Customer loyalty programs: types and tools overview

by Asha Jane Brown | January 8, 2019 8:35 am

Customer loyalty programs gain more and more popularity. Remember, how many times did you use customer loyalty programs last month? You probably even have such an application on your smartphone.

In fact, customer loyalty program becomes a useful tool for increasing sales[1] of e-commerce business. We have prepared a brief overview of the most popular customer loyalty programs. This will help you to easily differentiate them as well as understand all modern trends.Loyalty programs workflow

One of the main goals of the e-commerce marketing strategy is to attract more customers. The other important task is to motivate them to buy again and again. Among all the tools aimed at building a long-term retailer-customer relationship, customer loyalty program is among the most useful ones.

The reason is that, according to Pareto Principle, 20% of all clients generate 80% of the profit. This 20 % are regular customers who buy much more than occasional ones. They are frequently called loyal customers and can be motivated to buy even more if you give them what they need. And this can be done with the help of the right customer loyalty solution.

Types of loyalty programs


loyalty programs types

There are different types of loyalty programs. Let’s have a look at the most common and frequently used ones.

The point system. This is probably the most widespread model with a very simple algorithm. After every purchase, regular customers accumulate points that later can be exchanged for products, discounts, special offers, etc.

Tiered system. It is somehow similar to the point system but with a little difference. When the customers accumulate a certain number of points, they reach another loyalty level. Every new level gives them more rewards and/or discounts.

Percentage discount program. Fixed and regular discount on the next purchase is not a very effective tool[2], because clients mostly do not keep in mind the discount sum available at the moment. But if customers have fixed percentage discount, they tend to use it more frequently.

Free stock products. The idea of this system is to encourage customers to buy a certain number of products. If they have done it, they receive one more product or service free of charge as a reward.

Partners program. It works like this: when a customer receives points at one place, he / she can get a bonus or discount at other places among company partners.

Game program. A loyalty program can be not only beneficial but also entertaining, for example, in the form of a game application.

Hybrid loyalty programs. It is possible to combine several loyalty programs into one integrated system. For example, you may merge the game program and tier based system. In this case, when customers will complete each next level in the game, they will reach new loyalty levels. Rules and conditions are up to you.Loyalty Program Tools

There are a lot of customer loyalty software applications. They differ according to their aims and structure. There are numerous plugins, addons, as well as native solutions. We are going to overview some options available on the market today.

WordPress E-commerce Loyalty Program Plugins

Magento[3] E-commerce Loyalty Program Extensions

Other E-commerce loyalty software

Last word

There are also many other good software and tools for building customer loyalty systems that we have not covered today. Each one has its own peculiarities and provides unique possibilities, but, still, they possess a lot of common features. However, among the best ones are those, who focuses on software usability and apprehensibility, at the same time aiming to satisfy all e-commerce business needs.

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