10 Effective Loyalty Programs to Drive Repeat Purchases

✍🏻 Dominik Díaz

Published: Tuesday, Oct 03

Are you tired of customers wandering off to explore new stores, even if they love your products? Well, it’s time to turn the tables and keep them hooked on what your business has to offer!

Loyalty programs are the secret sauce for any business, as they have the power to transform one-time shoppers into lifelong fans. Whether you’re in the business of coffee, clothes, or accessories, you can persuade your customers that the grass is always greener on your side of the fence.

Buckle up as we dive into the world of loyalty programs that will make your brand shine bright and keep customers coming back for more.

What Is a Loyalty Program?

A loyalty program is a way of rewarding customers for remaining loyal to your brand by providing discounts, free items, coupons, or special offers. Customers will be able to redeem these rewards after making several purchases at your store. It is a great strategy to increase customer retention.

There are various types of loyalty programs that you can choose from and implement as soon as possible. Continue reading to find out which is ideal for your store.

Do Loyalty Programs Work?

Loyalty program members generate 12-18% more revenue growth each year than non-members if properly executed! It’s worth trying it out and seeing if it works for your brand.

How to Create a Loyalty Program

The key to creating a successful program is to make it personal and valuable for your customers. There are a few elements to consider when creating a loyalty program, such as what type of rewards and perks you’ll offer and how customers can earn them.

But don’t worry, there’s no need to reinvent the wheel—there are plenty of successful loyalty programs out there that you can draw inspiration from and start generating more sales.

Here are some examples:

The Points Program

The points program is one of the simplest loyalty programs out there. Buyers earn points for every purchase they make, and then they can use those points to get a free item or discount.

For it to be successful, the program must be easy to calculate and understand. For instance, a customer earns 1 point for every 1$ or 2$ spent at your store. Points can be made for purchases and engagement, such as a like on Facebook or a subscription to a newsletter.

It’s also important to make your points program easy to use. Give clients a tangible card to take around and also allow them to access it through their phones with an account or mobile app. That way, if they forget or lose their card (as we all do from time to time), their points remain stored in their phone and can be retrieved.

Short-term and frequent purchases benefit from this kind of reward program the most.

Let’s take Starbucks Loyalty Program as an example:

Starbucks is well-known for its rewards system. Customers receive one star for every dollar spent using a credit or debit card and two stars when using preloaded money from the app. With the stars, members can get free drinks or food.

Coffee is an integral part of many people’s morning routines. Some people drink coffee every morning, so they might as well get rewarded for it!

Fun fact: Starbucks is one of the most popular rewards programs, averaging nearly 29 million members in 2022.

Note: the Gratisfaction app from the PagoYa! App Market can help you run a points loyalty program just as easily as Starbucks!

Listen to the founder of the Gratisfaction app share his insights and tactics on developing loyalty programs.

The Tier Program

With a tier program, the size of the rewards increases with time. The more a customer buys, the bigger the prize. Customers will return in anticipation of earning that prize.

To keep your brand top of mind, you must constantly remind your customers of the benefits, their status, and how close they are to a new level (= additional reward). This program gives customers a feeling of exclusivity and high status and excites them about shopping at your store.

This system works best for long-term customers and high-priced businesses.

For example, the Sephora Beauty Insider Program offers a variety of rewards depending on how much you spent on their products in the past year. It includes invitations to exclusive events, various discounts, and free standard shipping (they really make you feel like a VIP!)

Pro tip: Send a personalized offer via email by segmenting customers that spend over a certain amount in your store. In PagoYa! , you can do that by syncing your PagoYa! store with Mailchimp. For example, you can set up an automated email for customers who spend over $2,000 in your store. The email can congratulate them on joining a new tier and list all the benefits they have now accumulated.

Or, use Order Export on PagoYa! to find out how much your customers spent last year. On your Sales list, click “Export Orders” and download a CSV file. You’ll be able to work with it in Google Sheets to filter customers that ordered over a certain sum from you—then you can offer rewards based on the amount!

The Fee-Based Program

Customers who join this loyalty program pay a fee to get a VIP membership. It offers perks that regular customers can’t access, such as free shipping, more significant discounts, or exclusive products.

Remember that this is most effective for repeat purchases and may not be as interesting for new customers.

For example, Amazon Prime membership provides access to video streaming, prime rewards, or early access to select deals. And they seal the deal with free, one-day shipping. Shoppers are eager to receive their orders and dislike having to wait. They are willing to pay for speed!

Fun fact: Amazon Prime members spend more than twice as much as non-Prime members.

Note: You can sell access to a membership program right in your PagoYa! store! All you need to do is create a product that doesn’t require shipping and name it something like “Access to a membership program.” If you’d like to receive a recurring payment for the membership (say, $2 per month), you’ll find PagoYa! subscription tool particularly helpful.

The Reward Partnership

With this loyalty program, you partner with one or more companies and offer rewards that can be redeemed at participating stores. For this, it is important to work with companies related to your brand that your customers will be interested in. For instance, if your store sells fitness apparel, you can partner with a gym or fitness center. You can offer special co-branded deals or discounts in your partners’ stores.

For example, Air Canada’s Aeroplan members can earn points at various retailers and use them on flights, hotels, and stores — anything a customer might need for a trip.

Pro tip: The easiest way to offer a discount at a partner store is via discount coupons.

The Non-Monetary Program

This program does not offer a monetary incentive but rather a value-based one. Purchasers will not receive any reward directly, but their purchase will help support a specific organization of your choice. In this case, it is crucial to choose a fund that represents your values and your audience’s.

You can donate some of your sales to animal rights organizations, art efforts, educational programs, etc. This choice is determined by your brand’s unique characteristics and your customers’ values.

Don’t forget to keep your buyers informed on how their purchases have helped those funds, and show proof of donation after the fact.

For example, Patagonia, a popular outdoor clothing retailer, donates 1% of sales to preserve and restore the natural environment. They’ve awarded over $140 million to domestic and international environmental groups.

Note: There are several ways to collect donations in your PagoYa! store, both recurring and one-time. Customers will be able to see a donation option on the storefront and/or at checkout.

The Game Program

Why not entertain customers and offer them something special at the same time?

Create a loyalty program based on a game and offer your buyers gifts, discounts, or exclusive deals when they win. The game must be simple and easy to use and should offer something that satisfies your customers’ interests. Stick to fair play: the odds must be at least 25%.
You can go for a “Spin the Wheel” game or a quiz.

Let’s take Starbucks as an example again (sorry, they are just killing their loyalty game). Every year, they launch their summer games, which allow members to play a puzzle game, collect points, and win rewards. The prizes include free drinks, food, accessories, gift cards, and even trips. It’s addicting!

Pro tip: You can set up a gamified loyalty program in your PagoYa! store using the Gratisfaction app. Or, add a spin wheel to your storefront with Discount Spin Wheel.

The Cashback Program

This type of loyalty program is quite simple: customers spend a certain amount of money and receive a portion back. It helps increase transactions and is easy for a customer to understand.

As this loyalty program does not provide an immediate reward, keeping customers engaged with your brand is critical. The results are only seen after a specific amount of time and repurchases.

For example, The CVS Extra Care program allows you to get 2% back of all your purchases.

The Hybrid Program

This is a combination of different types of loyalty programs.

But don’t try too hard here: if you combine too many types, it may confuse your customers. Points and tier systems work well together, unlike the mix of cashback, game, and fee-based programs.

For example: When you register for Kiehl’s Rewards, a free birthday gift is guaranteed, as well as a $10 reward for every $100 spent.

The Ambassador Program

How about rewarding your fans by putting them on your ambassador list? Give them freebies or VIP access to your services in exchange for spreading the word about your store on social media, review websites and in-person events.

This loyalty program is excellent for increasing social proof and brand awareness. Potential customers will be encouraged to try the product after seeing the ambassador use it and give a positive review. They trust their choices, and reviews in the form of videos or pictures are always more honest.

For example, Lululemon’s ambassador program enables individuals who engage in a variety of activities, such as running, yoga, studio owners, artists, and chefs, to become a part of the Lululemon community. They get to test out their products, connect with other ambassadors, and host company events such as yoga classes (while wearing their clothes).

This way, Lululemon’s ambassador program promotes the brand, demonstrates its products in action, and creates a community around them.

Birthday Gifts

This one is easy: you present your buyers with gifts on their birthdays. It works for any business with a customer database, and if you offer a birthday gift for signing up for subscribing to your newsletter, it helps to build an email marketing list. A gift can be an exclusive product, a discount, or a sample. Who doesn’t love gifts on their birthday?

For example: World Market offers a free reward on your birthday — and it’s a surprise!

Pro tip: Add a custom field to your checkout to ask customers for their birthday. Don’t forget to explain why you are asking for it.

Alternatively, celebrate a customer’s purchase anniversary by sending them an automated email with a discount coupon. This option is even easier as you won’t have to track all your customers’ birthdays. Just enable the “One Year After Purchase” email, specify the discount amount, and the emails will be sent out automatically to all eligible customers. (It’s a good idea to let your customers know about this perk to build loyalty.)

Best Practices for Loyalty Programs

To maximize the effectiveness of your loyalty program, remember these key guidelines:

  • Keep the terms simple and straightforward, ensuring clarity for your customers.
  • Simplify the sign-up process, making it quick and easy for them to join.
  • Offer valuable rewards that make their loyalty worthwhile and exciting.
  • Encourage ongoing engagement to promote long-term participation.
  • Provide additional value for each action taken, incentivizing customers to stay active.
  • Don’t forget to express gratitude and appreciation for their participation throughout the program.

By following these principles, you can create a loyalty program that truly captivates your customers and keeps them coming back for more.

Do you want more information?

Get free online marketing tips and resources delivered directly to your inbox.

No charge. Unsubscribe anytime.

This may also interest you…

Understanding Vision Statements: 21 Notable Examples for 2024

Understanding Vision Statements: 21 Notable Examples for 2024

Crafting a powerful vision statement is the cornerstone of a company’s future success. Beyond motivating employees, it serves as a guiding beacon, shaping collective endeavors. An inspiring vision captivates both employees and customers, fostering commitment and igniting a transformative journey.

read more
Understanding Mission Statements and Illustrative Examples

Understanding Mission Statements and Illustrative Examples

Explore the unique missions that drive businesses beyond the common goal of profit-making. While profitability is universal, each entrepreneur shapes a distinctive vision. Some seek to enlighten and educate customers, while others prioritize creating the most joyful customer experience.

read more