8 Types of Customer Loyalty Programs

Customer Loyalty Program

Turning any customer into a brand is never an easy task. Business owners should use repeatable and predictable strategies to incentivize their customers to buy from them over again. 

That is where and customer loyalty program comes into the scene. Through the right initiative, turning first-time buyers into repeat customers is possible while keeping the brand on top of mind.

Customer Loyalty Programs Overview

A customer loyalty program refers to the structured strategy combining event planning, marketing tactics, commercial incentives, gamification, hardware, software, communication, etc., to help many brands to build a closer and stronger relationship with their existing customers and attract prospective customers. The main goal of the program is to increase customer retention. Depending on your strategy, some churn management software might be worth looking into.

Through recurring engagement rewards, brands can increase their customer loyalty with continuous business growth. The more loyal customers they have, the more rewards available.

Customer loyalty programs gained new recognition over the past years because of several reasons. While they benefit the businesses, customers can also have a better buying experience.

According to Rare Consulting’s study, roughly 83% of customers do business with companies that offer customer loyalty programs. In a highly competitive market, these programs are a way to go, especially that customers quickly switch to other businesses if they experience inconvenience.

What Are The Different Types of Customer Loyalty Programs 

Customer loyalty programs come in different forms. Some brands prefer using a single model, while others decide to use a combination of two or more.

Below are different types of customer loyalty programs:

1. Point Programs 

One of the most common customer loyalty programs available in the commerce world is the point programs. They are also the simplest forms and based on the principle “spend more to get more.” This is quite popular with pawnshops too, like the more you pawn, send money, buy an item or use their services, you will be entitled to points that can be converted to cash. To check what you can do in a pawn shop, visit usa pawn and jewelry shops nearby.

Through these loyalty programs, customers can purchase on your website or in-store and get a specific amount of points, depending on the purchase size. The points can be translated into a reward type. Customers can collect a particular points amount to redeem their reward, whether it is a special customer treatment or a discount.

Rewarding the customers with redeemable points can increase the customers’ average order value. Plus, it encourages them to invest in the brand.

2. Spend-Based Loyalty Programs 

With spend-based loyalty programs, customers have a chance to get loyalty credits for the amount spent at a business. These programs are easy to maintain, create, and understand. Plus, they are proven to effective in reducing churn rates while increasing amounts.

3. Tiered Programs 

Suppose a brand wants the right balance between desirable and attainable rewards. In that case, tiered loyalty program implementation is the answer—this customer loyalty program rewards initial loyalty to encourage their customers to make more purchases.

Generally, tiered programs are based on loyalty levels. Customers have a chance to get points every time they purchase something. If they get more points, they will receive a higher loyalty level. Then, if they get a higher level, they will receive more rewards.

You can create a program that will let your customers ascend according to customer loyalty. You base the tier program on how often customers buy, points, and other engagement metrics. Then, offer more significant benefits and exclusivity the higher the customers ascend.

4. Paid Programs – VIP Member Club 

Paid programs invite customers to pay a membership fee monthly or annually to join the VIP member’s club. In making these loyalty programs effective, brands should market them to their frequent buyers or existing buyers.

The membership allows the customers to access unique opportunities, discounts, and special services. The programs should include exclusive membership benefits. If not, they will lose their value.

5. Value-Based Programs

Your customers are likely to become your brand ambassadors if you structure loyalty programs aligned to their values. So, you need to think of a strategy for rewarding customers without the need to reward them.

That is why you need to define your values. For instance, if you are an online pet store owner, you know how your customers value animal welfare. The best thing you can do is create a loyalty program that is the same as the point system. Meaning, your customers’ purchases are translated into currency.

Whenever your customers make a $60 purchase, you will donate the $8 to animal rescue organizations. When it comes to value-based programs, the rewards are connected with your customers on a deeper level. It is possible by creating an ethical and strong relationship with them.

6. Game Programs 

For sure, almost everyone loves to play games. So, why not involve gaming to creating a loyalty program?

You can turn a customer loyalty program into a game app. That way, you can encourage repeat purchases, strengthen your brand image, and increase customer loyalty while entertaining your customers.

7. Partnered Programs 

Effective customer retention is also achieved through a strategic partnership with the customers. You can combine customer partnership with a loyalty program. That way, customers can get more opportunities. Plus, you grow your business by building new partnerships.

As you provide your customers with relevant value while going beyond what your brand can offer them, you show the customers that you care and truly understand their needs.

8. Hybrid Loyalty Programs 

With hybrid loyalty programs, you can combine two types of loyalty programs. You can merge more than one different system like game and tier programs. That way, your customers can reach new loyalty levels whenever they complete a new game level. Their game participation can entail a purchase.

Tier program with a point-based system is another common combination. That is because it makes the point calculation for the customers easier. It also encourages the customers to pursue more purchases and the next loyalty level.


Once you offer your customers loyalty programs, you have an excellent opportunity to get more loyal customers while growing your business. The key here is to understand the customer needs and improve the way you provide value to them.

In order to achieve this, every business needs to understand and put in place effective CX mechanisms that help connect with their clients with future in mind. 

CX has become a significant part of building lasting relationships with clients with many professionals appreciating the role it plays in business promotion. 

What is CX meaning and why is it important? Before incentivizing your customers, it would be important to know how they perceive your brand or business based on their interactions. 

CX therefore means meeting your customer’s needs and expectations with the aim of offering seamless experiences that result in mutual benefits. Your customers need to feel that they are valued and can trust your brand for long-lasting relationships.

We hope that this post helps you choose which customer loyalty program will effectively correspond to your customer experience and business needs.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.