The Independent Retailer’s
Ultimate Guide to Customer Loyalty
How to Create an Effective Loyalty Program
5 Types of Retail Loyalty Programs: How to Make Money and Retain Customers
Learn the basics in our quick reference guide below, and download the full resource to see popular examples and learn more about which type of program is right for your business.
A basic points system is the simplest and most straight-forward type of program. In short, for every dollar a customer spends, they receive a certain amount of points in return. These points accumulate until the customer is able to redeem them for a reward.
Stepped Points Programs
Stepped points begin to add a weighted system to a loyalty program. The weighted system can be used to encourage certain behaviors as well as tap into the exclusivity factor desired by many consumers.
Pay to Play Programs
These programs require upfront fees to become a member and start earning points towards rewards. This type of program has become fairly common, from annual fees for airline mile credit cards to Amazon Prime memberships.
Some companies choose to partner with each other to reward their mutual customers and encourage repeat business within the network. Partner Programs introduce your brand to a new group of potential customers with the endorsement of a brand that they already trust.
Many brands which are household names today used referral programs when they were just starting out. PayPal, Uber, and AirBnB all used referral programs to generate initial buzz and mobilize current customers to recruit new customers.
Download the full 5 Types of Retail Loyalty Programs resource guide.
Spotlight on Pay to Play Programs
Paula Thomas, host of the Let’s Talk Loyalty podcast, shares her thoughts on Pay to Play.
“My favorite form of loyalty in the present and very recent past would be paid loyalty. Panera Bread is probably the best example I’ve seen. They realized that customers were beginning to resent how much money they were spending on coffee every day, so they decided to create a loyalty program in which customers could get unlimited coffee for $8.99. What they found was that customers not only came in more frequently, but they were also more tempted to buy lunch or a cookie as well.”