What Types of Loyalty Programs Can You Offer Your Clients?

Dec 4, 2023
3 min read
Loyalty program
Building loyalty and trust with your customers is an important part of any successful business model. Offering loyalty programs is one of the best ways to do this. While there is no one-size-fits-all loyalty program that works for everyone, there are some basic types of loyalty programs that can be tailored to your customers and your business.

Here’s an overview of the types of loyalty programs you can offer your clients.
  1. Points programs
  2. Tiered membership
  3. Subscription
  4. Referral program
  5. Cashback
  6. Visit-based program

Points programs

One particularly popular and effective variant of such programs is the points program. Operating as a strategic symbiosis of economics and psychology, a points program is meticulously designed to harmonize the act of purchasing with the thrill of earning rewards, thereby forging an enduring bond between customers and businesses.

At its core, the philosophy of a points program is elegantly straightforward yet profoundly impactful: recognizing and celebrating the patronage of customers through a tangible and gratifying rewards system.

Tiered membership programs

Tiered membership programs are designed to reward customers based on their frequency and total spending. Within the program, customers can move up in levels depending on how many purchases they make. The higher their membership level, the more rewards and benefits they will receive. This type of loyalty program can be tailored to better fit the needs of your customers.

In a tiered membership program, the different tiers often have names that reflect their status or benefits, such as "Basic," "Silver," "Gold," or "VIP." Each tier provides an escalating level of value and exclusivity, with higher-tier members receiving more valuable and unique perks compared to lower-tier members.

Subscription programs

Subscription programs offer customers a recurring service, usually at a discounted rate. This could be anything from a weekly subscription to a monthly delivery of a product or service. This type of loyalty program can help increase customer loyalty by providing them with the same product or service on a regular basis. Subscription programs also make it easy to track customer spending and reward them for their loyalty.

Examples include streaming services like Netflix and Spotify, subscription boxes for curated products, software subscriptions (SaaS), loyalty programs, and gym memberships. Subscriptions offer predictable revenue, customer loyalty, and opportunities for upselling.
Woman working in laptop

Referral programs

Referral programs are an effective way to build loyalty and encourage customers to continue doing business with you. These types of programs offer customers a reward for referring friends and family to your business. This could be a discount, a special offer, or a free gift. Referral programs are a great way to spread the word about your business and increase customer loyalty.

The existing customer gains a discount for their next purchase, incentivizing them to spread the word. The new customer gets a discount on their first purchase, making it more appealing for them to buy. The service provider attracts new customers and increases sales while rewarding its loyal customers.

Cashback programs

A cashback program is a rewards initiative offered by businesses where customers receive a percentage of their purchase amount back as cash, credits, or discounts. When customers make purchases, a portion of the money spent is returned to them in the form of a cashback reward. This encourages customer loyalty, repeat purchases, and engagement with the business's products or services. Cashback programs are commonly used in various industries, such as retail, finance, travel, and services.

For example, a language mentor offers this program with a 5% cashback rate. A customer purchases 10 lessons for $500 using their registered account. After the purchase, the customer's account is credited with $25 in cashback. Over time, as the customer continues to make purchases, their accumulated cashback grows, and they can choose to redeem it for discounts on future purchases.

Visit-based programs

A visit-based program can be used in every business offering service. It is a loyalty initiative where customers earn rewards by frequenting a business. Customers accumulate visits, and after reaching a set threshold, they receive rewards like discounts or free items. It encourages customer loyalty, repeat visits, and engagement. For instance, a massage studio might offer a discount after a certain number of visits.

There are many types of loyalty programs available, and it can be difficult to decide which one is right for your business. Consider the needs of your customers, and how you can best reward and incentivize them to stay loyal to your business.

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