5 Effective Customer Loyalty Programs and How to Start One

customer loyalty
Share this news:

More than 90% of companies implement some type of customer engagement or loyalty program.

In today’s competitive business landscape, loyalty programs are marketers’ tool of choice to keep customers instead of constantly trying to attract new ones. According to Invesp, it can cost five times as much to attract a new customer as it is to retain one.

What Do Loyalty Programs Do?

Let’s say you own a bakeshop. You can definitely keep customers coming back just from your tasty treats. But if another shop opens near yours? You need to have a loyal customer base that won’t turn the other way. An engaging loyalty program is one way to achieve this.

Loyalty programs encourage customers to keep coming back by earning rewards for every purchase. These rewards or points can then be used to get a product or discount.

It’s a smart marketing move: you can count on customers coming back to rack up points enough to get their reward. And even with only 5% customer retention, you can boost your revenue by at least 25%.

With that said, businesses need to improve the way loyalty programs are implemented. Almost 29% of consumers want rewards to be more interesting.

Whether you already have a customer engagement plan in place or you’re thinking of starting one, you can use our list below for innovative loyalty program ideas that work.

Points-based rewards card

A tried and tested loyalty program, creating rewards cards is an affordable and easy way to keep customers coming back.

Points-based loyalty programs provide plenty of opportunities for customization. Customers can exchange points either for a monetary discount or another product that you offer. But apart from that, you can use these loyalty cards to offer discounts and other prizes on their birthdays and other occasions.

You can take Starbucks as a great example. With every $1 spent, members can earn “stars” which they can use to redeem a free beverage, food, or merchandise. You can implement this in your bakeshop to encourage repeat customers and then provide sweet treats in exchange for accumulating points.

1. Tiered loyalty programs

Tiered loyalty programs offer customers membership where they get different benefits depending on their rank. Customers can rank up depending on the metric you set, such as the number of visits, amount of purchase, or some other type of engagement.

Plenty of people have FOMO or fear of missing out. By incentivizing each tier, they have more reason to stay loyal to you until they reach the highest membership rank and enjoy the perks it brings.

2. Paid loyalty programs

According to a report from consulting firm McKinsey & Company, consumers are 62% more likely to spend more on a brand after joining their paid loyalty program.

Fee-based loyalty programs are those that provide immediate and ongoing benefits for members upon participation.

One way to implement this for food industry businesses is to offer BOGO for members. Say a customer bought a box of cupcakes. Their membership can entitle them to another box.

3. Charitable loyalty programs


Also known as value-based loyalty programs, this type of loyalty program allows customers to contribute to charitable causes just by purchasing from a business.

Going with our bakeshop example, you can bake a special batch of cookies every day for a month. All the proceeds from the sale of these cookies will then go to your chosen charity. Through this, you can create a variety in your menu and help at the same time.

While it doesn’t directly benefit customers, a lot of people like this type of loyalty program because it makes them feel good about being able to help. From a business perspective, not only does it encourage customer loyalty, but it also boosts your image for donating to various causes.

4. Email Rewards

Email subscriptions provide a wealth of benefits for businesses. For one, your business’ mailing list gives you valuable insights into your customers, which you can use for better marketing.

To increase the chances of your email subscribers reading what you send out, though, you can provide email rewards. From sneak peeks into new cake flavors to exclusive discounts, the possibilities are endless.

How to Start a Customer Loyalty Program

Armed with your best whisk and aluminum baking sheet pan, together with a great rewards program, your effort to keep customers will pay off. But how do you know which program is right for your business?

  • Study customer behavior and design rewards to match

The first step is to know your customers. This will help inform which interaction with your business to reward. Want to encourage them to buy more coffee with the cakes you offer? Offer a free cup for every five they purchase.

  • Make joining easy and convenient

79% of Americans are more likely to join a reward program if it doesn’t require them to carry a card. 75% said they are more likely to engage if the program can be easily accessed from a smartphone. In short, don’t make joining your program a sport.

With an effective customer loyalty program, you can successfully engage repeat customers, strengthening your business and increasing your profits.

Scroll to Top