Businesses of all sizes are always looking for ways to increase customer loyalty. Statistics show that 56% of customers stay loyal to brands that get them. It means they are more likely to return and spend money again.
As a business owner, you must design loyalty program to keep customers coming back.
In this blog post, we will discuss loyalty programs, how they work, and how they help you retain existing customers.
We will also provide five tips for designing an effective loyalty program with PassKit and some priceless tips and tricks for growing a loyal customer base.
So, if you want to learn more about creating a loyalty program your customers will love, keep reading!
What is a loyalty program?
Businesses use loyalty programs to build stronger customer relationships and increase customer lifetime value.
You can offer rewards like points for purchases, reviews, or referrals through loyalty programs.
Customers can then use these points for discounts, personalized offers, and other benefits.
How does a loyalty program work?
Customer loyalty programs are a strategic way to keep existing while attracting new customers. When customers make purchases, they earn points.
They can redeem these loyalty points for:
- Discounts: Percentage off future purchases
- Complimentary products: Full-priced items at no cost
- Exclusive offers: Special deals for loyalty members
This system encourages customers to spend more to earn more points, boosting your income.
Customer data plays a key role in these programs, helping companies tailor rewards to suit their target audience better. Loyalty programs also help expand a company’s customer base by making it more attractive.
Around 70% of consumers are more likely to recommend a brand with a good loyalty program.
Loyalty programs reward customers for their commitment and help companies increase customer retention.
It creates a win-win situation where loyal customers feel valued while businesses increase profits.
Why is customer loyalty important?
Customer loyalty helps businesses retain customers, which leads to higher profits and a strong reputation. When customers consistently choose your business over competitors, it boosts customer retention and your bottom line.
Furthermore, 82% of companies agree that retention is more affordable than acquiring new customers.
Key benefits of successful loyalty programs:
- Reduced marketing costs
- Higher profits from repeat purchases
- Valuable feedback from frequent customers
- Willingness of loyal customers to pay premium prices
- Ability to test new products with an engaged audience
Satisfied and engaged customers give positive feedback and are likely to share their experiences, improving brand loyalty and promoting business growth.
Types of customer loyalty programs
Diverse types of loyalty programs appeal to different customer segments. Let’s explain the most frequent ones.
Points programs
Points-based loyalty programs reward customers for repeat purchases with points. Customers can redeem these points for discounts, free products, or other perks. Since points accumulate with each purchase, these points reward systems encourage customers to keep coming back.
Tiered programs
Tiered programs provide different reward levels based on purchase amounts or frequency. As customers spend more, they move up tiers, unlocking better rewards. They can often access rewards from lower tiers.
Paid loyalty programs
A paid program requires a fee in exchange for loyalty rewards. These programs usually offer better rewards compared to points or tiered programs. Examples include access to exclusive benefits, early access to sales, or other premium perks.
Value-based loyalty programs
Value-based programs aim to build customer loyalty. They often allow customers to donate a percentage of their purchase to a charity. Companies choose one charity or enable customers to select from several options, turning their purchases into meaningful rewards.
Whether it’s points programs, tiered programs, paid programs, or value-based programs, each type offers unique benefits and caters to different customer preferences.
What’s the best timing for setting up a loyalty program?
Launching a loyalty program when you have a growing customer base and a steady revenue stream can be perfect. This timing allows you to test the program with enough customers and make adjustments for better results.
The goal is to increase customer loyalty and improve your retention rate.
With a strong foundation, you can optimize your program over time to meet the needs of both your business and your customers.
Focus on creating a program that encourages repeat visits and long-term customer engagement.
How to create a strong loyalty program with PassKit
PassKit is one of the best loyalty program apps designed to facilitate the creation, management, distribution, and analysis of mobile wallet passes, such as digital coupons, loyalty cards, membership cards, and tickets.
It integrates seamlessly with Apple Wallet and Google Pay, allowing you to improve customer engagement without requiring your customers to download additional apps.
PassKit enables you to leverage the capabilities of mobile wallets, making it easier for your customers to store and use various types of passes directly on their smartphones.
The platform allows quick setup, enabling users to create and distribute passes within minutes. It provides loyalty card templates and customization options to align with your brand’s identity.
PassKit supports various online and offline distribution channels, including email, SMS, social media, and in-store promotions, improving the reach of marketing campaigns.
You can analyze the performance of your passes through built-in customer loyalty analytics tools, enabling you to track engagement and redemption rates effectively.
PassKit offers a pay-as-you-go pricing model, significantly reducing costs associated with traditional paper and plastic passes, making it a sustainable option for businesses.
Start a 45-day free trial to experience all features.
Offer a variety of rewards
The core of any automated loyalty program is its rewards. Providing a range of options will help cater to different customer preferences and keep them engaged.
Think about offering rewards such as:
- Discounts on future purchases
- Free samples of new products
- Cashback offers
- Birthday surprises
- Early sales access
- Free shipping
- Merchandise
- Exclusive products
- VIP experiences
Diverse rewards can attract customers to join and stay active in your QR code loyalty program.
Design appealing digital loyalty cards
Using PassKit, you can create customized digital loyalty cards that are easy for customers to store and use. Follow these steps to prepare your card with our digital loyalty card maker:
- Sign up: Start a 45-day free trial on PassKit.
- Project naming: Give your project a name that reflects your brand.
- Design cards: Customize the appearance for Android and Apple users. Our digital card templates comply with Apple and Google Wallet design standards.
- Barcode option: If scanning at a POS is required, select a suitable barcode type and use the PassKit PassReader app.
- Visual elements: Upload your logo and a hero image.
- Color scheme: Choose a color palette that matches your brand.
- Template info: Input essential information into your card template.
- Additional sections: Add applicable sections for more details.
- Backfield data: Include information on the back of the card.
- Links: Add important links like social media profiles and official websites.
Once everything is set, save your design and start working on your loyalty program strategy.
Distribute digital loyalty cards effectively
PassKit helps you facilitate the necessary tools to promote and distribute your digital loyalty cards, digital membership cards, and digital coupons using various online and offline channels.
Here are some examples.
In-store promotions
For in-store promotions, PassKit allows businesses to distribute digital cards, such as club membership cards or gift cards, directly to customers’ smartphones. It enables customers to easily access and use their digital cards at the point of sale.
Online shopping
When it comes to online shopping, PassKit’s digital card distribution can be integrated into the checkout process, allowing customers to receive and store digital cards for loyalty programs, discounts, or gift cards directly in their mobile wallet.
Email marketing
For email marketing, PassKit enables businesses to include links or buttons in their marketing emails. With a simple click, recipients can add digital cards to their mobile wallets. This provides a convenient and engaging way to distribute digital cards and drive customer engagement.
Automated messages
PassKit supports automated messages, allowing businesses to set up triggers that send digital cards to customers based on specific actions or criteria.
For example, a customer who makes a certain purchase may automatically receive a digital loyalty card via PassKit’s automated messaging system.
Overall, PassKit streamlines digital card distribution across various channels, making it easier for businesses to engage and incentivize customers while providing a seamless user experience.
Start a 45-day free trial to see how it works.
Promote your loyalty program
To effectively promote your loyalty program using PassKit, you can leverage several strategies to build awareness and attract customers.
Social media
Use your social media platforms to share information about your loyalty program. It involves creating engaging posts that highlight the benefits and perks of joining.
Ensure that the design of these posts aligns with your loyalty card styles for a consistent brand image. You can also use targeted ads to reach a broader audience and encourage sign-ups.
Email marketing
Send newsletters and email campaigns to your existing customer base, emphasizing the advantages of your loyalty program. Highlight exclusive rewards, discounts, and personalized offers that members can enjoy.
Use compelling subject lines and clear calls to action to drive engagement and encourage customers to join.
Word-of-mouth
Encourage your satisfied members to share their positive experiences with friends and family. Use referral incentives, where existing members receive rewards for bringing in new members.
Additionally, showcase testimonials and reviews from happy customers on your website and social media to build trust and credibility.
By combining these strategies, you can effectively promote your loyalty program and increase customer participation, driving higher engagement and retention.
Additional customer loyalty program tips
Here are five additional tips to optimize your customer loyalty program for maximum impact.
Simplify your loyalty program
Make sure your loyalty program is straightforward and user-friendly. Customers should be able to join effortlessly, without any complications. Ensure that rewards are easy to understand, access, and redeem to motivate customers to participate actively.
Ensure program flexibility
Adapt your program to your customers. Consider implementing multiple reward tiers or various ways to redeem points. This flexibility helps maintain the program’s relevance and keeps customers engaged by offering them choices that suit their preferences.
Keep your program engaging
Regularly update your loyalty program to keep it interesting. Introduce new rewards, adjust the redemption process, or run special promotions. Keeping the program dynamic and fresh encourages ongoing participation and strengthens customer loyalty.
Aggressively promote your program
Ensure that customers are aware of your loyalty program through robust promotion efforts. Use your website, social media channels, and other marketing tools to spread the word.
Offering incentives like sign-up discounts can boost customer referrals and improve social media sharing, contributing to a more successful loyalty program.
Leveraging loyalty program data and customer feedback can provide valuable insights for further program refinement.
10 Best customer loyalty program examples
Running a business is all about keeping your customers happy. And one of the best ways to do that is by implementing a customer loyalty program.
Because there are many different ways to set up a loyalty program, we’ve compiled a list of the top 10 most successful examples you can use as inspiration when creating your loyalty program.
1. Starbucks Rewards Program
Starbucks offers a flexible and accessible rewards program that has captivated millions. You can collect stars through purchases and activities, which can then be exchanged for benefits.
You can sign up on their website, but the app sign-up is preferred because it lets Starbucks collect more user data.
Special perks and benefits are exclusive to the app, encouraging frequent use. Bonus Star challenges and Double Star Days also keep the engagement levels high.
- 1 star per dollar if you scan and pay separately with your credit card
- 2 stars per dollar if you pay with a preloaded digital Starbucks Card
- 3 stars per dollar if you use the Starbucks Rewards Visa Credit Card
Typical rewards include:
- 25 stars – Customize your drink with extras
- 50 stars – Brewed coffee, bakery item, or hot tea
- 150 stars – Handcrafted drink, hot breakfast, or yogurt parfait
- 200 stars – Lunch sandwich, protein box, or salad
- 400 stars – Starbucks merchandise
2. Sephora’s Beauty Insider
Sephora’s Beauty Insider program ranks high among loyalty programs in the beauty industry. The rewards system offers customers perks for being loyal shoppers.
With ties to top makeup brands, Sephora can provide significant discounts, freebies, and exclusive offers, enticing millions to join.
There are three membership tiers. Each tier provides different benefits:
- Basic members – Birthday gift, free shipping on orders over $50, access to special offers
- VIB members – Basic benefits, plus a 20% discount on all purchases and early sale access
- Rouge members – VIB benefits, plus a free custom makeover and an additional 10% discount
Leveraging supplier relationships can create a more compelling loyalty program.
3. Amazon Prime
Amazon Prime isn’t a typical loyalty program due to its paid membership, but it offers valuable lessons. By charging an annual fee, members enjoy benefits like unlimited two-day shipping. It appeals to the impatience of online shoppers.
Studies show that Amazon Prime members order four times more than regular Amazon customers. Offering a strong value proposition can significantly increase customer engagement.
4. The North Face
The North Face has a personalized and flexible loyalty program. The XRLP Pass Program lets members earn points for various activities. Members can redeem these points for unique experiences like mountain climbing trips.
Earning points is easy. You can earn:
- 25 points for customer referrals
- 10 points for using reusable bags in-store
- 5 points for checking into a National Park
- 25 points for purchasing recycled items
- 10 points for downloading the North Face app
- 5 points for store check-ins
Rewards include limited-edition items, exclusive deals, product testing opportunities, and more. The program strengthens emotional ties between customers and the brand.
5. Tarte Point-Based Rewards
Tarte’s loyalty program is geared towards makeup enthusiasts. Members earn points through purchases, which they can later exchange for rewards. The point system includes:
- 100 points for signing up
- 100 points per full-sized item purchased
- 50 points for mini items or sale products
Loyal members also get early access to sales and new releases. Tarte’s efficient email marketing updates customers on promotions and loyalty status, adding to the program’s appeal. The visually appealing design of their loyalty elements keeps customers engaged.
6. Hilton Honors
Hilton Honors is a leading hotel loyalty program offering extensive rewards for frequent travelers. Members can earn points through hotel stays, car rentals, and credit card purchases. Points can be redeemed for free nights, room upgrades, and exclusive experiences.
The program has multiple tiers, each offering different benefits:
- Member – Free Wi-Fi, late check-out
- Silver – Fifth night free, rollover nights
- Gold – Free breakfast, room upgrades
- Diamond – Executive lounge access, premium room upgrades
Hilton also offers partnerships with airlines and car rental companies, providing more ways to accrue points.
7. Ikea Family
Ikea Family offers a unique loyalty experience focused on home improvement. Membership is free and includes special discounts, member-only events, and free coffee or tea during store visits.
Ikea’s program also includes:
- Price drops – Exclusive member discounts on specific products
- Workshops – Free or discounted workshops on various home improvement topics
- Birthday surprise – Special birthday offers
Members also receive regular updates on promotions and events, keeping them engaged and informed.
8. Uber Rewards
Uber Rewards provides benefits for frequent users of their ride-sharing service. Members earn points for every dollar spent on Uber rides and Uber Eats. Points lead to different membership tiers:
- Blue – Basic membership
- Gold – Priority customer support, flexible cancellations
- Platinum – Price protection, priority pickups at airports
- Diamond – Premium support, complimentary ride upgrades
Uber Rewards focuses on enhancing customer experience.
9. Chick-Fil-A
Chick-fil-A’s loyalty program, Chick-fil-A One, offers rewards through a tiered system. Members can earn points with every purchase that can be redeemed for freebies. The tiers include:
- Member – Earn points for purchases, birthday rewards
- Silver – More points per dollar, personalized experiences
- Red – Exclusive benefits, access to unique experiences
- Signature – Highest rewards and priority customer service
The program’s highlights include birthday treats and personalized surprise rewards. Members also receive points multipliers and early access to new items.
10. Expedia Rewards
Expedia Rewards grants points for travel-related expenses. Members earn points on hotel stays, flights, and vacation packages, which can be redeemed for discounts and rewards.
The tiered system includes:
- Blue – Basic membership, exclusive member discounts
- Silver – More points, priority customer service
- Gold – Room upgrades, flexible check-in/check-out
Expedia’s focus on personalization enhances the user experience, rewarding loyal customers with exclusive deals and offers. Regular updates keep members engaged and informed about new point collection and redemption opportunities.
Design attractive loyalty programs with PassKit
A loyalty program is an excellent way to keep customers coming back. With PassKit, you can design a loyalty program that stands out.
Use the platform to create a unique experience that makes customers feel special and valued. By offering tiered rewards, you can encourage more spending.
Customers love moving up tiers to unlock better rewards, which increases their loyalty.
PassKit’s tools are intuitive, allowing you to design visually appealing and user-friendly loyalty cards easily.
Customize them with your brand colors and images to make them instantly recognizable. Get detailed insights into customer behavior and track your program’s performance.
You can test PassKit’s design tool to understand its features before committing to a paid plan. Engage your customers and increase retention with a well-designed loyalty program. Begin now and see your sales grow!
FAQs on how to design loyalty program
How are loyalty programs designed?
Loyalty programs provide clear value to customers, encouraging them to join and stay engaged. The point system should be intuitive, making it easy for members to understand how they earn and redeem rewards.
Digital tools like PassKit can help customers track their rewards effortlessly through Google and Apple mobile wallets. Ensuring that all program elements align with your branding is also crucial for maintaining consistency and recognition.
How can I create a loyalty program?
To create a loyalty program, start by defining your goals. Identify what you want to achieve, whether it’s increasing customer retention, boosting sales, or gathering customer data.
Develop a simple point reward system, ensuring it’s easy for customers to understand and use. Consider incorporating exclusive perks or deals for members to add value.
Ensure your program is integrated seamlessly across various online and in-store platforms.
What is the best example of a loyalty program?
A standout example of a successful loyalty program is the Starbucks Rewards program. Members earn stars for every purchase, which they can redeem for free items.
The program includes tiered rewards, encouraging continued engagement and higher spending. Additionally, Starbucks offers personalized offers and exclusive benefits for members, such as free birthday drinks and access to members-only events.
This combination of easy-to-earn rewards and exclusive perks makes it an exemplary loyalty program.
What is the average cost of a loyalty program?
The cost of a loyalty program can vary widely depending on its complexity and scale.
Basic programs might include simple point systems and email notifications, which can be relatively inexpensive.
More advanced programs might integrate with mobile wallets and offer substantial rewards, resulting in higher costs.
Businesses spend between $50,000 and $200,000 annually on maintaining a loyalty program, which covers marketing, technology, and reward costs.
With PassKit, you pay as you grow, starting at $39 per month. Start a 45-day free trial.
