In 2026, gaining customer loyalty relies heavily on a combination of convenience and values. The fact is that many consumers switch brands if the loyalty experience isn’t tailored to them, with 36% of them changing brands due to a poor, generic mobile experience. Using AI and other solutions to create a personalized, unique loyalty experience will keep your customers coming back.
In this blog, Sebastian Turner, VP of Business Development, will go into what makes a solid customer loyalty program and how you can keep your customers returning with the right approach.
TL;DR
This blog will cover the following loyalty program marketing topics:
- What a customer loyalty program is
- The different types of reward programs for customers
- How to start a loyalty program
- Loyalty program best practices
- FAQs About Loyalty Programs
What is a Loyalty Program?
A loyalty program is a customer retention program designed to entice consumers to purchase consistently from one brand while rewarding them for their loyalty.
In exchange for their loyalty to a particular brand, customers receive access to exclusive discounts, bundles, and promotions that first-time customers don’t. The key to these types of programs is to really study and understand your customer base so that you know what they will like and what they will pass on.
These programs aim to attract more customers, increase the average order value of existing customer orders, improve retention rates, and encourage brand trust and awareness. When executed correctly, they can lead to big sales and customer loyalty like you’ve never seen before.
You can gain a competitive advantage by putting an emphasis on customer loyalty.
Harvard Business Review says that acquiring a new customer can be a whopping 25x more expensive than hanging on to an existing one.
That same report cites a Bain & Company study showing that increasing customer retention rates by as little as 5% can increase profitability as much as 95%.
There’s an old saying: “Make new friends but keep the old. One is silver, the other gold.”
My Expert Insights on Loyalty Programs
A good customer loyalty program can go a long way in keeping customers returning, and recent statistics prove this.
According to Queue-it, 84% of consumers are more likely to stay with brands with cool loyalty programs, and the programs that perform the best lead to a 15-25% increase in revenue from their customers.
By developing a personalized and truly rewarding experience for your customers, you can ensure customers choose you over competitors, and you’ll be able to maximize revenue in the long run.
Let’s explore how to build a customer loyalty program that gets real results, with some shining loyalty program examples to give you ideas.
7 Types of Rewards and Loyalty Programs
The type of program you decide to use depends on what your customer base will respond to more. Before developing your own program, I’ll go over the most common types, how they work, and how they can be incorporated into the rest of your marketing strategy.
Keep in mind that every loyalty campaign should have a clear mission behind it, reflecting your values to connect with consumers in a way that sets you apart from more detached competitors. For instance, people could convert the points they earn into donations for relevant charities.
Now, let’s look into the different types of customer loyalty program ideas to get you started:
1. Points Based Rewards Programs
Points-based programs work by assigning points to a customer’s spending. When customers have enough points, they can redeem them for free products or services.
They inspire customers to visit your business frequently, to rack up points toward cool prizes. Most points-based programs operate using a mobile app, which has pros and cons.
For example, a mobile app makes it easy to keep track of points. You can also use it to market to consumers through push notifications directly to their devices. However, some consumers aren’t willing to download another app on their phones, which may keep people from participating in the program.
Starbucks is one of the most popular points-based programs. Using the smartphone app, customers earn stars for every purchase and can redeem them for rewards such as free beverages, food items, or upgrades.
Starbucks has also innovated in recent years, introducing Starbucks Odyssey in 2022 to take advantage of the non-fungible token (NFT) trend dominating that year. This component used blockchain-based Web3 to offer collectible Starbucks NFTs and points when users engaged with the brand, but it was discontinued in 2024 due to its unnecessary complexity as the company returned its focus to its core points-based system.
2. Tier Based Rewards Programs
Tier-based programs separate customers into tiers depending on certain metrics, such as how much they spend in a year or quarter. This type of program aims to entice customers to spend more to reach certain tiers and unlock new promotions.
This type of loyalty program will increase customer retention, as customers will continue to purchase if they want to reach a certain tier. However, some customers can become frustrated if the tiers are too hard to reach. To add some balance, you can offer points for things other than spending, such as sharing on social media or joining an email list.
3. Spend Based Loyalty Programs
Spend-based programs reward those who spend the most. Essentially, the more you spend, the more rewards you earn. Many airlines use this type of customer loyalty program model.
It works great for high-dollar, recurrent purchases but might not be the best for companies with lower-value products. Consumers who will spend more for a higher level of experience will resonate more with spend-based programs.
4. Subscription-Based Programs
Subscription-based programs work by having the consumer pay an upfront fee for access to certain perks or rewards.
Panera Bread’s famous Unlimited Sips Club is an example of a subscription-based program. Consumers spend a certain amount of money monthly or yearly to access exclusive rewards. This program works great for frequent visitors to your business but might not work for customers who don’t make frequent or consistent purchases.
5. Referral-Based Loyalty Programs
Referral programs reward consumers for referring people to your business. Sometimes tied into other types of programs, this strategy is a great way to reduce your per-customer acquisition cost, as your new leads come from existing customers and not marketing you’re paying for.
You can reward the referrer with cash or other incentives, such as free products or discounts on your services. Whatever you decide, it should encourage people to refer new customers to your business.
Like any other program, it comes with some downsides. For example, some people get so comfortable relying on referrals that they drop other types of marketing and narrow their lead sources, placing significant pressure on your base to keep supplying you with new leads. You also risk rewarding low-quality leads that aren’t right for your business.
6. Gamified Loyalty Programs
Gamification is another effective strategy that can appeal to your customers. Making a game of your app, whether it’s a literal mini-game enabling users to earn points or allowing people to “level up” when they complete certain purchases, will encourage more engagement.
In fact, a gamified loyalty campaign can boost user engagement by as much as 100-150% compared to traditional marketing.
Just look at how the Burger King app uses gamification to connect with audiences. In addition to including actual games allowing users to earn prizes and points, the app encourages people to climb tiers based on the number of purchases they complete, enabling them to increase the points they earn exponentially with each “level.”
Source: Burger King App
7. Community-Based Loyalty Programs
One last type of customer loyalty program you could implement is community-based, bringing people together within your brand to increase engagement even further.
There are plenty of ways to go about introducing a community to your loyalty campaign, from allowing customers to submit product reviews and share photos to developing dedicated forums and setting up public events for people to attend.
By building a community around your brand with loyalty program marketing, you’ll be able to imbue a sense of belonging among your customers and entice them to stick with your brand.
One loyalty program example using a community is Sephora, which has its Beauty Insider Community to allow customers to ask questions, take part in challenges, and recommend various style tips and products to each other in a dedicated forum.
3 Simple Steps to Build Your Own Loyalty Program
The process of creating a loyalty program can be broken down into three simple steps. Start by identifying what your customers value most, such as discounts, bundles, or other great deals. These key offers will be what creates the base of your program. Now, it’s time to design a program that will keep your customers happy, building their loyalty to your products.
Step 1: Outline Your Key Offers
The first step to designing an incredible loyalty program is to identify what your customers value most, such as discounts, bundles, or other great deals.
Be sure to pick items that are cost-effective for you but also excite your customers and inspire them to spend more.
Step 2: Select Your Tech Stack
The next step involves identifying and implementing the technologies you need to bring your customer loyalty program ideas to life.
If you want to learn how to start a loyalty program, the following are some solutions you may need:
- Loyalty Management Engines: API-centric loyalty management engines can enable you to manage all aspects of reward programs for customers, including points, rewards, and tiers. Some examples of these tools include Open Loyalty, LoyaltyLion, and Yotpo.
- Customer Data Platforms: You also need an effective CDP or customer relationship management (CRM) system to manage all customer data, segment your audiences, and allow for consistent personalization.
- POS and Ecommerce Platforms: These solutions help integrate in-store and online transactions to facilitate point accumulation and redemption. Platforms like Shopify Plus and BigCommerce can give you what you need here.
- Customer Engagement Tools: With the help of these tools, you can send personalized messages to customers based on their milestones, potentially using both email and SMS messaging.
- Mobile Wallets: Maximize compatibility with users’ mobile devices by integrating mobile wallets, which can allow users to create digital cards and receive rewards instantly through their mobile wallets, such as Apple Wallet.
Step 3: Develop a Data Privacy Strategy
Finally, you need to keep all user data consistently secure, which will help protect your customers and build more trust.
To start with, one of the most important loyalty program best practices is data minimization, which involves only collecting the data you need from your customers, ideally through first-party and zero-party data.
An opt-in strategy will also help you obtain clear consent from users, and you should give them a clear way to opt out if needed. Users should also have the ability to manage and delete their data at any time to further protect their privacy.
Another critical element here is an in-depth, fully transparent privacy policy that details what kind of data you will collect and how you will use it.
7 Best Practices for Building Brand Loyalty
If you want to know how to build a customer loyalty program the right way, the following are some key loyalty program best practices to follow:
1. Practice Outstanding Customer Service
If you want loyal customers, make sure that your customer service is second to none. Start by looking at what your competitors are doing in terms of customer service. Then, do it better.
Also, if you want to know if your customer service is up to snuff, ask your customers.
Send out email surveys that give people the opportunity to offer feedback about your brand. Let them tell what they like and where you could improve.
Remember: criticism is your friend.
When customers tell you what’s wrong with your business, that’s a blessing. It’s information you can use to improve your quality of service and make future customers happy.
2. Get to Know Your Customers
Get to know your customers. Once you understand them, you can improve your quality of service by addressing their specific needs.
Learn about your customers’ pain points. Find out why they buy your product or service. Then, tailor your marketing message and customer care accordingly.
One of the easiest ways to keep up with your customers is with a great information system. Use it to collect important information about your customers, such as their reasons for purchasing your product and their demographic details.
Then, you can use reporting tools to aggregate that data and look for trends.
3. Build Customer Loyalty: Develop a Consistent Brand Personality
Your business probably has a mission statement. But does it have a personality people can relate to?
Why has Progressive Insurance been running commercials with Flo for years? Because she makes the company more relatable.
Even if you have a boring business model (like insurance), you can still spice it up with a human touch.
A good example of cool loyalty programs that carry a unique personality is Patagonia’s. What makes Patagonia so different is that its customer loyalty program doesn’t offer points or even tiers, and yet the company has earned a nearly 80% customer loyalty rate.
And why is that?
Because the company appeals to its audiences’ sense of belonging, it creates a community centered on maintaining an active lifestyle and sustainability. As a result of this brand consistency, Patagonia has developed a unique personality that truly speaks to its audiences to maximize loyalty.
4. Offer “The VIP/Founders Circle”” to Your Best Customers
Find the customers who are contributing most to your bottom line. What can you do to make them even happier?
Remember, your top-tier customers in 2026 want “access” over “discounts,” seeking events, early product drops, and other perks that come with exclusiveness.
So, how do you reach these customers?
Here are a few suggestions:
- Give them a dedicated account manager
- Offer extra perks like larger discounts on volume purchases
- Waive restrictions that you put on other customers
- Give them “first dibs” on new products or services you’re offering
- Let them try new offerings for free
- Give them your cell phone number so they can call you directly if there’s a problem
You can build customer loyalty by treating your best customers as partners. Ask them for advice before making big decisions that will affect your business.
5. Monitor Social Media and Respond
It’s often the case that people who have a question or complaint will reach out to your business on social media. Please note: they might do that even if you don’t explicitly state that you offer customer support via Instagram or Twitter.
When they reach out to you on social channels, make sure to respond.
Remember: Other people (including potential customers) watch how you respond on social media. Make sure you leave them with a good impression.
6. Give Your Frontline Employees the Ability to Deal With Complaints
Empower employees who deal directly with customers to handle complaints themselves. That way, customers don’t have to wait for management approval.
You might be worried that if you give your customer-facing employees too much authority, they’ll abuse it and disburse way too many refunds or free exchanges. That’s an understandable sentiment, but unfortunately, refunds and free exchanges are the cost of doing business.
7. Set Expectations at the Beginning
Tell your customers exactly what level of service is provided. In some cases, it might be necessary to inform them about what services aren’t provided as well.
Also, tell them about the cost upfront. That way, they have a chance to make an informed decision.
It’s also a great idea to follow up with a courtesy email or phone call after they’ve made a purchase. Check to make sure that everything is okay.
8. Use Hyper-Personalization to Appeal to Customers’ Wants
Using AI automation in marketing, you can effectively push personalized offers and recommendations to your customers with predictive analysis. Based on past purchases, user data, and behavior, you’ll be able to offer rewards even before the customer knows they want it.
For instance, you might offer a customer the chance to try a new product you plan to release later, one that falls right within the same category as previous purchases.
Give Your Frontline Employees the Ability to Deal With Complaints
Empower employees who deal directly with customers to handle complaints themselves. That way, customers don’t have to wait for management approval.
You might be worried that if you give your customer-facing employees too much authority, they’ll abuse it and disburse way too many refunds or free exchanges. That’s an understandable sentiment, but unfortunately, refunds and free exchanges are the cost of doing business.
FAQs About Loyalty Programs
1. Are loyalty apps dead in 2026?
No, loyalty apps are going strong in 2026, with most brand apps implementing some type of customer loyalty program in the form of a dedicated app. Today’s loyalty apps are evolving to incorporate AI-driven and highly rewarding experiences to deliver personalized offers, discounts, and prizes.
2. How does AI improve loyalty programs?
AI has helped evolve reward programs for customers by changing them from more generic experiences to highly personalized ones, using customers’ purchases and other data to anticipate their wants and needs and encourage them to engage even more with their favorite brands.
3. What is the biggest mistake brands make?
One of the biggest mistakes that brands make is neglecting to create and offer rewards programs for customers. Brands can significantly increase loyalty and revenue by implementing a loyalty campaign that offers rewards to customers in exchange for engaging more consistently, leading to repeat business in the long term.
4. How do I handle data privacy in a loyalty program?
To properly secure your customers’ data in a customer loyalty program, you can take multiple key steps, such as:
- Collecting only necessary data
- Implementing an opt-in strategy to obtain consent
- Developing and advertising transparent privacy policies
5. Can small businesses compete with big loyalty tech?
With the right approach, small businesses can develop customer loyalty program ideas that help them compete with even their biggest competitors. Good loyalty program marketing and development will keep customers coming back and ultimately lead them to choose you over larger businesses.
Build Your Customer Loyalty with Ignite Visibility
No one knows more about customer loyalty than the experts here at Ignite Visibility. Our digital marketing experts can help you:
- Increase customer retention
- Encourage higher per-sale amounts
- Boost your referrals
- And more
Want to get the most from your next loyalty campaign? Find out how our lifecycle marketing services can help you get the most from your program.
