How to Build a Loyalty Program That Aligns With Your Business Goals

You’ve heard it before—customer retention is more cost-effective than acquisition. While some businesses have a higher CRR, others see a higher churn rate.

Whether you’re in retail, food & beverage, entertainment, wellness, nonprofit, franchise, or the like, aligning your customer loyalty programs with your business goals can drive repeat purchases (and revenue), improve the customer experience, and strengthen brand affinity.

Around 80% of Americans are part of at least one loyalty program, and being in these programs increases the chances of repeat purchases by 60%.

Let’s explore how to build a loyalty program that works for your business.

loyalty program

Understanding the Loyalty Program Business Model

Loyalty programs work best by creating meaningful incentives for loyal customers while helping businesses achieve specific objectives. The key is selecting the right program type that resonates with your target audience and business goals. Here are some customer loyalty program examples to consider:

1. Points-Based Programs

These programs allow customers to earn points for every purchase, which they can redeem for rewards. This model works well for businesses that encourage frequent purchases.

Real world example: Starbucks Rewards incentivizes customers by offering points (Stars) for every dollar spent, leading to free drinks, exclusive deals, and early access to promotions.

2. Tiered Loyalty Programs

This loyalty program rewards customers based on their spending levels, encouraging higher engagement.

Real world example: Beauty Insider by Sephora provides escalating benefits based on customers’ annual spending, fostering long-term customer loyalty and retention.

3. Value-Based Loyalty Programs

Rather than focusing on discounts, these loyalty programs align rewards with customers’ values and preferences.

Real world example: North Face XPLR Pass rewards members exclusive access to product launches and outdoor experiences, strengthening North Face’s brand loyalty.

4. Subscription-Based Programs

Paid memberships provide loyalty program benefits that justify costs through enhanced convenience and savings.

Real world example: Amazon Prime boosts customer loyalty by offering free shipping, streaming content, and exclusive discounts.

Key Steps to Build a Successful Loyalty Program

1. Define Your Business Goals

Before selecting the type, outline what you aim to achieve:

  • Customer acquisition – Attract new customers through compelling incentives.
  • Retain customers – Reduce customer churn by rewarding repeat buyers.
  • Increase spending – Encourage larger purchases with tiered rewards.
  • Improve customer service – Increase engagement through personalized offers.

2. Choose the Right Loyalty Management System

A robust loyalty software solution like bLoyal simplifies program management through customer and data analysis, automating rewards, and personalizing experiences. Whether running a rewards program for a coffee shop or a global enterprise, a centralized platform ensures efficiency.

3. Offer Meaningful Customer Loyalty Rewards

To reward customers effectively, tailor incentives to their preferences. Some widespread benefits can include:

  • Discounts or cash back – Encourages repeat purchases. While discounts are immediate price reductions at the point of sale, cash back is a reward customers receive for purchases.
  • Loyalty cards – Encourage repeat visits with a tangible reward system like loyalty cards. Customers can earn points or rewards for each purchase, which they can redeem for discounts, free products, or other incentives once they accumulate enough points.
  • Early access – Offer priority access to sales and product launches.
  • Exclusive access – Build customer loyalty by offering VIP treatment, like American Airlines’ elite status perks.
  • Personalized offers – Uses customer data to provide relevant rewards.
  • Experiential rewards – Enhances engagement through unique experiences.

4. Promote Your Rewards Programs Effectively

A loyalty program marketing strategy should leverage multiple channels:

  • Email marketing – Announce the customer loyalty program to subscribers.
  • Social media – Engage followers with promotional content.
  • Online and in-store banners – Remind customers at key touch points along the customer journey.
  • Referral incentives – Encourage existing loyal customers to invite others.

5. Continuously Optimize

Analyzing program performance helps refine strategies and maximize impact. Consider tracking:

  • Redemption rates – Measure how often rewards are claimed.

Redemption Rate = (Number of Rewards Redeemed ÷ Total Rewards Issued) × 100

  • Customer retention – Assess repeat purchase behavior.

CRC = Total Retention Cost / Number of Active Customers

  • Engagement metrics – Monitor interactions with program promotions.

Total engagement divided by total followers or reach, multiplied by 100%

The Best Loyalty Programs Drive Long-Term Success

Companies with loyalty programs that work integrate customer-centric rewards with strategic business goals. Aligning incentives with customer expectations is critical to your business’s strategic future.

It’s time to build loyalty that keeps customers wanting more and sets your brand apart!

Want a platform that takes the guesswork out of loyalty program management?