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Customer makes a purchase or engages with a company in some way Company prompts the customer to sign up for its loyalty programCustomer signs up using their information (phone number, email, etc.)Customer receive a reward for their purchases. Rewards continue to build the more interaction or purchases are made. Customer stays with the brand rather than trying something new to continue this loop.
Enhanced customer analyticsIncreased product sales Improved brand recognition and customer loyaltySense of exclusivityTargeted rewards based on purchase history
DSW - Creates a vibe of exclusivity based on consumer buying behavior. Tiers include Club, Gold and Elite. Expedia - Three-tier program identified by Blue, Silver and Gold each allowing for earning perks and rewards.NFTs as brand collectibles — limited and rare collection of branded NFTs, used as loyalty or gamification rewards, or only airdropped to members of a certain loyalty tierAmazon Prime - A paid subscription service that offers free shipping if you subscribe.Dollar Shave Club - Become a member by making one purchase and automatically get access to new products, etc. NFTs as loyalty membership pass — non transferable (soul-bound) token serving as access point to a brand’s loyalty program and specific tiered or individualised perks and benefits Marriott - Allows members to redeem points for free hotel nights, etc. The North Face - By joining the XPLR Pass, customers get rewards such as exclusive gear, etc. Speaks directly to its target audience by offering points for outdoor activities. NFTs as member profile (PFP) — a membership pass with distinct profile artwork, potentially generative to show combination of unique traits based on actual member behaviour, transactions and preferencesDuolingo - You unlock gems and higher tiers for competing in levels and unlocking achievements.NFTs as gamification tool — play-to-earn mechanism wherein a brand can set a specific mission or goal for its customers to increase engagement and reward them based on their progress toward that goalAzerbaijan Airlines - Rewards frequent flyers with travel points based on each ticket’s base fare. Sephora Beauty Insider - In addition to gifts based on a points system, an online community is unlocked where customers can ask questions and share tips. NFT gating — gating access to exclusive services, product releases, content etc. based on NFT ownership; tokengated commerce can also be used to access future NFT releases and airdrops, as well as exclusive access to community channels, in-person events and retail store activations
Value-based loyalty program - Brand donations to a charity that allows connecting with customers on a deeper level.Paid program (VIP member club) - Access to exclusive benefits for the members who pay a monthly or annual fee. Coalition program - Partnering with other businesses to offer discounts with associated brands.Free perks program - Simple, easy to use, customers don’t need to purchase anything to receive perks.Hybrid program combines several types of loyalty programs, usually point-based and tier-based systems.
Ease & enjoyment: The value of the perks of being in the rewards program.Benefit: Whether the rewards are – in the customer's perception – worth being part of the program. Overall satisfaction: Whether personal expectations were fulfilled, and whether the customer is satisfied with the experience of the loyalty program overall. Customer support: Measures the level of assistance provided to customers when signing up for the program or having trouble redeeming benefits. Trust: The trust in the loyalty program around how they use the personal data provided through the program. Recommendation: The likelihood of recommending the program to friends and family.
Guide: Traditional Loyalty Programs
What is a loyalty program? A loyalty program is a marketing strategy designed to encourage customers to continue to shop at or use the services of a business associated with the program.
How It Works:
Though programs may vary, the makeup of a traditional loyalty program is typically a bit like this.
➕ Advantages that loyalty programs have:
Brief History of Loyalty Programs
1700s
American retailers gave customers copper tokens with purchases that could be later redeemed for products on future purchases.
1800s
Stamps replaced coins when Green Shield awarded stamps for purchases at select retailers that could be later redeemed for catalog products.
1929
Betty Crocker introduced their box top program (box tops were coupons that could be printed directly onto product packages) in 1929.
1981
The birth of one of the most well-known loyalty programs ever created: Frequent Fliers from American Airlines.
1985
Subway sandwich rolls out Sub Card: a stamp based loyalty program.
1990
AMC Theaters launches Moviewatcher, the first customer rewards program in cinema.
1991
Nordstrom Fashion Awards is launched and included early access to sales and VIP events and Quality Foods, an 8-store chain of Canadian supermarkets, becomes the first grocery store in Canada to initiate a points-based loyalty card programme.
2008
Starbucks created the Gold Card which allows quick, instant rewards such as a complimentary top-up or a free shot of flavored syrup for customers.
2011
Cards start to phase out with RewardMe introduced a cardless loyalty solution where customers entered their mobile number on an iPad screen to join the program and earn points.
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From stamps to box tops to cards and now digital, customer loyalty has been a significant number of the most well known brands and since are members of at least one loyalty program, it’s very likely you’re a member of at least one, if not many.
📝 Types of Loyalty Programs
Type of Program
Desc
Web 2 Example
Why it works?
How it works in web3?
Tier-based loyalty program
Separates benefits into different levels, with more rewards offered to customers in higher program tiers.
Customers can rely on for months or even years at a time and gives customers a goal to strive for.
Subscription-based loyalty program
Requires customers to pay an upfront, monthly or yearly fee to join.
Helps retain customers for specified amounts of time.
The program follows a more community-like approach rather than enticing customers to spend more to get benefits
Points-based loyalty program
Offers customers the ability to earn points that can be redeemed for discounts or other rewards.
Can analyze customer behavior and use that data
The more they know about a customer’s preferences, the more the company can offer personalized rewards.
Gives customer the flexibility on how they can earn points.
Game-based loyalty
Powered by gamification and engagement
Injects an element of fun into the act of making a purchase.
Spend based loyalty
Spend-based program that rewards frequent buying
Recognizes how often customers buy and how much they spend
Community based loyalty
Joining the program unlocks a online community
Adds an emotional element and strengthens customers’ relationship with the brand.
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Additional types include:
A study by McKinsey, for example, found that customers who are members of a loyalty program are over a competitor and 43% more likely to buy weekly.
What makes a good loyalty program?
What makes a good loyalty program is largely up for debate depending on the goals of the brand and their target audience. However, Newsweek did a study ranking all the loyalty programs and this is what is worth considering when determining the quality of a loyalty program.
Based off the , the top 10 include:
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