How to build a loyalty programme that actually works

Why invest in a loyalty programme

A good loyalty programme pays off on several fronts at once:

• Higher customer retention: customers have a reason to stay.
• Higher average order value: rewards nudge people to spend a little more.
• More customer data and better personalisation: every interaction tells you something.
• Customers become brand ambassadors: people who feel valued talk about you.
• Lower acquisition costs: keeping customers is cheaper than constantly replacing them.

The problems a loyalty programme solves

Many companies run into the same issues when it comes to keeping customers and growing their value. A loyalty programme is a practical answer to each of them.

Too few repeat purchases. Customers buy once and never return. A loyalty programme gives them a reason to come back, for example by saving points or getting exclusive benefits.

Customers dropping off after the first purchase. Winning a customer is one thing; keeping them is at least as important. A programme keeps people engaged by offering value on an ongoing basis.

High acquisition costs. Attracting new customers costs more than keeping the ones you have. Research by Bain & Company has made this point for years: acquiring a customer costs several times more than retaining one, and even a small improvement in retention has an outsized effect on profitability. Loyalty programmes tackle this structurally by strengthening the relationship and encouraging repeat purchases, which brings acquisition costs down and margins up.

Collecting and using customer data. Plenty of companies struggle to gather customer data and put it to work for personalisation and retention. A loyalty programme is a natural way to collect first-party data through interactions and purchases. It reduces your dependence on third-party cookies and external platforms, while you build your own up-to-date database for targeted communication.

Raising the average order value. When you reward customers for spending more or for reaching specific milestones, the average order value goes up.

Standing out from the competition. A loyalty programme gives your brand character and creates a customer experience that competitors find hard to copy.

Classic loyalty: earn and redeem points

There are many ways to encourage loyalty, depending on your audience and business goals. In practice, the most effective programmes combine several methods into one integrated programme that fits your brand values. It is not a matter of choosing one model: a successful loyalty programme mixes classic and newer elements to build a strong customer relationship. Here are the methods that work best, with real examples.

The most traditional form of loyalty is the points model. Customers earn points with every purchase and later exchange them for discounts, free products or other rewards. It is easy to understand and works well to encourage repeat purchases.

Decathlon runs a simple but effective points model. Customers earn points on every purchase and can redeem them for discounts or exclusive products. Decathlon also hands out extra points for certain actions, such as bringing back old sports gear for recycling. That encourages repeat purchases and builds a more sustainable relationship at the same time. The data it collects gives Decathlon useful insight into buying behaviour, which it uses for targeted promotions and recommendations.

H&M‘s Members programme rewards customers with points on every purchase. Those points can be redeemed for discounts, but also for early access to new collections and exclusive offers. Customers buy more often because they can see their purchases turning straight into benefits.

Brand-building loyalty methods

Beyond classic points models, there are more considered ways to strengthen loyalty, built around a sense of exclusivity and belonging.

VIP access

Give loyal customers exclusive access to events, product launches or services. It makes them feel valued and connected to the brand. Nike gives members of its Nike Membership access to exclusive sneakers and special events. By offering products and experiences that are not available to everyone, Nike builds a sense of community and brand loyalty.

Early access

Early access to new products or collections creates exclusivity and a bit of urgency. Customers feel privileged and are more likely to buy again. Zalando gives its premium customers early access to new collections and sales. Customers who feel treated as special buy more often and more quickly, which shows in conversion and in a stronger bond with the brand.

Personal recommendations

Use customer data to recommend products and services that match previous purchases or interests. Spotify uses listening behaviour to build personalised playlists. Users feel understood and come back more often because the experience is shaped around their taste. (More on this in our personalisation work.)

Loyalty tiers

With different levels, for example silver, gold and platinum, customers earn extra benefits as they spend more. The Emirates Skywards programme offers more the more often members fly: free upgrades, lounge access, extra baggage. That gives customers a reason to choose Emirates over other airlines.

Gamification

Add game elements such as challenges, badges or leaderboards to motivate customers to take part and spend more. The North Face’s XPLR Pass rewards customers not only for purchases but also for outdoor activities and for sharing their experiences on social media. Members collect points by completing routes and sharing content, and earn discounts or exclusive access to products and events in return.

Referral programmes

Reward customers for referring friends and family. HelloFresh runs a strong referral programme: existing customers receive a discount code or a free meal box for every successful referral, and the new customer gets a discount on their first order too. It makes it easy for new customers to try the service and motivates existing ones to promote the brand in their own circle, which drives both new sign-ups and repeat purchases.

Innovative loyalty methods

Want to go a step further? These newer approaches take loyalty beyond the till.

Integrations with lifestyle platforms

By connecting with platforms such as Strava and Garmin, companies can offer loyalty programmes that fit their customers’ interests and activities. Justpadel links its loyalty programme to Strava and Garmin, so customers earn rewards by sharing their sporting achievements, such as reaching a certain number of kilometres. It deepens engagement and the feeling of belonging to the brand.

Behavioural segmentation

Group customers by buying behaviour, interests and preferences. Delhaize applies behavioural segmentation within its SuperPlus loyalty programme. Customers receive personalised vouchers and offers based on their purchase history: someone who often buys vegetarian products gets discounts on plant-based ranges, while a regular wine buyer receives offers for their favourite type of wine. By reading behaviour and responding to it, Delhaize raises the average basket and makes shopping feel more relevant and personal, which strengthens loyalty.

Social rewards

Reward customers for sharing their purchases or experiences on social media. Glossier has rewarded customers who share its products online with discounts and early access to new products. It encourages word of mouth and strengthens the sense of community.

Thinking about starting a loyalty programme, or getting more out of the one you have? Have a look at how we approach loyalty, or get in touch.