The Genius of Loyalty Points Program

by Natasha Ambavle |

The Genius of Loyalty Points Program

Loyalty programs have been around for decades, and at some point, one might start to question their relevancy and impact.

Have they become redundant and ineffective after all this time? Let’s look at some facts and figures to better understand brand loyalty and its relevancy in today’s world.

The Pareto Principle shows 80% of your profits come from just 20% of customers.
Over 70% of consumers are more likely to recommend a brand if it has a good loyalty program.
– Bond Brand Loyalty
72% of US adults belong to at least one loyalty program.
In 2018, the top three brands judged by customer loyalty were Amazon, Google, and Apple.
-Brand Keys
49% of consumers in the US engage with up to three loyalty programs.

A global customer survey conducted by Yotpo states, Customer loyalty has actually gone up year-over-year from 2019 to 2020.” This is a clear indication that brand loyalty programs have become a crucial determinant in customers’ purchasing decisions.

Over the years, brand loyalty programs have evolved and branched out to encompass various systems. Still, loyalty points programs remain one of the most effective tools of boosting customer loyalty, increasing retention rate, and keeping customers engaged with the brand for a prolonged period.

What is a Loyalty Points Program?

The use of points is one of the oldest and simplest loyalty programs, globally known by customers and used by thousands of brands to keep them engaged.

Members enrolled in these programs earn points on every transaction they make with the brand. The points are accumulated in the customer’s digital wallet and can be redeemed on their next purchases.

The points system is based on the simple principle of ‘Spend more to earn more.’ The success of the loyalty points program lies in the simple fact that customers find the process of collecting points exciting. To redeem rewards and gifts, they willingly spend a few more dollars on each visit to earn more rewards in the future. Hence, the loyalty points program proves to be a win-win situation for both the customers and the brands.

Why Should You Opt for Loyalty Points Programs?

  • Simplicity – The points program is widely used and understood globally. Often, loyalty programs with too many tiers and complicated steps fail because members cannot make sense of it, whereas the points program has been around for years, so the audience has become accustomed to it.
  • Accumulation of Data – To sign up for a loyalty program, members are prompted to share personal details like name, age, address and contact information, birthdays, etc, with the brand. This data can offer valuable insights into understanding the target audience and associated demographics, plus assist in designing effective marketing strategies.
  • Helps in Building Brand Credibility – According to a study by Bond Brand Loyalty, “71% of customers who are members of loyalty programs consider membership as an important and meaningful part of their relationship with brands.” A well-planned loyalty points program can help not only in boosting brand loyalty but also help in building brand credibility.
  • Helps in Customer Retention – Loyalty programs are an excellent way to keep your customers engaged. An engaging program will keep members busy collecting loyalty program points, and by delivering timely rewards, you can successfully create a strong and lasting relationship with your clientele.
  • Assists with Customer Acquisition – Members that are satisfied with the loyalty programs are bound to recommend the brand, along with the loyalty program, to their network of family and friends. A loyalty program that offers unique benefits and great rewards easily gains traction through word-of-mouth publicity and helps to increase the customer base.
  • Increase in Revenue – Loyalty programs are responsible for the boost in revenue and sales. According to HubSpot, a massive 93% of customers prefer purchasing from a brand they trust over its competitor. To put that in real-world terms, that means nearly all the people you would casually interview in your store or on your site would say they’d rather shop with you than somewhere else. That’s a lot to take in. Loyalty programs will help you keep your customers engaged, boost the trust factor, and consequently give impetus to sales and revenue.

A loyalty program is a strategically designed marketing tactic that embodies the brand’s personality, aesthetics and core value. A strategy that does not resonate with the brand’s personality is bound to have a low efficiency rate. Annex Cloud can help you with dynamic loyalty solutions that are specifically designed for your business and help you to achieve your  marketing objectives. To know more, or get a free demo, click here.

Disadvantages of Loyalty Points Programs

  • Expiration Date – Usually, points come with an expiration date, so if certain members forget to redeem the points before expiration, their points become invalid. This results in a non-satisfactory customer experience, which is likely also to bring complaints.
  • The Time Factor – Many members quit the points program or become inactive simply because it takes a lot of time and effort to earn substantial points.
  • Quality and Variety in Rewards – The success of a loyalty points program greatly depends on the company’s quality and variety in rewards. If the rewards are not appealing, the program is likely to fail and hamper the brand’s image in the market.

8 Examples of Successful Loyalty Points Programs

  1. American Express – American Express’s Plenti Rewards is a hybrid program that combines coalition loyalty and points systems. American Express has partnered with various brands to give its members more options to earn points from (and redeem them).
  2. Uber – The American technology company has a well-known loyalty program called Uber Rewards. Uber Rewards enables customers and riders to earn points on every purchase/ service they obtain through Uber and use them for their next purchase.
  3. Marriott International – Marriott Bonvoy Benefits allows members to accumulate and redeem points on their stays, dining, and other services and experiences offered by the chain of the hotels.
  4. Tarte Cosmetics – The cosmetic company has a hybrid program called Team Tarte. Members can accumulate points through their purchases and earn handsome rewards by posting about the company on social media and referring the brand to family and friends.
  5. Designer Shoe Warehouse (DSW) – This beloved depot of marked-down footwear has one of the oldest loyalty programs, which combines the tier system and the loyalty points program. Members are encouraged to spend more to earn more points and escalate to the next level, where they can redeem special rewards and claim more benefits.
  6. Starbucks – Starbucks started its points program with a physical card but has now moved on to an app. The coffee beacon’s simple points program has been highly efficient in urging customers to spend more so they can snag a free drink through the points system and accumulate and track customer data and purchase patterns.
  7. Lively – The fashion retail brand has a successful points program that awards points not only on purchases but also on special occasions, such as birthdays and anniversaries. This personalized program has worked well for the brand and helped in increasing brand loyalty.
  8. The North Face – The outdoor gear retailer has a popular points program called VIPeak. Members enrolled in VIPeak earn points for a variety of activities: purchases, attending the brand’s events, downloading the app, and various other features.


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