In an industry where the competition is steadily increasing, customer engagement and retention is a constant struggle for eCommerce businesses. But the one strategy you do see them set in place to address the same is a Shopify customer loyalty program.
So, are all customer loyalty programs a success?
Not every eCommerce business sees success with customer loyalty programs.
Even if they do manage to promote their loyalty program and get enough sign ups, there are very few that are able to see active engagement.
That’s because a one-size-fits-all approach does not work when it comes to Shopify customer loyalty programs.
In this post, we’re going to introduce you to the different types of eCommerce customer loyalty programs along with examples – so you can pick one that is more suited for your target audience.
Different customer loyalty programs
Here is a list of different types of customer loyalty programs for your business to try.
1. Point Programs
Point programs are among the most common types of customer loyalty programs. Customers earn points for making purchases, and these points can later be redeemed for rewards or discounts. Here’s more detail:
- How It Works: In this loyalty program, customers earn points based on their spending, with a certain amount of points allocated per dollar spent.
- Benefits: Encourages repeat purchases and incentivizes customers to spend more to earn more points.
- Example: Starbucks Rewards
- Pros: Straightforward and easy to understand, appeals to a wide range of customers.
- Cons: This can lead to a short-term focus on earning points instead of fostering true brand loyalty.
2. Spend-Based Loyalty Programs
Spend-based programs are one of those types of customer loyalty programs where customers get rewards based on the total amount they spend over a certain period. This encourages larger and more frequent purchases.
- How It Works: Customers are classified into tiers based on their spending levels (e.g., silver, gold, platinum), each offering escalating rewards as the spending threshold increases.
- Benefits: Motivates customers to spend more to unlock higher rewards, and strengthens customer relationships.
- Example: H&M sustainability points programme
- Pros: Encourages higher spending, and fosters a sense of exclusivity among top-tier customers.
- Cons: May exclude lower-spending customers and could be complex to manage.
3. Mission-Driven Programs
Mission-driven programs are one of those types of customer loyalty programs that connect customers to a brand’s values and causes, incentivizing loyalty through shared ideals.
- How It Works: Customers are rewarded for engaging in activities that align with the company’s social or environmental goals (e.g., charitable donations, volunteering).
- Benefits: Builds emotional connections with customers who share the brand’s values, and enhances brand image.
- Examples: Toms One for One, The Body Shop’s “Forever Against Animal Testing” campaign.
- Pros: Demonstrates a commitment to social responsibility, and attracts socially conscious consumers.
- Cons: Requires a clear alignment between the brand and the chosen mission.
4. Tiered-Based Programs
Tiered programs offer escalating rewards based on a customer’s loyalty level or engagement with the brand. This keeps customers engaged and striving for higher tiers.
- How It Works: It is one of those types of customer loyalty programs where customers progress through tiers by meeting certain criteria (e.g., number of purchases, total spending), unlocking more valuable rewards at higher tiers.
- Benefits: Encourages ongoing engagement, customer retention, and upselling.
- Example: Myntra Insider membership
- Pros: Provides a sense of achievement, and rewards loyal and consistent customers.
- Cons: May take time to see substantial rewards, which could lead to frustration if tiers are difficult to reach.
5. Refer a Friend Program
Refer-a-friend programs capitalize on word-of-mouth marketing by rewarding customers for referring others to the brand.
- How It Works: Customers refer friends or family to the brand, and if those referrals make a purchase, the referrer receives rewards or discounts.
- Benefits: Leverages the power of social networks, brings in new customers, and strengthens community.
- Examples: Dropbox’s referral program, and Airbnb’s referral system.
- Pros: Low-cost acquisition method, taps into personal relationships, builds a sense of community.
- Cons: Effectiveness depends on customers’ willingness to refer, rewards might need to be compelling enough.
6. Paid Programs
VIP Member Club is one of those types of customer loyalty programs that offer exclusive perks and benefits to customers who pay a membership fee, creating a sense of exclusivity and enhanced value.
- How It Works: Customers pay an upfront fee or subscription to join the VIP club, gaining access to special privileges, discounts, early access to products, and personalized experiences.
- Benefits: Generates an additional revenue stream, and fosters a loyal customer base willing to invest in premium experiences.
- Examples: Adidas’ Creator’s Club.
- Pros: Cultivates a committed customer community, generates recurring revenue, and strengthens brand affinity.
- Cons: This may limit accessibility for budget-conscious customers, and requires consistent value delivery to justify the fee.
7. Cashback Programs
Cashback programs reward customers by offering a percentage of their purchase amount back as cash or credit towards future purchases.
- How It Works: It is one of those types of customer loyalty programs where customers earn a percentage of their purchase as cashback, often deposited into an account or provided as credits for future transactions.
- Benefits: Provides immediate monetary rewards, and encourages repeat purchases.
- Examples: Credit card cashback rewards
- Pros: Appeals to a wide range of customers, tangible and straightforward rewards.
- Cons: Focuses on short-term savings rather than deep brand engagement.
8. Value-Based Programs
Value-based programs emphasize non-monetary rewards that resonate with customers’ interests and preferences, fostering a unique emotional connection.
- How It Works: Customers earn rewards like access to exclusive content, early product releases, personalized recommendations, or invitations to special events.
- Benefits: It is one of those types of customer loyalty programs that creates a sense of personalized appreciation, aligns with customer interests, and enhances engagement.
- Examples: Spotify’s personalized playlists
- Pros: Differentiates from monetary programs, enhances customer relationships, encourages interaction.
- Cons: Requires deep understanding of customer preferences, may not appeal to everyone.
9. Partnered Programs
Partnered loyalty programs are one of those types of customer loyalty programs that involve collaborations between brands to provide cross-promotional benefits and rewards to customers.
- How It Works: Customers earn rewards or discounts from one brand by making purchases from partner brands, creating a symbiotic relationship between the brands.
- Benefits: Expands customer reach by leveraging partner brands’ audiences, offers diverse rewards, and encourages exploration of related products/services.
- Examples: Credit card rewards that can be redeemed with various partner brands, and airline alliances.
- Pros: Enhances the variety of rewards, leverages mutual audiences, strengthens brand ecosystem.
- Cons: Requires careful alignment of brand values, and potential complexity in managing partnerships.
10. Subscription Programs
Subscription programs offer customers ongoing access to products or services in exchange for a recurring fee.
- How It Works: Customers pay a subscription fee to access a product or service regularly, often receiving additional perks, discounts, or exclusive content.
- Benefits: Ensures consistent revenue, establishes a predictable customer base, and fosters long-term commitment.
- Examples: Spotify membership
- Pros: Guarantees customer loyalty over an extended period, and provides regular interaction and engagement.
- Cons: Requires continuous value delivery to justify the subscription fee, may face churn if customers feel benefits need to be improved.
11. Gaming Program
Gaming programs infuse elements of play and competition into the loyalty experience, engaging customers through challenges, rewards, and interactive content:
- How It Works: It is one of those types of customer loyalty programs where customers participate in challenges, missions, or games designed by the brand. They earn points, badges, or virtual items for completing tasks, and these can be redeemed for rewards.
- Benefits: Enhances customer engagement through interactive elements, taps into the enjoyment of gaming, and creates a unique loyalty experience.
- Examples: McDonald’s Monopoly game.
- Pros: Fosters excitement and fun, and attracts a younger and tech-savvy audience.
- Cons: May not resonate with all customer segments, and requires ongoing content updates.
12. Community Programs
Community programs are one of those types of customer loyalty programs that foster a sense of belonging and camaraderie among customers by creating spaces for interaction, discussion, and shared experiences:
- How It Works: Brands create online forums, social media groups, or physical events where customers can connect, share stories, and discuss their experiences with the brand.
- Benefits: Strengthens emotional ties, builds a loyal customer community, and encourages advocacy and word-of-mouth marketing.
- Examples: Sephora’s Beauty Insider Community
- Pros: Creates a loyal and passionate customer base, and fosters customer-generated content.
- Cons: Requires active moderation to ensure positive interactions, may not appeal to all customers.
13. Hybrid Loyalty Programs
Hybrid loyalty programs combine various loyalty tactics to offer a diverse and comprehensive loyalty experience that caters to different customer preferences:
- How It Works: Brands blend elements like points, tiers, gamification, and personalized perks to create a multifaceted loyalty strategy.
- Benefits: Maximizes engagement by appealing to a broader range of customer motivations, and creates a well-rounded loyalty journey.
- Examples: Amazon Prime.
- Pros: Offers a tailored approach, and provides versatility in rewards and engagement.
- Cons: Requires careful management to avoid complexity overload, necessitates clear communication.
14. Free Perks Programs
The free perks program is one of those types of customer loyalty programs that offer customers immediate value without requiring a purchase, enhancing their experience and incentivizing them to continue engaging with the brand:
- How It Works: Brands provide complimentary benefits like free shipping, samples, early access, or upgrades to customers as part of the loyalty program.
- Benefits: Increases customer satisfaction, encourages repeat engagement, and builds goodwill.
- Examples: Sephora’s free birthday gifts, and Starbucks’ free refills for rewards members.
- Pros: Provides instant gratification, and enhances customer perception of value.
- Cons: May not drive significant revenue, and needs continuous refreshing of perks.
15. Lifestyle Loyalty Programs
Lifestyle loyalty programs tailor rewards and offerings to align with customers’ interests, preferences, and behaviors, creating a more personalized and relevant experience:
- How It Works: Brands analyze customer data to understand preferences and then curate rewards, content, and experiences that resonate with each customer’s lifestyle.
- Benefits: It is one of those types of customer loyalty programs that creates a sense of personalization, increases engagement and loyalty, and strengthens brand affinity.
- Examples: Nike’s NikePlus, and Sephora’s personalized beauty advice.
- Pros: Enhances customer connection, provides relevant incentives, and encourages ongoing interaction.
- Cons: Requires robust data analysis capabilities, and potential privacy concerns.
16. Coalition Loyalty Programs
Coalition loyalty programs involve multiple brands from different industries collaborating to offer customers a unified loyalty experience where they can earn and redeem rewards across participating brands:
- How It Works: Customers earn points by engaging with any participating brand within the coalition, and these points can be used for rewards across all brands.
- Benefits: Expands reward variety, increases customer engagement with a broader network of brands, encourages cross-industry spending.
- Examples: Plenti (formerly operated by American Express), Nectar in the UK.
- Pros: Creates a comprehensive loyalty ecosystem, and offers greater flexibility to customers.
- Cons: Requires careful coordination among partner brands, potential for complex reward structures.
Recommended reads before you choose a type of customer loyalty program:
- What Drives Customer Loyalty in Millennial Shoppers?
- How To Increase Customer Loyalty Among Millennials?
- How To Build Loyalty With Gen Z Customers?
Get started with a customer loyalty program for your business
When it comes to implementing customer loyalty programs, tailoring your approach to your target customers is key.
Understanding their preferences and needs will help you design a program that resonates with them and encourages repeat business.
With safe data collection and creating comprehensive rules for loyalty programs, Appstle provides:
✅Multiple loyalty program types
✅In-depth performance analytics
✅Customized loyalty redemption
✅Seamless integration across points of sales and social media platforms