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What is a loyalty program? Definition, strategies, and examples

Why is a customer loyalty program such a key marketing strategy? Here’s what you need to know.

Rebecca Otis Leder

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Loyalty programs FAQs

A customer loyalty program is a marketing strategy designed to incentivize repeat purchases and encourage ongoing engagement from customers by offering rewards, discounts, or exclusive benefits.

Loyalty programs help retain existing customers, increase customer lifetime value, gather valuable customer data, and foster brand advocacy, ultimately boosting revenue and profitability.

Common types include points-based programs, tiered programs, paid programs (e.g., subscription), value-based programs, and hybrid models combining different elements.

Customers benefit from rewards, exclusive access, personalized offers, and a feeling of being valued by the brand, leading to a more positive overall experience.

Create an effective program by understanding customer preferences, offering relevant rewards, making it easy to earn and redeem, and clearly communicating program value.

Success metrics include customer retention rate, repeat purchase rate, customer lifetime value (CLV), program engagement rate, and redemption rate.