How Loyalty Programs Keep Your Customers Engaged and Invested

7 minutes

It’s a fact: brands must explore methods to forge lasting connections with customers and distinguish themselves from competitors. A business is only as strong as its user base, so business have to continuously work on growing it and building relationships with users.

Loyalty programs are shown to effectively leverage the value of these loyal customers and their purchasing habits, fostering brand loyalty and repeat business.

So how to get started if you haven’t already?


What Is a Loyalty Program?

Loyalty programs are reward systems where customers make an upfront commitment to join. These programs are referred to by various terms such as paid, premium, or subscription loyalty programs.

Typically, joining involves a one-time or recurring fee, although the paid model can also be implemented without a financial commitment. The key feature of a subscription loyalty program is that it offers substantial rewards that offset the initial cost of joining.


Why Are Loyalty Programs So Successful?

  • Paid membership programs are designed to engage the most valuable existing customers, and usually—hopefully—result in repeat purchases from these users, as well as higher long-term retention.
  • Access-controlled content and perks create a sense of scarcity that motivates subscriber signups; the feeling of exclusivity of a membership program boosts customer loyalty.
  • Loyalty programs can help businesses stand out from their competitors.
  • Membership programs offer an amplified opportunity to understand customer preferences and pinpoint potential brand loyalists, making it easier to personalize.
  • Finally, fee-based loyalty programs are more inclined to yield a higher return on investment after their launch.

Let’s have a look at “HubSpot Academy Rewards” program, which has helped HubSpot increase customer retention and engagement by incentivizing users to complete more courses and certifications on their platform. The program rewards users for their loyalty to HubSpot, while increasing customer retention. It also provides users with tangible rewards that they can use to promote their affiliation with HubSpot.

It has definitely helped HubSpot establish itself as a thought leader in the CRM software space, as HubSpot Academy has won several awards for its educational content, including a TrustRadius Top Rated Award in 2022.


Why Are Loyalty Programs So Successful?


Perks Your SaaS Business Can Offer Through a Loyalty Program

Traditional services commonly offer loyalty programs, but introducing a thoughtfully designed SaaS loyalty program can be an excellent way to nurture and retain SaaS users. There are several types of perks you can offer your loyalty members.

  1. Early access: Loyalty member receive new materials—a just-released eBook, for example—before they are shared with the larger audience, contributing to feelings of privilege and exclusivity.
  2. Subscriber-only discounts: Surprise product discounts, centered around holidays or other occasions, can be shared with members to reinforce the feeling of exclusivity.
  3. Bonus exclusives: Additional or extended interviews, exclusive behind-the-scenes photos/videos, and expert Ask Me Anything (AMA) sessions can be made available only for subscribers.
  4. Insider data and advice: Members get all the news hot off the press, including the latest breaking industry, information, data, and statistics, with no lag time in reporting.
  5. Gratitude and recognition: Top-tier members receive kudos, shout-outs, and even thank-you gifts to recognize their loyalty.
  6. Community: An exclusive Facebook group or forum can be established and dedicated solely to subscribers, fostering a space for connection, mutual support, and direct assistance from you.
  7. Exclusive original content: Provide member-only blogs, videos, webinars, eBooks, or other media.

To get a better picture, Microsoft Rewards is a loyalty program that rewards members for using Bing search engine, shopping at the Microsoft Store, and playing games with Microsoft. Members can earn points for every search they make on Bing, which can be redeemed for Microsoft products, gift cards, sweepstakes entries, nonprofit donations, and more.

With Expedia Rewards, travelers can use points to save money on hotel or flight reservations. As of August 2023, PYMNTS noted that Expedia’s second-quarter results showed gains in loyalty membership, with revenue up 6% to $3.4 billion.

Expedia loyalty members earn points through a three-tier program that earns the member perks and rewards that include rebates on hotel stays, free breakfasts or spa credits, or late checkout and free room upgrades.

The North Face XPLR Pass Loyalty Program provides customers with early access to limited-edition collections and an opportunity to test unreleased products. Their Renewed Take-Back program lets members trade in old gear and receive a $10 credit for their future purchases at The North Face stores, a sustainable approach that sets the brand apart from its competitors.

It also rewards members with accumulated points through non-transactional engagements, such as referring a friend, checking in at The North Face stores or outlets via the mobile app, or by registering at national parks and monuments.

According to the Daily Outdoor Reporter, XPLR PASS global loyalty membership grew by more than one million new members in the fourth quarter, with a total of 18.5 million members at the end of Q4.

The GEM Bite Club’s loyalty program features a structured referral system with distinct advantages at each tier for their brand, which specializes in nutritional food and essentials with a focus on plant-based products for vegans. The three tiers are as follows:

  1. Enthusiast: The introductory tier, accessible for free.
  2. Advocate: Attained by earning 500 GEM Bucks annually.
  3. VIP: Reached by accumulating 1,000 GEM Bucks per year.

GEM membership perks encompass early access to new products, exclusive events, surprise gifts, and more. GEM Bucks can be earned through various activities, including monthly product shipments, community engagement, Instagram following, and leaving reviews. These points can then be redeemed for credits, daily essential vitamins, sleep booster packs, and a range of other products.

The Starbucks Rewards program has been upgraded recently, and now provides more personalized offers and product recommendations on its mobile app and streamlining their order-ahead and mobile payment options.

The company grew its 90-day active Starbucks Rewards customers by 25% in the third quarter of 2023, with now over 75 million global members. Almost 60% of Starbucks’ overall sales were driven by members of the Starbucks Rewards program.


Woman sitting in a cafe drinking coffee and working on a computer


Building Your Own Loyalty Program for Increased Retention and Revenue

Consumer habits have been transformed since the throes of COVID. There is a new dependence on eCommerce and its offerings, including features like convenience and personalized service.

Paid and subscription-based loyalty programs are a logical offshoot of this shift towards customer engagement. The customer loyalty program concept should offer the same unique qualities as your business.  But how to build your own program if you haven’t already? Here are some tried-and-true tips:


1. Craft the focus, aesthetic, and mechanics of your program via in-depth brainstorming and collaboration with your team

Create a strategic roadmap for your loyalty program, outlining a calendar of perks, communication strategies, and refresh schedules. Find a memorable and marketable name for all program components, from levels and points to designations and currency.

Additionally, carefully decide on the pricing model, whether opting for a free commitment approach, like rewarding customers with a free coffee after 10 purchases in a coffee shop, or exploring paid subscriptions similar to eMag Genius or Amazon Prime. Tailoring your pricing strategy not only boosts customer engagement but also opens doors for innovative perks, making your loyalty program a potent tool for customer retention and satisfaction. Choose a pricing model that aligns seamlessly with your business goals and customer expectations.


2. Create a list of impossible-to-resist benefits

Inventory your most valuable assets and craft comparable but new/unique experiences, products, and services that will be available only to subscribers or members of the loyalty program. These could include access to guest contributors or subject matter experts for Q&As; a members-only newsletter; admittance to exclusive virtual events, etc.

Temporary promotions can amplify exclusivity by generating a sense of immediacy, motivating customers to seize exclusive offers before they lapse. For example, if yours is a SaaS product, members of the loyalty program could be the first to get access to new platform capabilities, even during Beta stages.


3. Promote the program, make it easy to sign up, and communicate

Provide a sign-up form for membership that’s easy to fill out, then follow up with emails that detail the program and how it works. Seek out and add subscriber testimonials to the sign-up page to encourage new member subscriptions. If your loyalty program requires a payment, consider a free trial period before requiring a financial commitment.

For instance, you could promote your loyalty program on your website, social media channels, and in-store.


4. Monitor and measure specific loyalty program metrics

This includes churn rate, NPS (Net Producer Score, which can be measured by asking your members whether they would recommend the program to others), your loyalty adoption rate, and, of course, the program’s impact on revenue and how it compares to the resources you invested. You can use a customer relationship management (CRM) tool to track your loyalty program metrics.

You could also send out surveys to your loyalty program members to gather feedback and insights.


5. Gather feedback from your loyalty members

Use feedback surveys to ask them what they like about the program, and what would make it better. Ask subscribers who churn what made them change their mind, and adjust the program as needed. Send out a survey to your loyalty program members after they have been a member for a certain period of time.

Ask them what they like about the program, what they don’t like, and what they would like to see improved. You could also ask members who have left the program why they decided to leave and what could have been done differently.


Gather your feedback


Companies should seek innovative approaches to establish enduring bonds with customers and set themselves apart from rivals. Loyalty initiatives have proven to be successful in harnessing the potential of devoted customers and their buying behaviors, nurturing brand allegiance and encouraging repeat business.

To create a successful loyalty program, it’s essential to keep your goals in mind. Your program can be based on one or two goals, but it’s critical to define how you will measure success. This will help you ensure that you’re delivering a great customer experience and that your program is meeting your business objectives.

If you are planning to price your loyalty/rewards program, it is recommended to work with an expert recurring billing platform to ensure the retention of your user base.

2Checkout’s Subscription Billing Solution can help automate the process of charging customers for the loyalty program, which can help reduce the risk of losing customers due to payment issues. Additionally, a recurring billing platform can help merchants manage their customer data and track the performance of their loyalty program. This can help merchants identify areas for improvement and make data-driven decisions to optimize their program.


Supercharge your loyalty program with 2Checkout! Streamline billing, boost customer retention, and optimize performance. Elevate your loyalty strategy today!




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