vital thing right: it continues to transform and tweak the loyalty program to best meet the ever-changing needs of its customers. And that’s a great way to stop them from losing interest.
Another classic example of a points-based loyalty program is the loyalty card. You buy your items in a store, scan your card, and receive points based on the total value of your purchase. It’s a simple, clear reward that plays especially well in those industries where purchases are frequent and increasing average order value is a priority.
Value-based loyalty programs are a bit like points-based ones, but points can be earned in other ways than just making purchases.
The LEGO Insiders program, for example, rewards customers not just for purchases, but also for registering LEGO sets and getting involved in the customer community.
It works because LEGO enjoys such a strong emotional connection with its customers. People love their LEGO, and the company maintains this sense of reciprocity through initiatives like LEGO Ideas, through which customers’ original designs can be turned into official products via a voting process.
Building this kind of loyalty is incredibly valuable for a brand that sells high-ticket items, and for which increasing purchase frequency is essential.
The MoxieLash Insider program is another excellent example of a value-based loyalty program. Like Sephora, they understand the value of building a community of advocates, especially on social media, where a highly visual product like theirs plays particularly well.
That’s why they offer points not just for purchases, but for social media engagement and app downloads. They know that, in their case, the downside of giving product discounts for non-transactional activities is more than offset by the benefits of social media engagement.
Tiered loyalty programs involve levels of membership that offer increasing rewards and benefits based on customer spending or engagement.
They’re usually more complex to manage, but they can be more effective at creating customer loyalty.
Tiered loyalty programs are particularly well-suited to high-end, luxurious products, where the feeling of exclusivity can heighten the sense of luxury.
Astrid & Miyu’s loyalty program Astrid & You is a great example. At the silver and gold tiers, customers get early access to sales and promotions. At gold, they get £20 off on their birthday.
Hospitality companies tend to use tiered loyalty programs, too. Hilton Honors is a notable example.
Tiered loyalty programs are particularly effective in industries with fluctuating demand. Where purchases are frequent and consistent, and average order values low, exclusive tiered benefits can be less of an incentive to make repeat purchases.
What makes these tiered loyalty programs so effective is that they understand their status as “luxury” purchases in the eyes of potential customers, and that therefore they might have to work harder to incentivize repeat custom. At the same time, they recognise that it’s exactly this luxury status that makes exclusivity an enticing benefit.
With subscription-based loyalty programs, customers pay an ongoing fee to get access to perks, products or exclusive events.
Because customers have to pay up-front — rather than passively accruing points as they shop — it’s more difficult to enroll customers onto your loyalty program. The benefits have to be significant.
Subscription-based loyalty programs are best suited to frequent, less-considered purchases — such as books. Barnes & Noble Membership involves an annual fee for exclusive discounts, free shipping and special offers.
Similarly, Amazon Prime gives customers unlimited to extremely fast delivery for a set fee.
In commoditized markets like bookselling, where it’s difficult to compete without a race to the bottom on price, these bonuses tend to have a “lock-in” effect on customers. Once they’ve paid their membership fee, it’s a sunk cost, and they can choose between your next-day delivery or your competitor’s comparatively slow delivery.
Compare these industries to some of the luxury brands adopting tier-based loyalty programs. You’d have a hard time convincing someone to pay $10 a month for a subscription for a brand they purchase from a few times per year at most.
In Amazon’s case especially, subscription-based loyalty programs can also smooth the move into new markets. When Amazon launched Prime Video, they had a ready-made audience of Prime customers ready to adopt it, and they could strengthen the loyalty program by adding it as an additional feature.
The results can be huge. A 2015 report by the Consumer Intelligence Research Partners (CIPR) found that Amazon Prime members were spending an average of $1,500 per year on Amazon.com, compared to $625 per year spent by non-Prime Amazon customers.
It’s not exactly a type of loyalty program, but lots of brands use gamification to boost engagement with their programs. One notable example is TheCHIVE.
Walker Information’s 2020 customer study predicted back in 2013 that “customer sentiment, or feelings that customers have about their interactions, will increase in value as companies look to differentiate based on the experience they deliver.”
To offer this superior experience, customer loyalty programs provide a great platform for brands. And photo entertainment website TheCHIVE is doing exactly this. By rewarding their customers for photo uploads and social sharing, community is being put at the heart of their gamified blog.
As a result, the brand has gained an active community of highly engaged customers. They now attribute 6% of their annual revenue to their loyalty strategy – generating 6,800 referred visits per month.
By giving customers a reason to return to the site, they are more likely to shop again and again.
TheCHIVE leaderboard
The fashion and apparel ecommerce sector thrives on the allure of exclusivity and the joy of personal expression. Loyalty programs in this space are uniquely positioned to tap into these consumer sentiments. Here, loyalty isn’t just about transactions: it’s about becoming part of a fashion-forward community and enjoying the perks that come with it.
Fashion brand Lively is an example of a loyalty program that makes its most loyal customers feel special. It rewards members with points on their birthday, when they refer a friend and if they follow Lively on social media.
It’s easy for members to see the perks because benefits are clearly explained across their site.
Not only is it an effective loyalty strategy for a fashion brand, but customers also see the value of joining straight away. They’ll get 100 “Lively points” just for signing up. And that translates into $10 off their next purchase.
So, it’s a customer loyalty program that offers instant gratification. It also creates a strong and lasting emotional bond with the customer early on.
The results are impressive: the loyalty led to an increase in average customer lifetime value of 39%, and average spend increased by 36%.
Women’s fashion store Pulse Boutique offers customers a better chance to engage with their brand by inviting them to be part of a trusted fashion community.
This customer loyalty program is called Pulse Perks. It aims to encourage customer engagement on social media. At the same time though, it also helps increase user-generated content (UGC), customer reviews and photo submissions.
UGC and reviews are vital to brands because research has found that at least 92% of people trust word-of-mouth recommendations from friends or family. Meanwhile, people are four times more likely to buy a product if a friend or family member recommends it.
Since its launch, this example of a loyalty program generated a 39% uplift in returning shoppers. It also drove a 19% growth in average order value (AOV).
These programs work because fashion is a highly visual and shareable industry. Encouraging customers to share their fashion hauls, style tips, or outfit of the day (#OOTD) posts with brand-centric hashtags can amplify a brand’s presence on social media. Brands like Zara and H&M have effectively used user-generated content to engage their community, creating a ripple effect of brand visibility and customer engagement.
The key for fashion ecommerce brands is to tailor loyalty programs that not only reward purchases but also encourage brand interaction and social sharing. This approach resonates well with fashion consumers who value both the product and the experience surrounding it.
In the beauty and cosmetics ecommerce industry, loyalty programs play a pivotal role in enhancing customer experience and brand loyalty. This sector, characterized by its emphasis on personal care, self-expression, and frequent product launches, finds unique value in loyalty programs that offer personalized rewards and exclusive experiences.
The aim of Annmarie Skin Care was to develop a loyalty program where members felt part of a community that shared similar beliefs and values. So, they created the “Wild and Beautiful Collective” to bring their members together.
It’s so important to create a sense of community – especially in the beauty industry. Beauty shoppers are more vocal on social media, for example. They’ll share tips, recommendations and look to learn and thrive from each other.
The “Wild and Beautiful Collective” is a membership program example that nurtures this sense of inclusion through its name and mission. And Annmarie Skin Care’s approach speaks volumes. Members spend (on average) 140% more than non-members. The brand generated more than 1000 reviews too.
Meanwhile, they enjoy high levels of engagement with members, with 40% of points being redeemed within three months of being awarded.
Pacifica Beauty’s customer loyalty offering seeks to engage customers through the whole buyer journey. It has a branded, easy-to-use loyalty page. And there’s a pop-up display that will show you how many points you can redeem in the cart. At each stage of the process, the brand aims to make it easy for the customer.
As you near the end of your buyer journey, Pacifica Beauty shows a checkout slider. This lets you claim the rewards you’ve earned towards your purchase.
Now, thanks to this example of a customer loyalty strategy, Pacifica Beauty’s members spend 130% more on average than non-members.
Beauty brand Mirenesse elevated their loyalty program by introducing a special paid member tier. This is known as the “Gold” tier.
In exchange for a $10 monthly membership, customers of this VIP tier get extra perks on top of the basic rewards. This includes two points for every dollar spent, access to secret sales and the chance to trial new products as part of a tester panel.
Outdoor brands have long done more than most to connect with their customers based on shared values. Patagonia set the standard with their “Don’t buy this jacket” PR campaign. The ad, which encouraged potential customers to buy a used Patagonia jacket rather than a new one, detailed the environmental impact in the creation of each new jacket.
A number of other big outdoor brands have incorporated this apparently-genuine, values-based customer connection into their loyalty programs.
The North Face’s XPLR Pass membership program, which offers rewards ranging from discounts to competitions and early product access, gives loyal customers 20% off their next order for completing a course on racial diversity.
REI’s Co-op Membership program, along with the more standard benefits of discounts and free delivery, builds on the connection between customer and brand by giving cashback on purchases based on business profits. They’re also invited to elect candidates to the board.
So why does it work? Because the products customers buy from these brands are used towards a hobby they care about. They’re not necessary purchases, they’re purchases that reflect these customers’ values. And brands share those values in an authentic way — through their transparency, ethical business structures and focus on sustainability.
It’s not something you can fake. And it’s harder — but not impossible — to build this kind of connection when you sell an everyday commodity.
Loyalty programs succeed and fail by the attractiveness of their rewards — but how you design and brand your loyalty program can make a big difference too.
Lucy and Yak, a sustainable dungarees brand, is notable for its visually appealing integrated loyalty page. Using UGC photos of customers wearing their products and lifestyle imagery to showcase how customers can earn points, it is fun and on-brand.
Lucy and Yak describes its customer loyalty platform in their own tone of voice. You don’t just earn points, you earn “Yak points”. You don’t get “tier 1”, “tier 2” and “tier 3”, you get “Comfort Lover” “Yak Enthusiast” and “Dungaree Devotee”.
Lucy and Yak makes the most of its strong brand personality to boost its loyalty program. And that, in turn, strengthens the brand further.
Waterdrop – a “micro drinks” company – are paying careful attention to the look and feel of their loyalty program page. It means the Waterdrop Club is synonymous with the overall branding.
It uses fresh colors, light imagery and inclusive language.
On the page itself, everything is signposted clearly – from actions that customers must take to earn points, to information on the free gifts they can acquire.
Waterdrop’s loyalty program helpedg the brand to generate more than €58,000 from referrals. It’s one of the most effective health and wellness loyalty programs out there.
But if you’re looking for good examples of loyalty programs, sometimes the clue is in the name.
Nicce Clothing paid special attention to the name of their program and how they named their points system. “N Coin” is a simple, yet memorable term. It’s a customer loyalty program that clearly has its own brand. But Nicce Clothing also ensures it works with their overall contemporary and minimalist identity.
A family-run oat bar company, Eat Bobo’s got creative in naming their loyalty program example. Bobo’s Love Mitts is the name, while the points are called “Love Mitts”. Like Lucy and Yak, Eat Bobo’s loyalty program leverages and strengthens their down-to-earth, crafted-by-hand image.
If you want people to sign up to your loyalty program, you need to tell them about it. Here are a few brands that are particularly good at marketing their loyalty program.
MoxieLash get their loyalty emails right. They’re visually appealing, to-the-point, and the value proposition is crystal clear.
Encourage your customers to enroll in your loyalty program by building it a standalone page.
100% PURE built a beautifully designed loyalty page to explain the benefits of the loyalty program and to encourage customers to enroll.
“Short-time only” promotions encourage loyalty program sign-ups by creating a sense of scarcity. You could try “double points week”, or offering money off a product to loyalty program members for a month.
Dr. Axe has run promotions like triple point weeks, seasonal offers and higher rewards for referrals.
They also incorporate the loyalty program into all their email marketing and across their website.
Word-of-mouth referrals are often the best way to acquire high-value customers at low cost. Building specific rewards for referrals into your loyalty program is a good way to increase its value.
Like Pulse Boutique, you can use website banners to announce the launch of your loyalty program. It’s a solid, concise way to explain the benefits and include a strong call-to-action.
An often-effective way to scale up your loyalty program is to introduce a competitive element — for example, by creating a kind of “leaderboard” of referrals, and rewarding those customers who are most prolific.
And by having an effective loyalty program marketing plan for those newly referred customers, this can turn into a virtuous cycle.
These examples show us just how powerful loyalty programs can be, how great brands are making the most out of theirs, and how you can use your understanding of your own audience to design your own successful loyalty program.
But for many smaller ecommerce businesses, the biggest challenge is implementation. How do you set up, optimize and analyze your loyalty program without significant investment of both time and money?
With this, LoyaltyLion can help. When you’re ready to get started, book a demo.
