Updated on February 21, 2022
Nicce was a streetwear brand at its inception in 2013. Since then, the fashion retailer has grown, targeting the young, urban demographic with its exciting loyalty program, N Coin.
According to the N Coin loyalty program, the members who spend £1 earn 5 N coins. And every point earned is equal to a £0.01p discount. If customers create an account or refer a friend through its referral program or engage in ambassador marketing, they get N coins worth a large amount.
Wondering why Nicce’s loyalty program works? It’s quite simple since the fashion retailer treats the loyalty points as a real currency. Customers can easily collect and redeem them. No hassles are involved but a multitude of opportunities for customers to engage with the brand.
And if there is one thing you can learn from Nicce - reward non-transactional behavior that adds value to your business. It could be following you on Instagram or signing up for your newsletter. All this could help in building loyalty over time.
If Nicce could run a successful loyalty program, so can you. In this blog, we’ll see what a loyalty program is. We shall explore the various types of rewards programs with retail niche-specific examples to help you get a steady stream of customer loyalty program ideas.
Table of Contents
Investopedia nails the definition of a loyalty program. It says that customer loyalty programs are sponsored by retailers and other businesses to offer rewards, discounts, and other special incentives to retain previous customers and attract customer referrals.
With a loyalty rewards program, you can encourage repeat business and give rewards to those of your loyal customers. So, those who patronize you more, and spend more, would get greater rewards.
There are various types of customer loyalty programs for a reason. What works for a food and beverage retailer might not work for a fashion retailer. And again, what works for a grocery store may not work for its competition.
So, in this section, we are going to explore the various types of customer loyalty programs with examples from the retail niches.
Keep reading, I also give you tips and best practices to hold onto while trying to execute a loyalty rewards program.
1. Point program
The loyalty points program is the most common and the simplest of customer loyalty programs in the commerce world. This traditional loyalty program is based on the principle: Get more by spending more.
So, every time your customer purchases something in your stores or on your online stores, they can get a certain amount of points. You can subject the assignment of points to their purchase value. Then, translate these points into some form of reward.
The rewards could be anything—discounts on products or a special customer treatment. Whatever that might be, your customers would have to work toward collecting a certain amount of points to redeem their rewards.
Point-based customer loyalty examples
1. The North Face - Apparel retailer
The North Face is an American apparel retailer that follows the traditional points loyalty program. With its XPLR Pass, customers get 1 point for every $1 spent.
2. Sephora - Cosmetics retailer
Sephora is a name that's synonymous with the beauty industry. The Sephora Beauty Insider Rewards Bazaar is again an example of the old-school points-based reward systems. As always, customers earn points on every purchase. But it’s so successful because it lets members choose the rewards they want in exchange for their points.
And that’s why it’s named Rewards Bazaar. Customers can grab new rewards every Tuesday and Thursday in exchange for their points.
3. Beer Hawk - Food and beverages retailer
Beer Hawk’s Beer Tokens is a points-based loyalty program wherein customers receive one beer token for every £5 spent. Then, every point is translated into a £0.05 discount.
In addition to this, Beer Hawk engages with its costumes outside of the buying cycle, by rewarding points for rating beers, referring friends, and returning draft kegs.
2. Spend program
In a spend loyalty program, you give your customers loyalty credits for the amount they spend in your store. If you are looking for a loyalty program that’s easy to create and maintain, look no further than a spend-based loyalty rewards program.
Since this rewards program requires your customers to spend more, you can increase their average transaction value and reduce the churn rate.
Spend-based customer loyalty program examples
1. Boots - Health and beauty retailer
Boots offers its customers a Boots Advantage Card that uses a spend-based system on the purchase of its beauty products. In this, loyal customers earn 4 points for every £1 spent in-store or online. And every point is translated into a penny. This way, when customers get 80 points on a £20 spend their discount value equals 80p.
2. Co-Operative Food - Food retailer
Here’s another take on the spend-based loyalty program. The Co-Operative Food retailer chain offers a Co-Op membership card to its loyal customers which they can use to get a percentage of their spend as a store credit.
For example, when shoppers spend £1in-store or online, they get a 2p added to their account. This could be redeemed in future purchases on any of the brand’s items. What’s more, Co-Op takes it a step further by donating the same value of their experiential rewards for local causes and those in need.
3. Huggies - Baby care, diaper retailer
Moms and any mom-to-be would know Huggies. But its core hassle was a lack of engagement with its customers. Since Huggies sells its items through third-party wholesalers, pharmacies, and other retailers, there was no way for them to launch a loyalty program for its loyal customer base.
At this point, Huggies’ came with a solution by creating a digital loyalty app with receipt scanning technology. This way, customers can earn rewards by scanning their receipts and uploading them into the app.
While Huggies does not just delight its customers with discounts and freebies, it also gets tangible insights into the customer’s buying behavior.
3. Tiered customer rewards programs
Do you want to reward initial loyalty and encourage more purchases? Tier-based programs can help you do this. Tiered programs achieve the right balance between attainable and desirable rewards.
So, you reward customers based on their levels of loyalty. Your customers would get points every time they purchase something.
When they started, your customers might be in the Silver tier. As they purchase from you, and become regular customers, they would accrue points and when they reach the threshold, they’d be promoted to the next tier.
Therefore, with more points, they get to reach a higher loyalty level. And with a higher level, their rewards would also be greater.
Tiered loyalty program examples
1. Starbucks - Food and beverages retailer
Starbucks is one of the famous tiered rewards programs out there. The Starbucks Rewards allow customers to earn 1 star per $1 spent while paying with cash, or mobile wallets, or credit/debit cards in-stores. Then, there is a chance for earning 2 stars per $2 spent when customers load funds and pay with their digital Starbucks Card in their loyalty app.
When customers get 25 stars they get specific Starbucks Rewards, and similarly, as they go higher up in the loyalty level, so greater would also be their rewards.
2. Marriott Hotels - Hospitality retailer
Marriott brings us an example of tiered hotel loyalty programs. Their major benefit on each tier is clearly listed, as depicted in the image above. And an article from the Houston Chronicle says that Marriott gives you a good bang for your buck with rewards valued at $10.85 per $100 payment.
All these rewards and perks motivate Marriott’s customers to stay loyal. Some of the benefits of its reward program include room upgrades, accelerated point earning, and late checkout.
3. Mirenesse - Beauty retailer
Mirenesse is a cosmetic retailer boasting an active community of loyal customers in its program, Love Rewards. Its tiered program has only two levels—Onyx, the first tier, and Gold, the second tier.
At the Onyx tier, customers can get 1 point for spending $1. And at the gold tier, which is a conditional tier, customers get $10 upon reaching 200 points. The good thing about Mirenesse’s tiers is that both new and old customers can be benefitted. The best of its customers, of course, get to the Gold Tier with its exclusive perks for their continued loyalty.
4. VIP programs
You don’t always have to give out freebies in exchange for purchases. With VIP programs a.k.a fee-based loyalty program, you get your customers to pay a monthly or an annual subscription fee to join your VIP loyalty club.
And these exclusive offers are only for your VIP customers who pay the membership fee. That is, the VIP perks should not be available to your non-member customer base. Otherwise, the program would lose its significance.
Fee-based program examples
1. REI Co-op - Sports equipment retailer
For just $20, customers can become REI Co-op’s lifetime members. And with that, customers get exciting benefits—10% back on all purchases and steeply discounted garage sale. What’s more, members also get discounts on REI’s adventure classes.
2. Costco - Hypermarket retailer
The entire business model of Costco is quite different from the other retailers. In fact, just to shop with Costco, one needs to have a membership. And there are four different levels—Gold Star, Gold Star Executive, Business, and Business Executive.
Once a member of any of these tiers, customers get full access to Costco’s warehouse. And its Executive members get an annual reward that’s worth 2% of their purchases.
5. Value-based loyalty program
Aligning your loyalty program’s structure with your customers’ values can turn them to become brand ambassadors. But, here’s where you need to answer the million-dollar question: How on earth would you reward your customers without directly rewarding them?
The key to this answer lies in defining your values. For instance, say you run a pharmaceutical store. One way to create value here is by donating to a cancer patient’s chemotherapy.
To begin with, you can have a loyalty program that’s similar to the points program we saw first. Except that instead of rewarding your customers with every transaction, you lend a helping hand to a cancer patient in need. This could be like donating $250 to a cancer institute every time a customer spends $1000 on his medication.
With this customer loyalty program example, you can connect with customers on a deeper level and forge a strong and lasting bond with them.
Value-based customer loyalty examples
1. TOMS - footwear retailer
TOMS has brought about a global change with its loyalty program, One for One. According to this program, TOMS gives away one pair of shoes to a child in need for every pair that a customer buys. And this value-based program has helped TOMS build a sense of community and togetherness with its customers.
Expanding on this program, TOMS now has the Grassroots Good program in place, wherein they contribute ⅓ of the profits towards organizations that work with building locals from scratch.
Besides this value-based program, TOMS also has a tiered program in place - Good, Gooder, and Goodest tiers.
6. Coalition program
Partnered loyalty program is an effective means of improving your customer retention rate. Here you partner with other businesses to provide your customers with value that goes beyond what your brand can exclusively offer them.
Coalition program examples
1. American Express - Apparel retailer
American Express’s coalition loyalty program called the Plenti rewards gives its customers rewards from the gas stations to the grocery stores. Customers can carry just one loyalty card to use in various brands and retail outlets.
While this is a good example of a coalition program, with over 30 million subscriptions, the program had to end in 2018. Forbes says that it could be because fewer than half the subscriptions ever used their points to redeem anything. And even when folks did redeem their points, it was usually only once or twice.
So, be careful about the way you structure your loyalty programs. Because, if a brand like American Express could have failed its loyalty program, you might also face a bottleneck if you aren’t careful enough. Read up on how current loyalty and CRM programs are failing retailers.
Just avoid the pitfalls mentioned in that blog and you’d surely be able to run a successful loyalty program.
2. Sainsbury - Supermarket retailer
The Sainsbury’s Nectar loyalty program is another coalition program with 16 partners including eBay, DHL, and British Airways. As is the case with the points program, customers can earn 1 point for spending £1. They can then redeem the points on special offers, cashback, and coupons.
And Nectar loyalty program has been there for around two decades—imagine its success rate!
7. Game-based loyalty programs
Who doesn’t love a good game?
It’s a great idea to turn your rewards program into a game application. A game-based loyalty program will entertain customers, encourage repeat purchases, and strengthen your brand’s image.
Game-based loyalty program examples
1. Challenges program
You can introduce gamification in your loyalty scheme by setting some challenges. But for this, you have to have a game-based loyalty app.
If you are a grocery retailer, then you could launch a treasure hunt. Let customers hunt for a particular item in your store.
Set a time limit. And let the first three who find the product and buy it can avail a 10% discount. This totally gives an amazing customer experience and also helps to improve footfalls to your retail store.
8. Hybrid loyalty rewards program
When you combine more than one type of loyalty program, you get a hybrid loyalty program. You could either merge tiered loyalty programs with gamification programs. Here, your customers would reach the next loyalty tier when they complete a new level in your game.
Note that the game in itself should entail a purchase.
Hybrid loyalty rewards program example
1. Aldar’s Darna Rewards
Aldar belongs to the real estate space. But its membership program, Darna, allows customers to earn points across retail establishments, restaurants, theme parks, gym and spa, and golf facilities.
This hybrid program is a combination of coalition model, point program, and tiered structures. Darna has 3 tiers with a total of 200 benefits. To track how customers are using this program, Darna requires folks to link their credit card with their loyalty account.
Even as you are about to leverage the above types of rewards programs, you must create an omnichannel strategy.
If you are new to this concept of omnichannel, here is a quick definition for you:
Omnichannel refers to the practice of rendering smooth transitions between online and offline channels.
In the retail world, an omnichannel customer loyalty program can help you connect your eCommerce businesses and your brick-and-mortar outlets. And to achieve that you need to venture into four paths. Let’s look at them.
1. Choose an omnichannel loyalty program software
To launch a successful loyalty program, you need a robust loyalty program platform. An AI-based omnichannel loyalty program such as Ingage can help you out with this. Besides creating the loyalty program in a matter of minutes, it will help you set automation campaigns.
So, your team needn’t break their heads over when a customer has accrued or redeemed points. Also, with its data science engine, Ingage can automatically produce a report of who has and who hasn’t used their points. With that report, you can send out a reminder campaign and re-activate disengaged customers.
And as mentioned already, if you are an omnichannel retailer or are planning to become one, you can go with Ingage.
2. Go cross-channel and extend customer touchpoints
Introduce a digital loyalty program and spread the word with cross-channel marketing tools. This way, you can extend your campaigns across social media, mobile devices (SMS, push notifications), and on your websites. With various touchpoints, you would empower your customers to transact and interact with your brand in their most convenient way.
3. Reward customers for engaging with your brand
Don’t always try to reward transactional behaviors. Take the extra mile to reward your customer base when they patronize you. This loyalty rewarding system will help you go beyond transaction engagement to emotional connection.
So run engaging promotions on social media and reward those who interact with you. Try to also engage social influencers—they can become your brand ambassadors!
4. Use data to increase the level of personalization for your customer base
Allow your customers to display their loyal behavior—be it signing up, or accruing and redemption of points, across all channels. Then, leverage those channels to mine the customer data, host it in a customer engagement platform such as Ingage to identify trends, behaviors, and preferences.
Based on the insights you gain, segment your customers and target them with a personalized customer experience and product recommendations.
5. Be accessible by being where your customers are
Use mobile technologies to let your customers make transactions, accrue, and redeem points, in real-time. This will make the loyalty program accessible for your customers, keeping it easy to join, earn points, and benefit from the rewards.
And again, using the information your collect, you can tailor your communications and promotions for your customers.
Loyalty programs can go a long way in converting your customers into brand advocates of your brand. We just covered 8 types of loyalty programs and 16 loyalty program examples in this blog.
And through all of it, if there was one message that resonated all around, it is that your loyalty program has to be at the center of your customers. You need to give them value and make them feel important.
Spontaneously, you’d be the one reaping the benefits of customer loyalty!
Tell us, how do you use loyalty programs? Facing any hassles? Need ideas? Let us know!