How’s your loyalty program? (part 2)

In our introduction to loyalty programs last week, we looked at stats from Bond Brand Loyalty that show how important loyalty programs have become to loyalty-program-cardsbusinesses.

70% of consumers modify when and where they shop to maximize points. 33% of customers would not be loyal to a brand if it were not for a loyalty program.

This week we take a look at various types of loyalty programs and 2 examples of how companies use them.


Punch Card: This is the most basic form of loyalty that rewards customers with “punches” on a ticket real or virtual.

Spending Based: A direct form of loyalty tying dollars spent by the consumer to discounts or rewards.

Points Based: This system is based on accumulation. For every x amount of dollars spent the consumer gains x amount of points. When the customer reaches a specific threshold the points can be cashed in for a discount or free item.

Tiered: An approach based on segmenting customers in to tiers based upon spending habits, or frequency of interaction with the business. Each tier has more benefits/perks than the one previous thus encouraging an increase in customer frequency/spending amount.

Visit Program: This system is solely based on the amount of times a consumer visits the physical location of a business. This is useful for physical locations such as theme parks.

Gift Cards: Not traditionally thought of as loyalty programs, we certainly think they are. It’s been shown that consumers are more than twice as likely to pay full price when using a gift card. Additionally, when the card is redeemed it has been shown that customers generally spend more than what the gift card is worth.

Non Monetary Program: This plan rewards its customer base with non-cash, non-point related methods. Think of this as tapping in to your customers’ ideals and values.

Our favorite example of a non-monetary loyalty program is Toms Shoes. When Toms sells a pair of shoes, a new pair of shoes is given to an impoverished child, and when Toms sells a pair of eyewear part of the profit is used to save or restore the eyesight for people in developing countries. In 2015, TOMS Bag Collection was launched to help address the need for advancements in maternal health by providing training for skilled birth attendants and distributing birth kits.

Partnership: A strategic program that partners with another business with same values or has complimentary offerings.

Gamification: This is the most recent form of customer loyalty. It is based on earning badges, competition, achieving goals, leveling up, and community. Examples of these games can be found online from companies that encourage users to sign up, take quizzes, play product related games, watch videos, chat with other members etc.  The rewards can be as simple as virtual “badges” that can be shared on social media for mere bragging rights, or turned in for special perks or offers from the business.

Coffee giant Starbucks gave custom Foursquare badges to people who checked in at multiple locations and offered discounts to people who checked in most frequently at an individual store. The brand used gamification tactics to enhance the Starbuck’s experience and to boost sales as well. Players register for My Reward through an application. Every time they purchase a Starbucks product, they accumulate stars (which actually look like cups that are graphically filled in). But the game does not stop here. There are three “levels” depending on the degree of user loyalty. More frequent visits to a Starbucks store is awarded through an upgraded level. Examples of benefits include: an extra cup of coffee, a birthday gift or even offers designed specially for the customer.

Upfront fee for VIP: A system that charges the consumer to be part of a group of customers that receive perks and benefits that are highly desired. The most well known form of this type of loyalty program is Amazon’s Prime membership.


We’ve seen the importance of loyalty and the variety of the programs that businesses use. Next week we’ll put it all together. Join us to find out what it takes to have a successful loyalty program and what it can mean for your business.

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