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Loyalty platform have proven as one of the most effective tactics for increasing revenue and inspiring customer loyalty. As many as 84% of consumers say they’re more apt to stick with a brand that offers a loyalty program. And 66% of consumers say the ability to earn rewards actually changes their spending behavior.
We know that it costs a lot less to sell to repeat customers than acquire new customers—that’s why brands invest in loyalty and rewards programs.
While they can be effective, customer loyalty programs are nothing new. Most fall into one of four categories: points, tiers, social media, and paid programs. That’s why some retailers are looking to shake things up and find innovative new ways to build rewards programs and inspire customer loyalty.

Types of rewards programs

1. Points-based loyalty programs

Points programs are the most common type of rewards programs. They let customers accumulate reward points they can redeem for freebies, cashback, perks, etc. Customers don’t just earn points from purchases. They can also earn points from sharing on social, leaving reviews, having a birthday, or through gamification.

2. Tiered loyalty programs

Tiered customer loyalty programs are a type of membership where customers get different benefits depending on their rank. Businesses often rank membership into groups depending on certain metrics like sales or engagement.
These customer rewards programs give customers a goal. The higher their tier, the more exclusive and better rewards they’ll receive.

3. Paid loyalty programs

Paid loyalty, or fee-based loyalty programs, give customers immediate and ongoing benefits for a participation fee. These fees can be recurring or one-time.
Paid programs may need to require proof-of-value to get signups, but the business can gain higher customer value from members. A recent report by McKinsey shows that consumers are 62% more likely to spend more on a brand after joining a paid loyalty program.
The most common example of a paid loyalty program is Amazon Prime. While it seems like a hard model to mimic, paid loyalty can suit many different business models.

4. Value-based loyalty programs

The idea behind a value-based loyalty program is to connect with customers on a deeper level. It involves donating a percentage of purchases to charity or welfare programs. You can offer multiple options for different charities to choose from or have one that genuinely aligns with your customers’ values.
This program doesn’t actually reward customers. But it holds a special place for them, as the rewards are used to benefit society. Brands often create a hybrid loyalty program using this model.