Does Your Brand Need A Loyalty Scheme?

If you’re considering launching a loyalty scheme for your brand, you may be feeling a bit overwhelmed. Where do you start? What kind of program works best for your customers and your business? The truth is that building a successful loyalty program takes careful planning, but the rewards can be significant. A well-structured loyalty scheme can strengthen customer relationships, boost repeat business, and drive long-term growth. Here’s some advice to help you figure out what loyalty truly means for your brand.

Why Consider a Loyalty Scheme?

Before jumping into a loyalty program, it’s important to understand why you should consider one in the first place. A loyalty scheme can influence various stages of the customer journey, from attracting first-time customers to nurturing repeat business and encouraging long-term brand loyalty. Loyalty is no longer just about offering discounts or rewards; it’s about fostering a deeper connection with your customers.

A properly implemented loyalty program doesn’t just drive repeat business—it builds a foundation of loyal, engaged customers who become advocates for your brand. According to research, loyal customers are more likely to refer your brand to others, provide valuable feedback, and spend more over time. It’s often more cost-effective to retain existing customers than to constantly acquire new ones, which makes building loyalty a smart business strategy.

In short, loyal customers are your brand’s most valuable asset. It’s better to focus on gaining loyal customers rather than just chasing repeat transactions. Loyalty programs can help facilitate this shift.

Offering a loyalty scheme can also help you acquire new customers, with consumers choosing to shop with businesses that offer one over those who don’t. Businesses with loyalty programs may also attract new customers who are more likely to choose them over competitors who don't offer such programs.

What Kind of Loyalty Schemes Are There?

Not all loyalty schemes are created equal. The type of program you choose should align with your brand’s goals, customers’ preferences, and business model. Below are some of the most popular types of loyalty programs:

1. Sign-Up Loyalty Program

This is the easiest option for customers to access, often functioning like an email newsletter sign-up. It’s simple for businesses to set up, sometimes as easy as rebranding a newsletter. However, this program is very one-dimensional and doesn’t incentivise purchases or encourage long-term loyalty. An example is The North Face XPLR Pass sign-up scheme.

2. Tiered Loyalty Program

In this program, customers earn different status levels based on their spending or engagement. Higher levels come with more exclusive perks or better rewards. This creates a sense of achievement and exclusivity, encouraging customers to spend more to unlock higher tiers. Tiered programs are a great option for fostering loyalty, but they require offering a substantial amount of rewards and benefits to make them worthwhile. An example of a tiered program is Harrods Rewards.

3. Points-Based Loyalty Program

Customers earn points for every purchase or engagement, which can be redeemed for rewards such as discounts, products, or exclusive services. This type of program motivates repeat business, as customers are incentivised to collect points to unlock better rewards. However, these schemes can sometimes be confusing for customers, and they require close management and potentially significant investment in a new platform. Starbucks Rewards is a well-known points-based loyalty program.

4. Paid Loyalty Program

In a paid loyalty program, customers pay a fee to access exclusive benefits. This scheme often provides the highest return on investment (ROI) for businesses, but the upfront cost could deter customers. Additionally, it might see lower repeat subscription rates if not managed properly. An example of a paid membership scheme is Soho Home Friends.

5. Values-Based Loyalty Program

This program turns customer interactions into incentives that align with both the brand and the customer’s shared values. It delivers high emotional value for the customer but also limits your audience, as the values need to strongly align with the brand’s mission to drive purchases. If your brand’s core proposition supports it, this can be the best option to reinforce your message. A great example of a values-based loyalty program is Nike's value scheme.

When deciding on a loyalty program, consider your business type. For example, a single-category subscription service or a multi-brand retailer may benefit from a simple points system that encourages frequent purchases. On the other hand, a luxury brand may opt for a tiered program to create an aspirational experience.

Think about what works best for your customers and your business. Loyalty schemes are complex, and once launched, it’s hard to change them without upsetting your customers. This makes it crucial to choose a program that not only serves your goals but is also aligned with what your customers want.

What Kind of Rewards and Benefits Should You Use?

One of the most important aspects of a loyalty program is the rewards and benefits you offer. A combination of tangible rewards and experience-led benefits is essential for creating a meaningful program.

Tangible rewards like discounts, free products, or exclusive offers are great, but experience-driven benefits can take your program to the next level. Think VIP events, early access to new products, or personalised services. These experiences make customers feel valued, and that emotional connection often leads to stronger loyalty.

How to Identify Your Best Customers

Knowing who your best customers are is essential for targeting the right audience with your loyalty program. It’s not always about the total amount spent—sometimes, loyalty can be found in frequency of purchase, engagement with your brand, or advocacy through word-of-mouth.

To identify your best customers, start by using the data you already have. Look at purchasing patterns, customer behaviours, and engagement metrics to establish what “best” means for your brand. Use CRM tools to segment your audience and understand their preferences so you can design a loyalty program that speaks directly to them.

If you’re unsure who your best customers are or if a loyalty scheme is the right fit for your brand, we can help. Our CRM offering helps businesses identify their top customers and understand their behaviours.

Conclusion

Deciding what loyalty means for your brand can feel daunting, but with the right strategy in place, it’s an investment that pays off. By understanding the types of loyalty programs available, offering the right mix of rewards, and targeting your best customers, you can build a program that strengthens relationships, boosts retention, and drives growth.

If you're still unsure where to begin or need help developing a loyalty program that fits your brand, don't hesitate to reach out. We can guide you through the process and help you leverage CRM to make informed decisions for your business.