Jul 6, 2022

Essential guidelines, types, and examples of retail loyalty programs

Retail “loyalty programs do have the potential to offer significant benefits to consumer businesses such as retailers, grocery stores, restaurants, gyms, drugstores, spas, coffeehouses, and more.” (HBR, 2021) And, if you construct your loyalty program well, it can keep customers coming back again and again (sometimes daily). You can gain benefits through a few different kinds of loyalty programs including:

  • Paid
  • Points-based
  • Tiered
  • Value-based
  • Hybrid

Almost all programs follow some basic rules to help get your customers to sign up and stay engaged.

Essential guidelines for your store rewards programs

Some of the best loyalty programs can create a sense of community while others can become confusing or frustrating. The first objective, however, should be to create a great customer experience with every interaction.

That’s why it’s important to think through your brand, program, and customers’ wants. Unifying the in-store experience, online expectations, and customer communications creates a smooth omnichannel experience for customers. It also helps provide a single viewpoint for your retail IT, marketing, and customer service departments.

Do make your loyalty program feel special, easy to join, and instantly rewarding

You want a loyalty program to be inclusive but still feel special. You can see this in some of the more popular loyalty programs like Amazon Prime, British Airways’ Executive Club, and Sephora’s Beauty Insider Program. A well-branded, yet distinctive, loyalty program should make the customer feel like they’re joining an exclusive group.

Making customers feel special includes designing a sign-up experience that’s easy. Getting to know a customer’s buying habits happens over time, so you don’t need to find out their favorite products right away. Keep enrollment simple by sticking to email or phone number, a basic question or two, and maybe one’s birthday.

A small reward right after sign-up helps confirm that they’ve made a good choice. Bonus points if there’s a simple visual representation of what rewards are upcoming and how soon. Even a small discount for becoming a member can be enough to get that next sale and build loyalty right away.

Don’t make your loyalty program complex, frustrating, or constantly changing

We’ve all closed a browser window when things get too frustrating. Don’t let this be your customer loyalty sign-up page. Test different variations to make sure signing up for your program is foolproof:

  • Remove complex or busy visuals
  • Keep required information to a minimum
  • Explain simply and thoroughly
  • Remind customers of rewards according to their preferences

In addition, maintain simplicity. Don’t change the way your program works all the time. Too much change can get confusing. Your customers might stop using it if they’re not exactly sure how it works. You can tailor it to what your customers want and how your business works, though.

Types of retail loyalty programs and examples

It’s important to note that any system must be able to function across and on all platforms. Customers deserve their rewards whether they spend money in-store, on Instagram, or through your eCommerce store. So, make sure you can delight your customers wherever they choose to interact with you.

Leveling up, earning rewards, surprise birthday gifts – there are all kinds of ways to keep customers happy with your brand. Here are a few of the most popular retail loyalty programs and examples.

Benefits for a price – paid programs

Paid programs require more effort than other programs for the customers. They’re paying for the opportunity to earn rewards, so it’s important to show the value up front. Lower prices across your product selection or elevated customer service for the account show better value than other programs.

With a CVS Pharmacy ExtraCare Rewards program card, for example, customers get a 2% in-store credit on all items, personalized deals, and bonus sales that aren’t available for everyone. Spending with the ExtraCare Rewards program card is the price of the program’s savings.

Reward them with a points-based program

An extremely popular template for rewards programs is a points-based system. Customers make purchases, get points, and redeem them for rewards. Simple, effective, and – if you do it just right – fun for customers. Distilling this program down to its most basic would be something as simple as a punch card, though it can look and feel more sophisticated.

Some great examples include the nearly addicting loyalty programs of Starbucks Rewards and Chipotle Rewards. There’s no denying that these successful programs have something going for them – they’re made for coffee and burritos. However, they demonstrate a simple and successful points-based approach.


It’s easy for customers to spend on something they already like and consume daily or weekly. Adding an incentive that results in a free latte or guacamole reinforces the buying habit and creates a deeper loyalty to the brand.

Climbing to the top with a tiered loyalty program

Get your customers cheering like Rocky at the top of the Philadelphia Museum of Art’s stairs with a tiered program. Reward customers for spending a certain amount or making enough purchases. Reflect on what makes sense based on your merchandise and customer preferences.

While Ulta’s Ultamate Rewards Program is points-based, it has a deeper level. As a customer spends more, they get more perks and accumulated points are worth more. After spending $500 in one year, points don’t expire. Or after spending $1,200 in a year, members get exclusive deals and early access to products. As customers spend more, they get better perks, and your company gains more loyalty.

Earn their hearts with a value loyalty program

Points, tiers, gamification. They can work wonders building customer loyalty. But, for some brands, there’s a better move. Value loyalty programs lean on customers’ emotions and personal ethics. When done right, value programs can not only create a strong loyalty program, but also create a strong sense of community.

TOMS Tribe is a good lesson in value-based loyalty programs. The ‘tribe’ evokes community even though there is no sign up. The company invests around 30% of profits to a variety of charitable causes and organizations. The incentive to buy a pair of TOMS shoes comes from shared values. The brand makes it clear – online and in-store – that buying with them has a positive impact on people and the planet.

A la carte – using a hybrid for a customized program

With so many options and customer preferences to consider, you could mix and match to create a unique retail loyalty rewards program. Maybe a tiered program fits your business model, but there’s a big indication that customers are value driven. You could add an exchange option that lets customers trade points for cash donations to a charity that aligns with your brand and customers’ values.


Or perhaps infrequent purchases make a points-based model unsuitable for most customers, but they value exclusivity. A paid program could provide VIP access and cover the overhead cost of running your points program – everyone wins.

No matter what type or combination you choose, make sure your store rewards program fits your ideal customer and is easy to access – anywhere and anytime. To help communicate with and remind customers of rewards, use a reliable and secure omnichannel communications platform to keep your brand top of mind.