The Marketer’s Guide to Running a Successful Customer Loyalty Program

In an age where consumers are overwhelmed by choice and demand personalization, driving customer loyalty is essential to a company’s long-term growth and success. As a result, many brands are investing in  loyalty programs, with many seeing a healthy return on investment.  

Over the years, the customer loyalty scheme has evolved. But at its core, the model remains the same: offering people a level of reward and exclusivity that incentivizes them to make repeat purchases, becoming brand advocates in the process (through word of mouth marketing). 

But that’s also part of the problem. According to Deloitte, as people join more programs, loyalty and engagement have declined, indicating that as memberships increase, so does the competition for people’s time, energy, and attention.

This means that you need to create a loyalty program that makes a difference, saves money or offers real value to see success.  

In this blog, we’ll explore customer loyalty programs by looking at: 

• What are different types of customer loyalty programs?
• What are the benefits of a customer loyalty program? 
• How can you create a successful customer loyalty program?
• Emerging trends in customer loyalty programs
• 3 great examples of successful customer loyalty programs

There are several different customer loyalty scheme models used by some of the world’s most prominent brands. 

For a monthly annual fee, subscription loyalty members receive exclusive deals, offers, and benefits. With Amazon Prime, for example, subscribers gain access to free same-day or one-day shipping, TV streaming services, exclusive offers, and more.

Tiered loyalty programs offer different scales of benefits based on the amount a customer buys or shops with the brand. Sephora's Beauty Insider program, for instance, includes cash rewards, bonus product samples, and access to exclusive members-only events. The more loyalty you show, the higher your loyalty scheme tier.

With gamified loyalty programs, members earn points for every purchase they make which they can usually redeem for free products or items. Coffee shops and food vendors often use this model to keep their customers engaged and encourage regular physical footfall to their various stores or branches.

With this model of loyalty program, customers can earn points for making purchases and engaging with the app or portal, which they can redeem for discounts or exclusive offers. The North Face's XPLR Pass scheme, for example, allows members to tap into a community by offering early access to products, exclusive events, and leading sustainability initiatives.

For a monthly fee, paid loyalty scheme members can access benefits like free delivery on orders over certain price points. With Walmart+, for instance, members can enjoy free shipping for online purchases, get access to streaming service subscriptions, and earn fuel discounts.

With the right approach, a flawless experience, and incentives that offer genuine value to your customers, launching a customer loyalty scheme comes with a wealth of benefits. These include:

• Consistent levels of customer engagement: Launching a loyalty scheme will ensure your customers consistently engage with your brand, leading to better retention rates.
• Better brand reputation: Offering your customers a deep level of personal value through your loyalty scheme will improve your brand reputation, accelerating your commercial growth in the process. Why? Your most loyal customers become brand advocates and refer you to their peers.
• Higher conversion rates and consistent sales: Loyalty scheme customers are likely to buy more from you, resulting in a steady flow of sales. Your most loyal customers will often spend more, too - boosting your average order value (AOV) in the process.

Access to valuable data: You can use the data collected from your customer loyalty scheme to understand your customers on a deeper level and make more impact with your personalized marketing efforts. In turn, build trust, earn more sales, and grow your customer base faster.

To create a successful customer loyalty scheme, there are certain key elements to consider. These include making your app or loyalty portal as accessible as possible, offering meaningful incentives, and integrating your program across different touchpoints.

If your loyalty program app or portal is clunky, confusing or hard to use, you’ll earn little or no engagement.

When designing your app, keep the concept simple and always prioritize offering a flawless user experience (UX) over using fancy style elements that cause friction.

Make sure your messaging is simple across the board and use clear call-to-actions or navigation icons to guide your customers through the process. The easier your customers find your loyalty program to navigate, the more they’ll use it.

51% of consumers in the US say they would share their data with a brand that offers a personalized experience, according to Deloitte’s 2024 Annual Report on Consumer Loyalty Expectations and Preferences. But while this is the case, many brands are missing the mark when it comes to personalization.

By using your loyalty customers’ data (interests and preferences, buying behaviors, levels of engagement, favorite items, etc.), you can offer personalized deals, incentives, and content that offer genuine personal value.

To set up a loyalty program that works long term, you must make sure your communications, incentives, and content are all tailored to your individual users as much as possible.

To get the most mileage from your loyalty program and make your brand more visible, you should ensure it expands beyond an app, portal or virtual rewards card alone.

Giving your loyalty program omnichannel integration also means that your customers can integrate with your brand seamlessly across every touchpoint imaginable by:

• Offering exclusive in-store deals or discounts (if applicable)
• Setting up push notifications so customers can access content or incentives when they’re on the go
• Rolling out deals with partner brands that your customers can access on separate platforms or websites
• Sending loyalty customers exclusive email content, offers, deals, and access to exclusive virtual or in-person events

You might be asking yourself, “how can I measure and optimize my customer loyalty program?’”To help track performance and make targeted improvements, you should work with these essential metrics:

• Customer Lifetime Value (CLV): This metric measures the overall revenue you can expect from a single loyalty account. Tracking CLV will help you gauge how much revenue your loyalty program is driving over a certain timeframe.
• Repeat Purchase Rate (RPR): This metric will show you the percentage of customers who make repeat purchases in a particular time frame. A higher RPR among your loyalty members typically indicates a rise in customer retention.
• Average Order Value (AOV): Keeping tabs on your AOV will help you determine if your loyalty program members spend more money per transaction than non-members.
• Program Participation Rate: This metric is useful as it measures the percentage of customers who actively participate in the loyalty program on a regular basis. If your rates start to drop, you may need to look at your user experience, communications, and the kind of incentives you offer.

The rise of artificial intelligence (AI) in digital marketing has empowered brands to automate key parts of their loyalty scheme strategy.

Using AI tools, it’s possible to enhance loyalty scheme data analysis, dynamic rewards optimization (serving tailored rewards to customers at the right time in their journey), and delivering personalized loyalty scheme content. 

Advancements in personalization mean that brands looking to foster loyalty send  tailored offers or incentives on, say, a birthday. Apps like Stocard allow you to manage all of your loyalty memberships from a  single platform.

As loyalty schemes continue to evolve, more businesses will focus on improving their personalization efforts and explore cross-brand collaborations to expand marketing reach while offering customers additional value.

According to studies from Open Loyalty, here’s what we can expect to see:

• 58% of brands will prioritize personalization as their main area to increase customer engagement and retention
• 30% of brands and businesses are expected to invest in automation to streamline their loyalty scheme activities
• 32% of brands are looking to explore mutually-beneficial collaborations to improve reach and offer exclusive incentives that enrich their customer loyalty offering

These three different but equally effective rewards programs are a testament to how loyalty programs are evolving to keep pace with customer needs.

Starbucks Rewards has been one of the pioneering schemes since its introduction in 2015 (as it evolved from a wallet-based, or physical, loyalty card). Through carefully-curated partnerships, continual improvements, and a seamless user experience, Starbucks Rewards is one of the world’s most popular restaurant loyalty apps. In fact, 71% of people use the app at least once a week.

The mobile-centric nature of Starbucks Rewards not only streamlines the food & beverage purchasing journey but by incentivizing its customers by buying directly through the app, Starbucks has increased engagement (and collected valuable data) while driving loyalty.

By combining superior customer experience (CX), an engaging mobile app design, and seamless integration with other apps and services including Spotify (an experience that allows customers to save songs they’ve heard in-store to their Spotify accounts), Starbucks Rewards still leads the way in loyalty programs.

Starbucks continually assesses and evolves its loyalty scheme to meet the ever-evolving needs of its customers. In addition to improving the user experience (UX) of its mobile app, the coffee colossus also offers tiered memberships (‘Green Level’ and ‘Gold Level’) that unlock different incentives based on loyalty levels.

Not long ago, Starbucks teamed up with Delta SkyMiles and the Bank of America to offer their loyalty scheme customers additional points, rewards, and incentives.

To redefine its offering and remain competitive in a digital age, US pharmacy chain Walgreens developed its myWalgreens Balance Rewards scheme.

In addition to giving its loyalty customers access to a wealth of personalized deals or incentives via its Balance Rewards app, Walgreens also offers its users incentives for creating healthy habits.

Balance Rewards integrates into a range of fitness apps, making it easy for loyalty customers to track their exercise and earn additional points. Any points that customers earn by tracking their fitness progress can be redeemed towards services including dental co-pays, gym memberships, and counselling sessions.

Not only is this initiative unique and meaningful, but it also aligns with Walgreens’ core brand values as an accessible health and wellness brand. It’s one of the reasons the brand earned a 6.2% growth in sales in 2024.

High-end American department store chain Nordstrom reimagined its loyalty scheme to place a greater focus on personalization and attract a wider audience—resulting in a concept called The Nordy Club.

After becoming a Nordy Club member, customers can create a personal portrait, customizing their style profiles to receive highly-tailored offers, tips, suggestions, and incentives that will help them progress onto the next tier or level.

Pushing the envelope even further in terms of personalization, The Nordy Club rewards exceptional customer loyalty with personalized experiences including house visits from the brand’s best stylists.

Within the first five years of its launch, The Nordy Club became responsible for 55% of the brand’s core business—a testament to the power of a well-executed customer loyalty scheme.

Nordstrom’s loyalty scheme proved so popular that it even strained the luxury retailer’s bottom line. Its rewards customers have accumulated so many collective points, that the company reported a loss in 2024’s first quarter.

With growth comes challenge—the customer loyalty market is no exception. The introduction of GDPR, ongoing data privacy concerns, and general consumer pushback concerning their personal data means that privacy has become a common roadblock.

As brands strive to create a deeper level of personalization in their loyalty schemes, privacy concerns have been raised.

Customer loyalty schemes rely on consumer data to create a level of UX and personal value that builds consumer relationships and results in repeat custom. But, without taking an ethical approach and being transparent with how you intend to use your potential loyalty subscribers’ data, it’s unlikely that your initiative will be a sustainable success.

Despite recent privacy concerns, digitally-driven customer loyalty schemes make powerful customer retention tools.

As demonstrated by Starbucks, Walgreens, and Nordstrom, today’s loyalty schemes are more than about earning points alone. By streamlining the customer experience with digital technology and using all of your available touchpoints in a way that offers a high level of exclusivity as well as a deep level of personal value, you’ll be on your way to success.

To win at the loyalty scheme game, you need to strike the perfect balance between personalization and innovation. By doing so, you’ll form the foundations of a successful customer loyalty scheme—the rest will boil down to your own creativity. The sky's the limit!

Updated 2025

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