Monetizing Loyalty Programs with Subscriptions

Subscriptions have transformed how consumers interact with brands. From streaming platforms and software to monthly boxes at the doorstep, the subscription economy has reshaped expectations around value, convenience, and continuity. By the numbers, the global subscription e-commerce market is projected to surpass $450 billion in 2025, up from just $15 billion in 2019.

Behind the growth lies a challenge: keeping customers engaged long term. Churn rates for subscription services can run as high as 40% annually, and when budgets tighten, subscriptions are often the first expense consumers cut. That reality has pushed brands to think differently: beyond simply retaining subscribers, how can loyalty programs themselves become revenue-generating engines by monetizing loyalty programs?

The Subscription Effect: Proof That Customers Will Pay for Value

One of the most important lessons from the subscription economy is that customers will pay when value is clear. Amazon Prime is a perfect example: what began as free shipping grew into a $139/year paid loyalty program that funds ongoing perks—streaming, exclusive deals, member pricing—that reinforce loyalty across every part of Amazon’s ecosystem.

This model proved two things:

Customers see real value in paying for elevated benefits.
Paid tiers can create predictable recurring revenue that offsets program costs.

Now, retail and CPG brands are taking that playbook and adapting it for their own loyalty strategies, often as a foundation for monetizing loyalty programs more effectively.

Paid Loyalty Tiers: Elevating the Membership Model

For retailers and CPG brands, paid tiers open the door to richer engagement:

Tier Fast-Tracking: Members in a base tier pay a small fee to unlock higher-value benefits without waiting.
Status Benefits: Early access to sales, special pricing, or VIP experiences—similar to the way airlines reward their most loyal flyers.
Recurring Revenue: Fees create consistent income, which funds better rewards and reduces program costs.

The beauty of paid tiers is flexibility: they don’t have to replace a free program. Instead, they can be layered on top of an existing loyalty structure, working in tandem with a free tier to create a “good, better, best” model. This way, customers choose how much they want to engage, and brands gain multiple levers to fund richer benefits.

Vendor-Funded Rewards: Adding Value Without Adding Cost

Paid tiers aren’t the only way to monetize loyalty programs. Another growing approach is vendor-funded rewards.

Retailers like Target have shown how this works: deals in their loyalty app are often funded by brand partners rather than Target itself. Customers win with extra value, vendors gain exposure and trial, and the retailer strengthens loyalty without sacrificing margin.

For subscription businesses, this model translates seamlessly:

Vendors underwrite perks tied to qualified purchases.
Brands leverage customer data (without selling it) to run targeted campaigns.
Everyone benefits from increased engagement and reduced churn.

Engagement + Monetization = Sustainable Loyalty

At their core, loyalty programs still exist to influence key customer behaviors:

AOV (Average Order Value): getting customers to spend more per trip.
FOP (Frequency of Purchase): motivating them to shop more often.

But when engagement strategies are paired with monetization models like paid tiers and vendor-funded campaigns, programs become sustainable growth engines.

Importantly, these models don’t have to compete with free loyalty programs, they complement them. A well-designed program can attract a wide base of members at no cost, while offering optional paid upgrades for those who want more.

Where Loyalty is Headed: The Future of Monetizing Loyalty Programs

The future of loyalty is hybrid: blending the best of subscription thinking (recurring value, membership mindset) with monetization strategies (paid tiers, vendor-funded rewards) to deliver both engagement and profitability.

With AI and predictive analytics, brands will be able to anticipate churn, personalize offers in real time, and deploy monetization levers at the right moment. The ultimate goal? To make staying effortless and canceling feel like missing out.