6 Types of Loyalty Programs to Offer to 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.

What is a loyalty program?

Loyalty programs reward repeat and returning clients with discounts, free offers, and other incentives to encourage them to come back and purchase their service or products from your time and time again.

How do loyalty programs work?

Customers typically earn points, discounts, or other perks, which can lead to increased customer satisfaction and loyalty. This approach incentivizes repeat purchases and helps businesses gather valuable data on customer preferences and buying habits which enables more targeted marketing strategies and enhances overall customer experience.

Loyalty programs foster customer retention, increase the customer lifetime value, and drive repeat sales. They help brands with differentiation in a competitive market and help build a positive brand image, leading to increased word-of-mouth referrals and new customer acquisition.

What are the types of loyalty programs you can offer?

There are many different approaches to loyalty programs and each has its own set of benefits and potential disadvantages. Let’s take a look at each of them and see which one you can offer using Reservio.

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.
The visit-based program can work in a couple of different ways: 
  • A time pass where clients purchase, let’s say, a 6-month pass to your establishment and they receive an extra month. 
  • A credit pass where clients pre-pay a certain amount, e.g. $ 100, and they get an extra $ 30 to spend in your studio or salon.
  • Or a visit pass. Clients pay for a set number of visits and get an extra for free.
You can apply the visit-based program with Reservio. Read more about how to use it and how it works in these guides:

Points-based program

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 designed to incentivize customers to buy more because with every purchase they accumulate points they can later exchange for benefits like discounts, free products, and others.

At its core, the philosophy of a points program is straightforward but elegant - you improve your revenue while giving your clients the ability to earn something for their loyalty to your business.
desk with a coffee and computer

Tiered-membership program

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. 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.

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 bring new clients to your business.

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.

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.

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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