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Which Types of Loyalty Programs Are a Match for Your Business?

I’ve always found customer loyalty to be an interesting topic. Have loyalty programs become less popular in recent years? Or […]

I’ve always found customer loyalty to be an interesting topic. Have loyalty programs become less popular in recent years? Or have customers’ expectations changed, rather than their willingness to form a bond with a brand? According to a study by Yotpo, roughly 61% of customers are only loyal to 1-5 brands. This tells me that the real question isn’t whether or not people like loyalty programs, but rather whether the one you have is good enough to be in their top 5. In order to succeed, you need to get the foundations right and which types of loyalty programs fit both your business model and audience

Discovering Which Types of Loyalty Programs Fit You

Loyalty programs come in all shapes and sizes, but after analyzing recurring trends and core features, we’ve identified 6 definitive categories. To help you find the type of program that may work best for your business and strategy, we’ve created a guided list, with corresponding statements that are tied to a specific program. The bracket that features the most statements you agree with will indicate which types of oyalty programs could be the most beneficial for you

The list is based on actual client interactions with Antavo’s Loyalty Lab. Although the test merely indicates a possible program type, at the end of the article, I’ll tell you how you can get a professional, in-depth assessment.

For a general roundup about differentiating loyalty programs, check out our Customer Loyalty Minutes video, starring Zsuzsa Kecsmar, Antavo’s CMO, and Jörn Roegler, Antavo’s VP of Strategy & Insights.

Earn & Burn Type Programs

  • Our customers have high purchase frequency
  • We’re specializing in selling commodities
  • Our brand is positioned on “value for money”
  • Lightning-fast launch is a high priority
  • Our philosophy is “the simpler, the better”

If you agree with these statements, then your business is likely to benefit from an Earn & Burn type of loyalty program. This is a traditional approach to loyalty programs, where customers earn points and redeem them using a mechanism that is easy to implement and rules that are easy for customers to understand. Earn & Burn programs are favored by customers who love to chase rewards, and the point system encourages members to identify themselves when making online and in-store purchases.

The Logic Behind Earn & Burn Loyalty Programs

Tiered Loyalty Programs

  • Our brand faces a longer decision time in terms of customer purchase
  • We offer emotionally relatable products
  • A high-quality shopping experience is important for us
  • We want to shield top-spending members from the competition
  • We are aiming to build long-lasting engagement

If this section speaks to you, a tiered loyalty program type might be your choice. Tiers equal status and exclusive benefits (especially at the top), therefore they are popular among affluent and higher-spending customers. Tiered loyalty programs also help you segment your audience more effectively with targeted incentives and communication. Last but not least, reaching a higher tier demands commitment, and top-ranking members are less likely to give up their privileges by switching to a competitor.

The Logic Behind Tiered Loyalty Programs

Perks Programs

  • Our customers have low purchase frequency, but a higher basket value
  • We wish to generate a sense of customer gratitude
  • Our brand offers exclusive or unique services
  • Brand building is a high-priority task
  • We seek to achieve a high adoption rate 

These statements represent a challenge that Perks programs are well suited to solve. A loyalty program based on perks extends benefits to all members unconditionally. Perks are ideal if you’re planning to increase purchase frequency via long-term engagement and emotional attachment. Also, if you offer services like free shipping, you can offer them as members-only perks to encourage customers to sign up for the loyalty program.

The Logic Behind Perks Loyalty Programs

Gamified Loyalty Programs

  • We seek a loyalty program that offers a challenge to customers
  • Highlighting share values with our customers is a priority
  • We wish to offer a gamified customer experience
  • Our goal is to incentivize recurring customer behavior
  • We aim to encourage non-purchase-related engagement

This bracket shows that you could benefit from a Gamified loyalty program, which is based around engaging customers in an interactive way, through a series of badges or challenges. The overall goal of a gamified program is to encourage members to repeat behaviors that are valuable to your business. This includes submitting reviews or visiting the website multiple times each month. What makes this category interesting is that gamified programs work best when paired up with other types of customer loyalty programs, such as Earn & Burn or Tier-based programs.

The Logic Behind Gamified Loyalty Programs

Loyalty Communities

  • Community building is an important element of our strategy 
  • We already have a loyalty program, but want to enhance it
  • Offer personalized experiences is a priority
  • We want to engage customers via shared interests or core values
  • Our goal is to build a stronger brand identity 

This last set of statements is for companies that have set out to build a community around their brand. Similar to gamified programs, Loyalty Communities are best utilized together with another program type. In short, loyalty communities are smaller clubs based on specific topics, interests, or values that are important to your customers. Joining such a club not only promises a targeted experience, but helps you build a community of like-minded members.

The Logic Behind Loyalty Communities

Achieving Success Through Adaptability

In case you found relevant parts in multiple brackets, it may mean that a loyalty solution that includes mixed elements could suit you best. This isn’t a drawback – quite the contrary: with a hybrid loyalty program model, you can drive a wider range of KPIs and come up with an ultra-unique concept that matches your brand image. It’s worth considering that many loyalty programs launch starting with one particular type. Then over time they evolve into a hybrid program as customer feedback is collected.

The Logic Behind Hybrid Loyalty Programs

How to Receive In-Depth Assessment

This article is only meant to give you a general recommendation for the different types of loyalty programs.  However, Antavo offers a robust needs assessment tool that employs a proven methodology to measure and rank criteria such as urgency, exclusivity, and maturity, to recommend a custom-tailored and highly effective program structure. It also features an advanced questionnaire to uncover your most pressing KPIs. 

To learn more about Antavo’s needs assessment tool and how we can help you build a successful customer loyalty program, fill out the official contact form and a qualified member of our team will contact you.

Timi Garai

Timi is a Senior Loyalty Strategist at Antavo. She has helped numerous eCommerce, physical retailers and B2C brands strengthen customer loyalty, and significantly increase annual revenue. Timi is also the head organizer of one of the largest anime conventions in Europe.

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