Customer loyalty programs are systems designed to reward customers for choosing one brand over its competitors. Such solutions are one of the most frequently used and effective methods to drive repeat purchases, even in low purchase frequency industries.

Loyal clients are much more likely to buy your products or services again over an unknown retailer. A solid, personalized rewards program is quite possibly the most effective way to achieve this. That’s why more than 90% of companies are currently using some sort of customer loyalty program software.

However, a high-quality system isn’t easy to create. Only those with the very best, optimized, and original loyalty features work as intended and fare well with customers.

In this article, we'll look into different key features boosting loyalty, and describe examples of how the world’s leading brands have incorporated them into their loyalty programs. This information will help you design your own, successful customer loyalty program strategy.

Key takeaways

• Loyalty programs, a well-established strategy for enhancing customer loyalty, are widely embraced by 90% of American brands across various industries.
• In 2022, the worldwide market for loyalty management reached a valuation of $5.29 billion, with a projected increase to $6.47 billion in 2023 and an anticipated surge to $28.65 billion by the year 2030.
• Effective customer loyalty programs require a meticulous approach tailored to fit the specific brand, niche, and target audience.
• Successful loyalty programs must offer tangible value and excitement to users, fostering stronger brand-customer relationships.
• Leading loyalty campaigns incorporate diverse features such as point systems, tier structures, comprehensive rewards catalogs, both set and dynamic vouchers and coupons, referral programs, achievement recognition, and gamification elements.
• A well-executed customer retention program not only boosts revenue but also harnesses the power of an existing community, providing valuable data and opportunities for optimization.

What is a loyalty feature?

A loyalty feature within a loyalty program typically refers to a specific component or benefit offered to buyers as part of a larger loyalty program. These features are designed to encourage, cultivate, and reward customer loyalty to a business or brand.

Some of the most popular loyalty program mechanics (described in further detail in the article) are as follows:

1. Points system. A points-based loyalty program allows customers to accumulate points with each purchase, fostering a sense of progression and accomplishment. These points can be later exchanged for discounts, free products, or exclusive services, encouraging repeat business.
2. Tiered rewards. This loyalty feature categorizes clients into different tiers based on their spending or engagement levels. Higher tiers unlock more exclusive benefits, creating a tiered system that motivates customers to strive for elevated status and enhanced rewards through increased loyalty. 
3. Reward catalogs. Loyalty programs often feature a diverse catalog or customer portal of rewards, giving users the flexibility to choose from a range of options. This can include anything from merchandise, gift cards, or even unique experiences, providing a personalized touch to the loyalty program.
4. Vouchers or coupons. Offering vouchers or coupons as part of a loyalty program provides immediate gratification for people. These tangible, instant rewards not only incentivize further purchases but also contribute to a positive and memorable customer experience.
5. Referrals. By encouraging existing buyers to refer friends or family, businesses expand their customer base while rewarding both the referrer and the new customer. This creates a sense of community and mutual benefit within the loyalty program.
6. Gamification. Infusing elements of gamification into loyalty programs adds an element of fun and competition. Challenges, badges, or interactive activities keep brand advocates engaged and motivated to participate actively, enhancing their overall experience and strengthening their connection with the brand.

The main goal of all these loyalty features is to increase customer retention by providing tangible benefits and recognition to loyal customers, thus strengthening their commitment to the brand over time.

Is there any one-size-fits-all loyalty feature?

Loyalty software can use a variety of features to keep users engaged. 

Keep in mind that not everything works for every brand. Choosing the best elements of a loyalty program is a highly subjective matter. The decision should be based on the characteristics of the target group — demographics, presumed lifestyle, and wealth.

For example, you should not opt for a paid program if your customers belong to a low-income group. Similarly, an activity tracking feature similar to the one found in adiClub won’t work well with gamers or certain other social groups.

What will make loyalty features well-used in loyalty programs in 2024?

As we delve into the details of effective loyalty program features in 2024, what matters most is the synthesis of cutting-edge technologies and customer-centric strategies. From personalized experiences to blockchain integration, the key is to create a seamless and enriching consumer journey. 

For a detailed view on this matter, we have prepared the Loyalty Trends 2024 report, which includes analysis and predictions of 100+ loyalty experts who worked with brands such as McDonald’s, Sephora, adidas, and much more. 

For now, let’s examine the factors that can make loyalty functions relevant and exceptionally well-used in 2024.

Embrace personalization

Begin by leveraging data analytics to gain insights into individual customer behaviors and preferences. For example, if data shows a segment of customers frequently purchases eco-friendly products, offer them rewards related to sustainable goods or services. Personalization in rewards and communication can significantly increase customer engagement and loyalty.

Leverage technology for accessibility

Integrate your program with technologies like mobile apps, social media, and digital wallets. For instance, a mobile app could allow people to easily track their points, redeem rewards, or receive personalized offers based on their location or purchase history. QR code scanning for quick rewards redemption at the point of sale can also enhance the user experience.

Ensure reward relevance

The rewards should be both valuable and relevant. If your target demographic is young professionals, consider offering rewards like discounts on work-related products or networking event access. Relevance increases the perceived value of the rewards, making the program more attractive.

Streamline program mechanics

Simplify the process of earning and redeeming rewards. Avoid complex point systems or redemption processes. For instance, implement a straightforward point system where 1 point equals 1 dollar spent, and 100 points equal a $10 reward. Clear, simple mechanisms encourage more participation.

Maintain active engagement

Regular communication is key. Send out monthly newsletters highlighting new rewards, offer personalized deals based on past purchases, and use social media to create a community around your loyalty program. This keeps the program at the forefront of customers' minds.

Incorporate gamification

Add game-like elements to make the program more engaging. For example, create challenges where customers earn points for completing certain tasks, like making purchases in different product categories or referring friends. Leaderboards, levels, and badges can also be used to incentivize participation.

Expand through partnerships

Collaborate with other businesses to offer a wider range of rewards. A coffee shop loyalty program, for instance, could partner with a bookstore to provide rewards like free books or exclusive author meet-and-greets. Partnerships can greatly enhance the attractiveness of your rewards.

Align with social values

Connect your customer loyalty program with social responsibility. If your brand emphasizes sustainability, offer rewards like donations to environmental causes in the customer's name or points for recycling packaging. This approach appeals to loyal members who value social responsibility.

Implement feedback mechanisms

Actively collect and use customer feedback to improve your program. Online surveys, feedback forms at the point of sale, or focus groups can provide valuable insights. This continuous improvement loop ensures your program stays relevant and appealing.

Stay adaptable

Finally, remain flexible to adapt to market changes and customer preferences. Regularly review your program's performance and be willing to make changes. For instance, if customers show increased interest in online shopping, enhance your online rewards and redemption options.

By embracing these trends, loyalty programs can transcend mere transactions, fostering lasting connections with consumers and providing them with an experience that is not only rewarding but also enriching. The key lies in staying attuned to consumer needs, leveraging innovation, and creating loyalty ecosystems that resonate with the diverse preferences of the modern consumer.

To sum up, during the next 2–3 years, the key trends within rewards programs are gamification (including non-transactional customer engagement), experience-based rewards, predictive analytics, and marketing automation. 

According to industry experts, the most critical aspects that can help brands make their loyalty programs stand out in 2023 are personalization, differentiation, and finding new ways to bring customer value.

In most cases, a hybrid loyalty program is the way to go. Points make it easier to track accomplishments in games and show progress in a tier-based reward program. Referral programs are extremely valuable in the sense that they accelerate the time it takes to turn a potential customer into a loyal client.

Top loyalty program features used by prominent brands

A successful loyalty program must provide an exceptional experience in a crowded market with many competing companies. Studies show that 89% of buyers are willing to buy again after a positive experience. This is the main reason why loyalty programs must be engaging and enjoyable and offer attractive rewards.

Here's a look at some of the well-received loyalty programs implemented by major brands to increase their customer base and stand out from the competition. Standing out from the competition, as Jason Whiting, Global VIP Program Director at LEGO Group, noted in our Loyalty Trends Report, is particularly difficult. So, take inspiration from these examples while incorporating your own innovative ideas.

Points

Points are the ultimate loyalty currency for various reward programs. A study shows that 66% of respondents using a rewards program spend more money on a brand to maximize their points earnings. 

This loyalty mechanism is straightforward: clients earn points with each transaction. Subsequently, these earned points can be redeemed to acquire products or unlock personalized discounts, fostering a cycle of continued patronage and customer satisfaction for future purchases. 

In essence, the points system rewards customers for their current transactions and encourages ongoing loyalty by providing tangible benefits beyond the initial point of sale.

Points in action: Boots Advantage Card

With more than 2,100 shops across the United Kingdom, Boots is the UK's leading drugstore. But they certainly don't underestimate the value of customer data and loyalty marketing as part of their continued growth. Their Advantage Card was launched in 1997 and remains one of their most generous and effective loyalty programs to date. 

Every £1 spent at Boots equals 4 points added to the Boots Advantage Card, and each point is worth 1 penny. This means that for 200 points, a customer can buy £2.00 worth of product. These points can easily be used at checkout, either online or in-store. This is a good bargain for regular customers — and certainly enough to choose Boots over any other beauty retailer to make sure their points accumulate.

The Boots loyalty program operates through a private account linked to a unique code, which customers scan during each purchase. Alongside the physical card, a loyalty app was introduced in 2014.

Beyond enhancing customer satisfaction, the system serves as a valuable tool for gaining insights into customer shopping habits by monitoring their activity and data. This information enables Boots to tailor incentives more effectively, such as offering additional points for baby products to loyalty program members.

Boots effectively leverages its community, boasting over 16.3 million active Boots Advantage Card members and 5 million active users of the Boots App. These impressive figures are a result of the appealing benefits provided to registered users.

Achieving this level of success is a challenging feat. Boots dedicated £30 million to the development and refinement of their loyalty program. Ruth Spencer, the company's director of digital and loyalty, emphasized in an interview with Diginomica the crucial role of meticulously tailoring the scheme to align with and track customer behavior.

‍The Boots Advantage Card has been designed from the start so that it drives both loyalty and recognizes the enormous insight asset it provides us. When we developed the scheme, we developed those two in parallel. If you don't think carefully about who you do the design for, and how you operate and keep developing the scheme, you inadvertently end up with either one or the other, or neither. Don't accidentally end up somewhere where you don't want to be. (...) The design that's right for your loyalty scheme has to be based on the knowledge of your customers — Ruth Spencer, CEO of Boots UK

Tiers

Tier loyalty programs operate distinctively compared to points-based systems, though they can be interconnected. Upon initial registration, members are automatically assigned to the base tier.

Subsequent purchases contribute towards their progression to higher levels, unlocking enticing loyalty rewards at each tier. This dynamic setup is a powerful incentive for customers to increase their spending, aiming to attain elevated tiers and enjoy more exclusive benefits.

Below, you’ll find an example of the successful implementation of this kind of brand loyalty software structure.

AdiClub

Introducing adidas, a renowned brand ranked as the 24th largest consumer goods company globally. Boasting over 2000 stores and an impressive annual sales figure of approximately 20 million euros, Adidas stands as the second-largest sportswear manufacturer, only trailing behind Nike.

Despite being a relatively new addition (launched in 2017), Adidas' loyalty program has quickly gained prominence. Joining is free, and advancing through the tiered reward system can also be achieved without any cost. 

Points, which unlock various benefits for customers, can be earned through multiple actions, such as:

1. Signing up
2. Completing profile information
3. Making online or app purchases
4. Leaving reviews
5. Sending in old items for reuse or recycling
6. Logging workouts in the Adidas training app.

The adiClub loyalty program comprises four tiers, each offering unique benefits. The initial tier includes perks like early access to new releases and free delivery. As customers progress through higher levels, they can enjoy additional advantages such as birthday bonuses, access to Adidas Runtastic Premium, free product personalization, and a special surprise bonus at each tier. The VIP tier even grants exclusive invitations and tickets to events.

The brand's brilliance lies in rewarding clients for their purchases and physical activity, aligning seamlessly with Adidas' promotion of a healthy lifestyle. This concept has evolved from a basic loyalty system to a community program, effectively keeping the brand on customers' minds even when they aren't actively shopping.

One standout feature is the adiClub Give Back program, where members can return used items, showcasing Adidas' commitment to sustainability. This aligns well with consumer preferences, as 79% of Gen Zs in 18 countries emphasize the importance of companies adopting sustainable practices.

Adidas further engages its loyal clients through an annual event called Members Week. This exclusive week offers participants in the loyalty program access to product drops, discounts up to 40%, a raffle with exciting prizes, and unique experiences. This enticing scheme motivates new users to join and encourages existing members to make purchases.

And the results for Adidas? The base of 240 million registered members who buy 50% more often and have 2x the customer lifetime value of regular consumers. Despite the pandemic crisis, their net sales increased by almost €3 million in one year.

Reward catalogs

This type of rewards program consists of a list of products, discounts, gift cards, and so on, usually (but not always) available in exchange for earned loyalty points. In order to entice people, the offers should be as attractive and diverse as possible. Many companies pair up with partner brands to present even more rewards to their most loyal customers.

Our Loyalty Trends Report for 2024 predicts a 2% increase in partnership-based marketing in the coming months. An illustration of this concept is the connection between coalition loyalty programs and gift catalogs.

Crédit Agricole Advantage Club

Crédit Agricole is a leading French international banking group and the world's largest cooperative financial institution. They provide attractive benefits for new and returning loyal customers worldwide, including a loyalty rewards catalog designed for Crédit Agricole users in Poland.

Unlike traditional points-based programs, the Crédit Agricole program simplifies the process for its members. To enjoy the benefits, members only need to be active cardholders. By using their card for purchases at partner company stores, they automatically qualify for discounts.

These discounts cover a wide range of products across 15 industries, from electronics to furniture. Customers can avail themselves of these savings both in-store and online at the company's partner brands. To access the discounts, members must present the electronic coupon to the cashier or enter the provided code on the shop's website. It's a hassle-free way for Crédit Agricole users to enjoy savings on their purchases.

In May 2022, the accompanying loyalty program app was introduced. Currently, there are over 10,000 stores where members can redeem rewards. The discounts typically range from 5-10%, occasionally going up to 50% or a fixed value of 100 PLN.

This loyalty reward program doesn't involve customer segments. All clients enjoy equal access to the same rewards regardless of their card type or spending amount. This unique approach stems from the 2022 CAWI study, revealing that 78% of Poles seek discounts for their daily shopping, and most prefer short-term saving strategies.

This initiative has proven highly successful, attracting the same number of customers in the first three months as the previous loyalty program did in almost ten years.

Vouchers and coupons

This is yet another way to leverage earned points or reward repeat customers for frequent visits. As opposed to reward catalogs, vouchers and coupons are generally meant to be used at a specific company.

This approach is commonly employed by restaurants, grocery stores, and similar industries to stimulate frequent visits. Optimal vouchers and coupons are personalized and have a limited-time validity. They may offer discounts on frequently purchased items or include extras and freebies with a purchase. Users can conveniently track these ongoing benefits through a dedicated app.

My Biedronka (Jerónimo Martins) 

Jerónimo Martins, a prominent Portuguese corporate group specializing in food distribution and specialized retail, has made significant strides in its operations in Portugal, Colombia, and Poland. In the Polish market, the company stands out with its ownership of Biedronka, the largest discount store in the country.

The introduction of the My Biedronka card in September 2016 marked a crucial milestone, garnering nearly 10 million users over a span of four years. However, the real surge in results occurred with the launch of the dedicated My Biedronka app in May 2022. Since its official introduction, the app has been downloaded a staggering 4 million times, contributing to an additional 2 million registered users.

The My Biedronka app goes beyond traditional loyalty programs by offering personalized discounts and coupons. Users can explore a range of attractive features on the app, including:

• Personalized "Just for You" offers that change daily from Monday to Friday
• Surprise offers that also change daily
• Price scanner of all products available in the store
• Transaction history
• E-catalog of the best deals

What sets My Biedronka apart is its innovative use of collected data. The app not only benefits the company by providing valuable shopping statistics but also enhances the customer experience by tailoring offers to individual preferences. Biedronka now boasts an unparalleled understanding of its consumer base, surpassing other retailers in terms of data-driven insights.

The app adds a playful element to the shopping experience with Shakeomat, a feature where users can shake their phones to unveil a personalized, surprise voucher for the day. This gamification strategy not only boosts engagement but also adds an element of excitement to each shopping trip. The app strategically utilizes expiration dates to encourage frequent visits, creating a sense of urgency around special offers.

In the financial realm, Biedronka's success is evident in its 2022 income, which reached an impressive 17.6 billion EUR, showcasing a remarkable 20.9% increase from the previous year. Notably, the chain's profit contributes nearly 70% to Jerónimo Martins' overall sales, underscoring the significance of its impact on the corporation's bottom line.

The My Biedronka app stands as a prime example of a company leveraging technology, data, and gamification to enhance both business performance and customer satisfaction.

Referrals

A referral program, often called word-of-mouth marketing, is a type of customer loyalty initiative that acknowledges and rewards current clients for recommending your product or service to others. It works well in high-value niches where frequent transactions may not be the primary revenue driver. This approach not only incentivizes existing customer base but also proves to be an effective method for attracting new customers with a positive inclination toward your company.

Typically, companies provide incentives such as bonus points, extra discounts, or even cash in return for successful referrals. This feature can seamlessly integrate with most loyalty programs, offering the dual benefit of rewarding existing customers and expanding your base.

Westwing Club

Founded in 2011, Westwing positions itself as a "curated shoppable magazine" and has expanded its presence to 11 European countries.

Westwing's customer loyalty program is designed for simplicity. Customers enjoy daily access to new products at great prices, offering discounts of up to 70% off the manufacturer's suggested retail price on products from leading furniture brands. These time-limited promotions are updated daily at 8 AM, encouraging frequent visits to catch the best deals.

The loyalty program operates on a straightforward referral system. When someone registers through your link, they receive a €30 voucher, valid for 30 days. Upon their purchase, you also receive a voucher of the same value, valid for a year. This approach promotes brand awareness, attracts new clients, and rewards loyal customers.

Westwing's unconventional strategy includes a dynamic product offering without a fixed catalog. To keep people engaged, the brand encourages frequent visits. Registered customers can subscribe to a newsletter providing daily inspirations and updates on new releases. Despite this unique furniture and home decor sales approach, Westwing has proven successful in building a loyal customer base.

The differentiating creative and inspirational core of Westwing drives superior loyalty for our love brand, with 80% repeat order share. (...)

Westwing 2022 Results report

Achievements and gamification

Using game elements in customer loyalty programs proves to be a powerful strategy for boosting engagement, retaining customers, reducing churn, and gaining valuable insights into customer motivations. The gamification elements integrated into loyalty programs encompass challenges, quizzes, milestones, leaderboards, rankings, badges, and spending-based tiers. The following example illustrates successfully incorporating these elements into a loyalty scheme.

PlayStation Stars

PlayStation Stars exemplifies an effective rewards program tailored to meet the specific preferences of its target users. The gaming brand has introduced a multi-tiered scheme that enhances the overall gaming experience for players worldwide. Following the trend in the gaming industry, the loyalty program is designed to be gamified.

Players can leverage their gaming skills to accumulate points and earn various loyalty rewards. Points are earned through eligible purchases on the PlayStation Store and engaging in different activities. Upon downloading the app, users can explore a variety of campaigns, ranging from monthly challenges to specific in-game objectives, catering to diverse types of gamers.

The program's primary objective is to boost console sales and incentivize customers to play more and purchase additional games. The earned rewards can be redeemed for discounts on products in the PlayStation Store, add-on content, or exclusive digital collectibles featuring popular characters and nostalgic Sony memorabilia. Users can proudly display these digital collectibles in their showcase within the app.

PlayStation Stars also adopts a tier-based structure, offering four milestones for players to unlock. Each milestone brings more enticing rewards and introduces new campaigns, contributing to a dynamic and engaging loyalty program.

PlayStation Stars was created to celebrate the brand's users, achievements, and history, as well as the impact the console has had on gamers' lives. Grace Chen, the Vice President of Network Advertising, Loyalty, and Licensed Merchandise at PlayStation, explained in an interview with The Washington Post:

It’s beneficial for all players. Obviously, for players who have been with PlayStation for a long time and have been on this game journey with us, we want to be able to recognize and reward them in distinct ways, but there will be a lot of aspects about this program that new customers will enjoy as well.

As this customer loyalty system is relatively new, there's limited information on its success. Joost van Dreunen, a lecturer on the business of games at the New York University Stern School of Business, speculates that encouraging players to be more engaged and active will significantly impact brand loyalty and customer retention for Sony. This becomes especially crucial in uncertain times of high inflation and economic depression.

Summary

After exploring how major companies leverage loyalty software to their advantage, you should now understand how customer loyalty programs operate. Hopefully, you’re inspired to set up your loyalty marketing strategy to engage customers and attract new clients effectively.

To determine your brand's best loyalty software features, closely analyze your target audience, considering their needs and challenges. Also, get guidance on crafting the perfect loyalty strategy. Remember, it's not just about appealing rewards but also bringing value. Stand out from competitors by offering unique elements like early access to new releases, a VIP paid loyalty program, or a creative, gamified approach.

Tracking loyalty metrics is essential to ensure you're achieving desired results. Explore more about optimizing loyalty mechanisms in the increasingly competitive landscape. For further inspiration, check out our Top 100 Loyalty Programs report.

-

For more articles like this one, make sure to follow our LinkedIn channel and stay up to date on all our latest content.