There are many different types of loyalty programs. Choosing the right one for your business can:

1. Improve customer retention

2. Attract new consumers

3. Lead to repeat purchases.

In fact, 62% of people are more likely to spend more on a brand after subscribing, and 59% say that they’d choose a brand with a loyalty program over one without a similar program. 

However, not all loyalty programs are the same. For example, the loyalty program a gym owner offers to fitness buffs, won’t be the same as the loyalty program that concrete suppliers offer to industrial engineering firms. 

Finding the right loyalty program for your business can help you stand out from the crowd. Plus, it ensures that more of your consumers return for a repeat purchase. 

Types of Loyalty Programs: Tiered Loyalty

Tiered loyalty programs offer customers increasingly lucrative rewards based on their spending. Consumers who purchase frequently or spend large sums can quickly rack up tiered rewards. 

Tiered loyalty programs are usually best suited to businesses that offer a range of services. For example, airlines like Delta and American Airlines offer their customers tiered rewards like gifts, free flights, and the chance to enter raffles based on their commerce. 

Tiered loyalty programs should work in conjunction with pricing models. For example, if you work in the airline industry, you may find it difficult to convince customers to upgrade from economy to business class. A tiered loyalty program is a type of loyalty program that will convince more people to bump up their tickets, as they feel they are getting something back from your business. 

Before offering a tiered reward, break down your profit margins and identify the best ROI for your tiered loyalty rewards. You may find that you make a short-term loss by offering some rewards, but that the long-term loyalty will offset any dips in profitability. 

Behaviour-based Loyalty 

Next, behaviour-based loyalty is a type of loyalty program that is best suited to businesses that need their consumers to complete specific behaviours. This type of loyalty program is extremely motivating for consumers, as they gain rewards based on the constant use of a business’s product or service. 

Behaviour-based loyalty programs are best suited to businesses like gyms and educational providers. Gym owners can offer rewards to the gym members who work out the most frequently or who spend the most time with PTs at the gym. Similarly, educational apps like DuoLingo and Khan Academy offer rewards to users who keep their “learning streak” going. 

Behaviour-based loyalty can also be used in conjunction with tiered loyalty programs. This creates a sense of achievement amongst consumers and helps them gain exclusive rewards. For example, a doctor’s office could offer behaviour-based rewards to clients who practice healthier habits like daily hygiene, eating healthy foods, and staying hydrated throughout the day. 

Types of Loyalty Programs: Subscription-based Loyalty

More businesses are moving to subscription-based models for their products and services. This is largely due to the rise of e-commerce, which is predicted to be worth $904.2 billion by 2026. Paid loyalty programs incentivize consumers to spend more of their money at your business and can significantly improve brand loyalty. 

Subscription-based loyalty programs are best for businesses that can offer legitimate rewards for consumers. If consumers feel that the subscription doesn’t meet their expectations they will turn to competitors and may not come back.

Businesses that utilize e-commerce are natural adopters of subscription-based loyalty programs. And, major enterprises like Amazon set the bar for what is possible. Amazon’s subscription program, Amazon Prime, is used by millions of people around the globe. Users receive TV series, movies, free shipping, and discounted goods in return for their subscription. 

Before offering a subscription-based loyalty program, draft a few months of promotional offers. Determine the answers to the following: 

  1. What goods or services can you offer at a discounted rate?
  2. Can you offer early releases to subscribers?
  3. What will your predicted ROI be on discounted goods?

Answering these questions will help you plan out your subscription-based program and ensure that you choose the right customer loyalty program for your business. 

(Photo credit: Unsplash)

Value-based Loyalty

Did you know a value-based loyalty programs can improve your brand image and strengthen your commitment to corporate social responsibility? Value-based programs are best if your business already has charitable connections or is integrally tied to the communities you serve. 

Consumers who pledge to these programs effectively donate a portion of their proceeds toward a cause they care about. This won’t directly improve your bottom line, but it will help you align with consumers and the issues they care about. 

Points-based Loyalty

Lastly, a points-based programs are among the most common loyalty strategies. This type of loyalty program keeps consumers coming through your door and can incentivize them to buy more from your store. 

Points-based loyalty is particularly useful today as the end of cash is quickly approaching. Consumers will carry less cash but will be more interested in rewards earned through card-based transactions. 

Businesses that require high levels of consumer loyalty benefit most from points-based loyalty. For example, bookshops and pharmacies often sell the same product as competitors but rely on repeat purchases from the same consumers. Accruing points that can be used for future purchases will motivate consumers to return in the future. 


Loyalty programs are a great way to build your brand presence and retain repeat customers. Good loyalty programs also give your customers a reward that they want. Find the right loyalty program for your business by assessing your customer trends and choosing rewards with the highest ROI. 


Blog contribution: Amanda Winstead