Loyalty Programs: Real Examples & Best Practices (2026)

Learn about the different types of loyalty programs and how they boost retention and sales. Real brand examples and implementation tips included.

Walk into a neighborhood coffee shop or book a hotel room and you’ll likely be offered membership in a loyalty program.

There are good reasons for brands to offer loyalty rewards: 72% of customers say loyalty programs encourage spending, according to Deloitte data. Meanwhile, data from Antavo’s Global Customer Loyalty Report 2025 found that 83% of brands with loyalty programs reported a positive return on investment (ROI), citing more than five times the revenue from running them than the costs.

Ahead, review real examples and practical strategies to learn how loyalty programs work and how you can implement one for your business.

What is a loyalty program?

A loyalty program is a marketing strategy that encourages repeat business by rewarding customers for their continued patronage. Typically, with a brand loyalty program, customers earn points for purchases, which they can then redeem for discounts, free products, or exclusive offers.

How do customer loyalty programs work?

At a basic level, customer loyalty programs rely on centralized customer data to track repeat behavior and reward it with personalized incentive programs. Here are the typical components of a customer loyalty program:

• Identifying customers. Most programs identify loyalty members at online or in-store checkouts, usually through an email address, phone number, app login, or point-of-sale (POS) profile.
• Tracking behaviors. Modern loyalty programs track customer behaviors such as shopping frequency, preferred locations, and engagement across digital channels. Customers earn points, rewards, offers, or tier upgrades for making purchases, referring others, and meeting milestones. 
• Communicating rewards status. Loyalty members receive a record of their points, rewards, and offers across various digital touchpoints, including mobile apps, emails, text messages, and point-of-sale receipts. 

Types of loyalty programs

There are several ways to build customer loyalty and drive repeat sales. Here are some of the most popular types of loyalty programs:

1. Points-based loyalty programs

Points-based loyalty programs are the most common type, enabling customers to accumulate points redeemable for various rewards such as discounts and gift cards. Customers earn points by making purchases, leaving reviews, hitting milestones like birthdays and membership anniversaries, and participating in contests, games, or challenges.

For example, Gymshark runs a loyalty program where members earn “XP” for shopping, signing up for texts and emails, and completing workouts through the Gymshark Training app.

Gymshark’s points-based loyalty program rewards both purchases and engagement, extending loyalty beyond checkout. Source: Gymshark

2. Tiered loyalty programs

Tiered loyalty programs are membership programs in which customers receive different benefits based on their rank. Businesses often use metrics such as sales volume or customer engagement to assign tiers.

Customer rewards programs give customers a goal and incentivize repeat purchases. The higher their tier, the more exclusive the rewards.

3. Paid loyalty programs

Paid loyalty, or fee-based loyalty programs, provide immediate and ongoing benefits in exchange for a participation fee. These fees can be recurring or one-time.

Paid programs may require proof of value to drive signups, but they can deliver higher customer value. 

Take Tomlinson’s, for example. For $10 per year, Pet Club members receive 10% off pet food purchases, plus access to monthly specials, exclusive events, and member-only offers.

Customers realize the value of their membership immediately and are motivated to maximize their return on investment (ROI), making paid loyalty programs a smart bet for businesses that rely on recurring purchases.

Tomlinson’s uses a paid loyalty model—customers pay $10 a year for automatic savings, not points or tiers. Source: Tomlinson’s

While it seems like a tough model to mimic, paid loyalty can suit many different business models.

4. Value-based loyalty programs

Value-based loyalty programs build emotional connection with customers by donating a percentage of purchase profits to charity or welfare programs. You can choose a charity that aligns with your customers’ values and your business mission, or allow customers to choose from a selection of causes. 

Although they don’t reward members directly, value-based loyalty offers are attractive to audiences who prioritize the social good. This type of customer loyalty program also tends to boost brand reputation.

💡Pro tip: Not sure which type of loyalty program is right for your business? Ask customers what they want. Use Shopify Forms or post-purchase surveys to ask your most loyal customers whether they prefer charitable giving, discounts, or exclusive access to products. Then use Shopify Segmentation to group them and choose one to pilot a rewards program.

5. Coalition loyalty programs

Coalition loyalty programs let customers earn and redeem rewards across multiple non-competing brands.

A classic example is Star Alliance. Fly with Lufthansa, Singapore Airlines, or United, and you earn miles in the same loyalty ecosystem, even though each airline operates independently.

Star Alliance page explains how travelers earn and redeem miles across 25 member airlines using one frequent flyer number. Source: Star Alliance

In retail and ecommerce, coalition programs work the same way. A customer might earn points at a clothing brand, redeem them at a partner café, and unlock perks with a lifestyle or travel partner.

Coalition loyalty programs thrive when non-competing partners share high-frequency customers, enabling them to aggregate rewards rapidly across multiple touchpoints. 

Successful customer loyalty program examples

Some brands use rewards to drive repeat purchases, while others use loyalty to reinforce values, education, or community. The examples below show how different ecommerce brands apply loyalty mechanics.

Blume

Bodycare retailer Blume rewards “Blume Bucks” through its Blumetopia loyalty program. It’s pretty straightforward: customers earn Blume Bucks by following the ecommerce brand on Instagram, placing orders, and telling friends about Blume. They can redeem their Blume Bucks for merch, free products, and other gifts.

Blume uses a points-based loyalty program where rewards are clearly tiered, visual, and tied to products its community already wants. Source: Blume

Lola’s Cupcakes

Lola’s Cupcakes runs a straightforward points-based loyalty program called Lola’s Love Club. Customers earn five points for every £1 spent in store or online, redeemable for cash (one point = 1p). 

Members can also visit a Lola’s storefront for a free cupcake on their birthday.

Lola’s Love Club is a points-based loyalty program where customers earn five points for every £1 spent in store or online. Source: Lola’s Love Club

✨Shopify power up: In 2019, Lola’s replatformed to Shopify, which became the backbone of its online and in-store operations. Shopify POS rolled out quickly across UK stores, syncing with Smile.io customer profiles to automatically create loyalty accounts. Shopify helped scale Lola’s Love Club, adding more than 10,000 new customers to its loyalty program.

Mirenesse

Mirenesse is Australia’s leading sustainable and cruelty-free cosmetics brand. Its loyalty program, Love Rewards, includes two tiers: Gold ($18 per month) and Onyx (free).

Gold tier members earn two points for every $1 spent; they also receive free shipping on all orders, double points for activities, and a 200-point joining bonus. The Gold tier costs $18 per month and includes additional perks, such as access to secret sales and opportunities to test new products.

Meanwhile, Onyx members earn one point per $1 spent and receive a 100-point joining bonus and a birthday surprise.

Mirenesse runs a classic points-based loyalty program that lets customers convert spend into vouchers, products, and member-only perks. Source: Mirenesse

100% Pure

Skin care and beauty brand 100% Pure offers a tiered rewards system. Loyal customers earn points redeemable for products by engaging on social media and writing reviews.

The program has three tiers based on a customer’s spend per calendar year:

• Enthusiast: $0
• Activist: $250
• Revolutionist: $750

Benefits increase with each tier, with Revolutionist members receiving early access to new products, free expedited shipping, and priority customer service. 

100% Pure’s loyalty program ties better perks like shipping, gifts, and early access directly to how much customers spend each year. Source: 100% Pure

Benefits of loyalty programs

Loyalty programs earn their keep: customers receive tangible thanks for their loyalty, and businesses generate more sales. That’s why the global loyalty management market is projected to reach more than $30 billion by 2033. 

Here are some additional benefits for brands and consumers:

For businesses

More customer referrals

Successful loyalty programs turn regular customers into brand advocates who evangelize through word-of-mouth marketing—a low-cost strategy compared to paid advertising. Amplify this effect by offering referral bonuses to attract even more brand advocates.

Better customer retention

Rewards programs foster brand loyalty by giving customers a sense of added value—the feeling they’re getting more for their money. 

According to Growave’s study of more than 100 Shopify brands, loyalty members who redeem rewards make 2.5 times as many repeat purchases as non-redeemers, demonstrating that driving redemption is vital to loyalty program success. 

Higher average order value (AOV)

When you add earning opportunities to your loyalty program, you encourage your customers to spend more each time they check out. Growave’s Shopify study found that customers who redeem their loyalty points also have a 23% higher average order value (AOV) than non-redeemers.

Here are three real-world tactics for boosting AOV: 

• Point multipliers. Sephora regularly hosts point multiplier events for its Beauty Insiders.
• Tier-based opportunities. Nordstrom’s Nordy Club members must earn $500 per year to maintain Influencer status or $5,000 per year to maintain Ambassador status.
• Streaks. Target Circle runs special events for members, rewarding them, for example, with $30 when they spend more than $100 three times in a month.

Valuable customer data

Loyalty programs track their members’ habits, logging their interactions with the brand to produce a wealth of insightful customer data. Although it can be hard to directly measure the impact of all that information, when used wisely, consulting firm EY notes that it reduces marketing research costs and drives better marketing strategy and product development.

Reduced customer acquisition costs

Loyalty programs help lower the relative cost of customer acquisition by shifting focus to repeat buyers, who are muchcheaper to retain than brand-new prospects. How much cheaper? Frequently cited data from a 2014 Harvard Business Review article puts the customer acquisition at five to 25 times that of customer retention. Meanwhile, customer acquisition cost analyses from this decade set the costs of acquiring a single new customer at $21 to over $300, depending on industry. 

Predictable revenue from paid programs

Paid loyalty programs generate revenue before a customer places their next order, which makes demand more predictable by default.

For example, Amazon reports more than 200 million paid Prime members globally, with membership fees contributing a recurring, high-margin revenue stream that’s largely decoupled from seasonal shopping cycles.

Measurable business impact

The quantifiable business benefits don’t end with the examples already noted here. In a 2025 survey of more than 5,000 US loyalty program members, Deloitte listed loyalty programs as a “clear differentiator,” following closely behind price, value, and quality as drivers of brand loyalty across all age groups.

For customers

Tangible savings

The Deloitte survey found that a brand’s perceived value increases among its loyalty members, with 80% noting they get more because of it. 

Exclusive access and experiences

For many customers, loyalty comes from access—exclusive invites to product drops, limited editions, or member-only events make them feel appreciated. Gen Z and millennials in particular value brand loyalty programs that offer community events, charitable donations, and enjoyable digital experiences 

Personalized recommendations

Tailored suggestions matter, especially to the 90% of Gen Z and millennials who are willing to exchange their personal information for bespoke offers (and the 78% of Gen X and 64% of boomers who say the same). 

Recognition and status

Behavioral research indicates that status matters, particularly to customers in higher rewards tiers. Tiered programs deliver 1.8 times the return on investment (ROI) because they mine real customer motivations, giving members clear goals, tangible status indicators, and reasons to stay, according to Antavo’s loyalty research.

Implementing a loyalty program for your business

Showing gratitude and providing unique customer experiences builds customer trust. It’s also more effective for your bottom line to grow your existing relationships than to cultivate new ones. 

Tip: With a Shopify store, implementing an online loyalty program is easy. Download loyalty program software like Smile from the Shopify App Store and start today.

Promoting your loyalty program

Make it easy for your customers to find your loyalty program by promoting it at natural decision points:

• Homepage. Add a clear signup module or banner explaining what customers get for joining. 
• Checkout. Prompt customers to join before or after purchase, when intent is highest, and the value of rewards feels most relevant.
• Email and SMS. Use post-purchase emails to explain how points were earned and what they unlock next. Progress cues matter.
• In store. Train staff to mention loyalty at checkout, and display signage showing how rewards work.
• Customer accounts. Make points, tiers, and rewards easy to find whenever customers log in. 

📚Recommended reading: How to Create an Omnichannel Loyalty Program

Customer segmentation for loyalty programs

Understanding your customers and segmenting them into different groups can help you design a loyalty program that feels more relevant and rewarding. By targeting distinct customer segments, you can tailor loyalty offerings to meet different needs, making the program more effective.

Factoring in loyalty sentiment, engagement, and behavior loyalty, the LoyaltyLevers Benefits Framework enables businesses to create targeted, personalized strategies that resonate with each customer group. Read on for a breakdown of each segment and the strategies you can use to engage them effectively.

Engaged loyals

Engaged loyals are your loyalty program’s power players—the segment of customers who genuinely love your brand and frequently engage with it. They’re already committed and enthusiastic, so your goal should be to deepen this connection and turn them into brand advocates.

Consider offering them exclusive experiences, VIP access, or special events that reinforce their status. Engaged loyals are ideal for word-of-mouth marketing, so encourage them to refer friends and share their brand love on social media.

Game players

These are the customers who aren’t particularly invested in your brand, but love your loyalty program for the perks. They fall into a high-value category, but your strategy for keeping them engaged will need to be different from the one for your engaged loyals. Any way you can gamify your loyalty program will be alluring to them.

Games players can be persuaded to join your most elite segment. Sentiment builders, like the following examples, can help you turn them into engaged loyals:

• Status. Offer tier levels and badges to give them something to achieve, making them feel recognized.
• Convenience. Simplify earning and redeeming points with easy, low-effort actions.
• Surprise and delight. Add unexpected rewards like bonus points or discounts to keep their interest high.
• Personalization. Tailor offers based on their past purchases to make them feel valued.
• Control. Let them choose how to redeem points, adding flexibility to their loyalty experience.
• Community. Create a sense of belonging with exclusive events or members-only groups.
• Purpose. Allow points to be donated to charity, adding a purpose-driven option.
• Value. Emphasize the concrete benefits of the program to show it’s worth their time.

Brand driven

Brand-driven customers are the opposite of game players—they’re highly loyal to your brand itself but show limited engagement with your loyalty program.

For these customers, personalization and convenience are key. They’re not looking to “play” for rewards; they want straightforward, practical benefits. Simple, personalized perks like birthday discounts, free shipping, or early access to sales can be effective. The aim is to make it easy for them to see value in your loyalty program without requiring extensive interaction.

Belongers

Belongers tend to make up a substantial portion of loyalty programs. They’ve joined without strong commitment to your brand and typically engage at a low level. Since their loyalty is lukewarm, they may require additional incentives to become more active participants.

One loyalty strategy is to offer occasional bonuses or low-effort opportunities to earn rewards that don’t demand a big time commitment, such as getting points for signing into their account instead of using a guest checkout option. Over time, these small interactions can help build a connection and convert belongers into more loyal customers.

By segmenting customers and personalizing rewards, you can maximize the effectiveness of your loyalty program and ensure that customers feel understood and valued—no matter which segment they currently fit into.

Loyalty program common challenges

Ask brands what’s holding their loyalty programs back, and the answers are surprisingly consistent. Luckily, these are all challenges that companies can overcome.

Data integration

Loyalty programs stall when customer data is fragmented or siloed. Take the case of Lola’s Cupcakes, for example. Before adopting Shopify’s unified customer profiles, the brand stored customer data across multiple points in its tech stack—its email platform, loyalty management system, and online and in-store checkouts. Customers couldn’t redeem points for in-store purchases, and employees had to navigate multiple systems to gain holistic insights into their customer base. 

After Shopify integration, the company could pull customer order history, POS purchases, and life cycle data from a single source of truth. Integrating its customer relationship management (CRM) data into a unified system enabled Lola’s Cupcakes to make quick, strategic decisions based on accurate, real-time data. This allowed it to reduce its digital management costs, and ultimately increase its loyalty membership.

Managing reward liability and proving ROI

Accounting standards require brands to consider reward value when calculating revenue. Since customers often hold onto points before redeeming them—and sometimes don’t redeem them at all—this requirement can make it difficult to calculate both the value and risk of their loyalty programs.

Business consultancy EY challenges brands to consider more than just direct costs and to set loyalty program key performance indicators (KPIs) that account for brand loyalty, brand advocacy, and improved marketing data.

Market saturation

Loyalty programs aren’t just competing with each other—they’re also competing against every incoming text, email, and alert in a competitive attention economy. 

These Shopify tools can be used to help your loyalty program stand out:

• Shopify Checkout and post-purchase checkout extensions to surface rewards immediately after purchase
• Shopify Customer Accounts to display points and progress without setting up additional emails
• Shopify Flow to trigger marketing automations and loyalty messages after meaningful actions or milestones (e.g., unlocking a redemption offer, reaching a tier)

Loyalty program best practices

To make your loyalty program work to its fullest potential, keep these best practices in mind:

1. Start small

You don’t want to overwhelm customers with an overly complex program. Keep things simple right out of the gate: Members earn one point per dollar spent. Over time, you can test creative strategies and see which ones motivate your members.

2. Define your goals

Establish program goals—for example, increase AOV by 15% in six months—before setting up your loyalty program. Strategic goals will help you measure performance and iterate over time.

3. Offer valuable rewards

If members don’t feel they’re actually benefiting from your loyalty program, they might engage less frequently. Or, worse, they might lose trust in your brand.

Consider which rewards appeal to your target audience: motivate price-sensitive customers with percentage discounts and incentivize luxury-seekers with VIP events, expedited shipping, or early access to limited-edition products.

4. Incorporate multiple earning methods

Consider awarding points for actions beyond purchasing. Reward customers for valuable behaviors such as signing up for your newsletter, referring friends, leaving product reviews, and following your social channels. 

Supercharge your customer insights by exchanging points or rewards for survey participation. 

5. Communicate clearly

The landing page for your rewards program should clearly list its benefits, restrictions, and earning opportunities. Use infographics and visuals to communicate your program in a way that’s easy for customers to digest. Information that’s easy to understand is easy to trust, and providing it will establish your loyalty program’s credibility.

6. Personalize the experience

Personalization leads to higher spending, according to 75% of companies surveyed by Twilio in 2025, with an average 32% boost per transaction.

Something as simple as a birthday reward or a product recommendation qualifies as personalization. But personalization can extend to all sorts of customer interactions, such as targeted promotions, automated notifications, and behavioral triggers.

Loyalty program FAQ

What are the different types of loyalty programs?

You can base your loyalty program on purchase frequency, referrals, social media actions, and more. Programs may be points-based, tiered, paid, or value-based. You can run your loyalty program through an online account, provide a tangible item like a loyalty card, or both.

What is the best example of a loyalty program?

Sephora’s Beauty Insider program is often considered the best customer loyalty program. It offers exclusive rewards and bonus points, along with personalized recommendations for members. Members who use the Sephora credit card earn twice as many Beauty Insider points per purchase.

What’s the difference between points and tiered loyalty programs?

A points-based loyalty program rewards customers for specific actions—most commonly, spending—by converting purchases into points redeemable for discounts, products, or perks.

A tiered loyalty program adds a progression layer; customers move into higher tiers based on total spend, activity over time, or a paid fee, unlocking better perks as they go. 

What is the purpose of a loyalty program?

The purpose of a loyalty program is to motivate customers to continue buying from your business over competitors.

How much does a loyalty program cost to run?

Costs vary, with setup ranging from around $100 for basic implementations to $40,000 for complex, customized programs, according to LoyaltyLion.