What The Types Of Loyalty Programs?


Every business wants in on loyalty and therefore wants to have more loyal customers. For this reason, the businesses often associate loyalty with loyalty programs, which are a relationship between a brand and a customer. The existence of loyalty programs in a business provides an encouragement to shoppers to return to stores where they frequently make purchases. Most people do not have a clear understanding of the difference between loyalty and marketing. They therefore think of loyalty programs as an airline that gives miles to frequent fliers, a hotel that gives points towards a stay or a restaurant that offers a punch card incentive. Indeed these may be called loyalty programs but in the real sense, these are marketing programs disguised as loyalty programs.

Types of loyalty programs

  1. Points programs – these loyalty programs let customers accumulate points that can be redeemed for rewards or free products and services. These are the most popular type as they are points based and are easy to set up. They have got a tangible value for the customer and are flexible and customizable. They also have the ability to drive a desired customer behavior.
  2. Spend programs – here, customers get loyalty credit for the amount spend in a business. This program is easy to understand, create and maintain. With these programs, churn rates can be cut down and transaction amounts increased effectively. The programs are also tangible and encourage repeat business.
  3. Tiered programs – this is an improved version of the points program. It gives a customer rewards based on the spending points. These programs can be highly targeted and easily customized which is a reason for their increased popularity. They decrease churn rate for most valuable customers and motivates customers to higher levels.


It is human nature to stay with a company that is easy to do business with. When different loyalty programs are used in a business, opportunities to interact and build customer loyalty grow exponentially. Customers like consistency and so once they know how the company operates, they can rely on a consistent experience which creates confidence.

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