Customer loyalty program: what it is, types, and how to implement it

In today’s competitive market, acquiring customers is no longer enough. The real challenge is to make them come back, recommend your brand, and become natural ambassadors of your business. That’s where customer loyalty programs come in—one of the most effective strategies to increase retention and long-term profitability.

In this guide, you’ll learn what they are, the most common types, how to implement one in your business, and the KPIs you should track, with practical and up-to-date examples.

What is a customer loyalty program?

A customer loyalty program is a structured strategy designed to reward customers who buy repeatedly. Its main goal is to motivate return visits, generate more purchases, and increase the customer lifetime value (CLV).

Unlike one-off acquisition tactics, loyalty is about building an ongoing relationship based on trust, reward, and customer experience.

Example: A restaurant that offers a digital points card—where every 10 visits earn a free burger—is using a loyalty program.

Benefits of a customer loyalty program

A well-designed program brings clear advantages:

• More repeat purchases: customers return because they expect a reward.
• Higher average ticket: as they get closer to a reward, they tend to spend more.
• Brand advocacy: loyal customers recommend you organically.
• Quality data: track customer behavior and segment better.
• Profitability: retaining a customer is 5–7 times cheaper than acquiring a new one.

Most common types of customer loyalty programs

Not all programs are the same. Depending on your business and audience, you can apply different models:

Points programs

Customers earn points for every purchase and redeem them later. Easy to understand and widely used.

Tiered programs

Customers unlock categories (Bronze, Silver, Gold) as they spend more. This format drives exclusivity and motivates progression.

Subscription programs

Customers pay a monthly or yearly fee in exchange for exclusive benefits like free delivery or premium discounts.

Gamification and challenges

Game dynamics—challenges, collectibles, or achievements—encourage interaction and fun.

Partner programs

Two or more brands team up to offer shared benefits. Example: a café partnering with a gym to cross-promote discounts.

Examples of successful loyalty programs

Some of the world’s leading brands rely on loyalty strategies:

• Starbucks Rewards: points accumulation with tier benefits.
• Lidl Plus: personalized discounts based on past purchases.
• Sephora Beauty Insider: points + tier system with exclusive perks.
• McDonald’s Rewards: points per dollar spent, redeemable for popular menu items.

Key takeaway: even small restaurants or local shops can replicate these strategies with the right digital tools.

How to create an effective customer loyalty program

Designing a good program requires planning. Follow these steps:

1. Define your objective

Do you want more visits, a higher average ticket, or customer data? Your goal determines the program’s design.

2. Choose the right model

• Points → simple.
• Tiers → exclusivity.
• Subscription → recurring revenue.

3. Create attractive rewards

They must be achievable and relevant. If the reward is too distant or unappealing, customers will drop out.

4. Select the right tool

Physical cards are an option, but digital solutions provide convenience, updates, and analytics.

5. Communicate clearly

Your staff must be able to explain it in seconds, and the program should be visible in-store, online, and on social media.

6. Measure and optimize

Track results regularly and adjust rewards, mechanics, or messaging to improve performance.

Common mistakes when implementing a loyalty program

• Unattractive rewards or goals too far away.
• Complex mechanics that confuse customers.
• Poor communication: hidden or unadvertised programs fail.
• Ignoring customer experience: loyalty isn’t only about discounts.
• Not measuring results: without KPIs, you can’t prove success.

KPIs to measure loyalty program success

Here are the most relevant indicators:

• Program sign-ups (how many customers join).
• Repeat purchase rate (percentage of returning customers).
• Time to second purchase.
• Average order value (AOV) of loyal vs non-loyal customers.
• Redemption rate (percentage of rewards claimed).
• Customer lifetime value (CLV).

Digital loyalty programs: the key in 2025

Digitalization has changed the rules of loyalty:

• Apple Wallet & Google Wallet passes: customers save them on their phones with real-time updates.
• QR-based coupons (anti-fraud): easy to scan, secure.
• SMS and push notifications: direct, high-open-rate channels.
• Advanced segmentation: send personalized offers based on customer behavior.

In 2025, a digital loyalty program is no longer optional—it’s the most efficient way to retain customers.

How Promotty makes loyalty programs easy

With Promotty, any business can create its own digital loyalty program in minutes:

• Issue a digital loyalty card compatible with Apple Wallet and Google Wallet.
• Automatic updates of points and rewards.
• Real-time stats on purchases and redemptions.
• Segmentation tools to personalize campaigns.

This allows both small and large businesses to compete with global brands on equal terms.

A customer loyalty program is more than just “giving perks.” It’s a long-term strategy that generates recurring revenue, valuable data, and lasting relationships with your customers.

With digital tools, you can now deliver seamless, personalized experiences that really make a difference.

Start simple: define your goal, choose the right model, communicate it clearly, and measure results. And if you want an easy way to launch, Promotty helps you issue your digital loyalty card in minutes.