Loyalty programs are everywhere, from your local coffee shop's punch card to Amazon Prime’s exclusive benefits. And for good reason. These programs are not just a nice add-on; they’re a powerful part of a smart marketing strategy. In today’s market, where customers have endless options, rewarding customers for their loyalty helps brands stand out. It’s no longer just about selling a product. It’s about building a long-term relationship that keeps loyal customers coming back.

What are Loyalty Programs?

Loyalty programs are systems that reward customers for repeated purchases and engagement. These programs often use point-based loyalty models, where customers earn and redeem points for discounts, free products, or exclusive experiences. Other variations of loyalty include tier-based programs, product-based programs, and membership programs.

5 Benefits of Loyalty Programs

A well-designed loyalty program does more than offer discounts; it can transform how customers interact with your brand. When built with purpose, it increases customer engagement, improves retention, and encourages advocacy. Here are the key benefits.

1. Boost Revenue and Retention

Loyalty programs encourage customers to shop more frequently and increase their overall spending. By rewarding return visits, especially through points-based systems, they create habits that keep customers engaged with your brand. Customers using Leat’s tier-based loyalty have increased their average order value by 20%. This leads to stronger retention, more consistent revenue, and long-term growth.

According to Harvard Business Review, improving customer retention by just 5% can lead to profit increases of 25% to 95%.

2. Build Stronger Customer Relationships

Loyalty initiatives help businesses move beyond transactional relationships. By offering personalized rewards, early access, and status recognition through tiered loyalty programs, brands show appreciation for their most engaged customers while increasing their RFM scores.

Simple gestures like sending birthday discounts or offering exclusive previews make customers feel seen and valued. With Leat’s marketing automation, you can easily send out personalized birthday rewards, ensuring every customer feels special. Over time, this fosters trust, emotional connection, and long-term brand loyalty.

3. Brand Differentiation

In crowded markets, a loyalty strategy can help a brand stand out. Unique features such as purpose-driven rewards in a value-based loyalty program or brand collaborations through a partnership loyalty program create distinctive experiences.

While competitors may race to the bottom with price cuts, your brand can offer memorable benefits that build customer preference and reduce churn.

4. Encourage Word-of-Mouth Marketing

Happy, loyal customers don’t just come back, they tell others. This makes word-of-mouth marketing one of the most powerful outcomes of a good loyalty program.

92% of consumers trust referrals from friends and family over traditional ads. Loyalty programs that offer shareable rewards, referral bonuses, or social media challenges turn satisfied users into enthusiastic brand ambassadors.

With Leat, you can incentivize customers to leave reviews and reward them for sharing their experiences, turning feedback into a powerful marketing tool.

5. Motivate Customer Behaviour

Loyalty programs are great tools to shape customer habits. Want users to shop through your mobile app, try new products, or increase order size? You can reward these actions directly.

With rewards-based incentives, gamified loyalty programs, or custom loyalty rules, you can guide customers toward the behaviours that benefit both them and your business.

By aligning rewards with strategic goals, you create win-win scenarios that drive sustainable growth.

Different Types of Loyalty Programs

Loyalty programs come in various forms, each tailored to specific business goals and customer behaviors. The most common type is a point-based or earn & burn loyalty program, where customers earn points for purchases and redeem them for rewards.

As you can see from the examples below, the types of loyalty programs are not always mutually exclusive. For example, you could have a tier-based, point-based, or product-based program that is also a gamified program.

1. Point-Based Loyalty Program

This is the most commonly used type of loyalty program. It works on a simple model: customers earn rewards, usually in the form of points for making purchases, and later redeem those points for discounts, free products, or other perks. This points-based loyalty program is easy to understand, which makes it ideal for businesses wanting to drive quick engagement.

With Leat’s points-based loyalty program, points earned can motivate shoppers to spend up to 20% more per order to unlock rewards. Even with a simple 1-point-per-€1 structure, up to 80% of buyers opt into the program. By offering immediate value, the program encourages repeat purchases and strengthens customer retention.

This type of program is especially effective when paired with a wallet pass, allowing customers to track points in real time and redeem them easily. Coupled with push notifications, this is a practical way to encourage customers to return more often.

2. Tiered Loyalty Program

A tiered loyalty program is designed to reward customers based on their level of engagement or spending. This system breaks customers into different tiers, such as bronze, silver, and gold. Each level unlocks progressively better rewards and benefits. The more customers spend or engage with a brand, the higher they climb in the tier system, offering them exclusive perks such as larger discounts, early access to new products, or VIP customer service.

With Leat’s tiered loyalty feature, you can fully customize the rules for each tier and automatically trigger personalized emails when customers advance, highlighting their new benefits.

This type of program is effective for increasing customer retention, as it motivates customers to reach the next tier by making purchases or engaging with the brand more frequently. It also helps brands differentiate themselves, as customers feel more valued and recognized as they advance through the tiers. For example, a travel company might offer special benefits like free upgrades or lounge access to its highest-tier members, driving customer loyalty and satisfaction.

3. Product-Based Loyalty

A product-based loyalty program rewards customers for purchasing specific items rather than simply spending a certain amount. This approach allows businesses to incentivize repeat purchases of high-margin, newly launched, or strategic products, driving targeted engagement.
This type of loyalty program is particularly effective for coffee shops or other businesses that have one core product.

At Leat, we’ve taken product-based loyalty to the next level with our new Orders API. External integration partners can now push the entire order data, not just the total purchase amount, into our system. That means our clients can reward customers based on the exact products they buy. This is a major game-changer. Instead of generic rewards for spending, businesses can now recognize and incentivize product-level behavior. Want to boost sales of a new skincare line? Or reward loyalty to a best-selling supplement? With product-level data, it’s all possible automatically and seamlessly.

This opens up powerful opportunities for personalization. Brands can set up tailored rewards for specific SKUs, categories, or purchase patterns, turning customer data into action. And when combined with other loyalty structures like earn & burn or tiered programs, product-based loyalty adds a new layer of precision and impact.

4. Unified Loyalty Program

A unified loyalty program integrates multiple customer touchpoints: online, in-store, mobile apps, and social media into one seamless experience. Customers can earn and redeem rewards across all platforms, creating a consistent and unified brand experience no matter how they interact with the business.

With Leat’s 40+ integrations, you can connect your loyalty program effortlessly across e-commerce platforms, POS systems, and marketing tools, ensuring customers enjoy a truly unified experience.

Unified loyalty programs are particularly effective at improving customer retention and engagement, as they make it easy for customers to engage with the brand in ways that are most convenient for them. By offering a smooth, integrated experience, businesses can create stronger emotional connections with their customers, leading to increased brand loyalty and sustained customer relationships across different channels.

5. Paid Loyalty Program

A paid loyalty program requires customers to pay an upfront fee to access exclusive perks and benefits. Unlike free programs, where rewards accumulate through purchases or actions, paid programs offer immediate value in exchange for the membership fee. These programs often include premium rewards such as exclusive products, higher discounts, free shipping, or priority customer service.

Paid loyalty programs are highly effective for encouraging customer commitment and increasing customer lifetime value. They create a sense of exclusivity, making customers feel like they are part of a VIP group. For businesses, these programs generate consistent revenue and attract customers who are willing to invest in a deeper brand experience, ultimately driving higher engagement and retention.

6. Gamified Loyalty Program

A gamified loyalty program uses game mechanics such as challenges, points, badges, and earning rules to encourage customer engagement and enhance the overall loyalty experience. By incorporating elements like competition, achievements, and rewards, gamified programs make earning points and rewards more enjoyable and interactive.

With Leat, you can design engaging game-like experiences by creating different tiers and even offering point multipliers during special events like happy hours.

Gamification taps into customers’ desire for fun and achievement, making the loyalty program feel like a game. This approach increases customer engagement by adding an element of excitement and motivation to repeat purchases. It’s particularly effective at fostering long-term loyalty, as customers enjoy the journey of unlocking new rewards and advancing through different levels of the program.

7. Visit-Based Loyalty Program

A visit-based loyalty program rewards customers based on the number of times they visit a business, rather than the amount they spend. This model is particularly effective for businesses with frequent, lower-ticket transactions such as cafés, salons, fitness centers, or casual dining establishments. Instead of tracking spending, the system tracks visits, rewarding customer loyalty through consistent engagement.

With Leat’s wifi integrations, you can truly track the visits rather than just tracking transactions.

Visit-based loyalty programs are simple and easy to understand, which makes them especially attractive to time-pressed customers. They’re often implemented through digital check-in systems that automatically track visits and alert customers when they’re close to earning a reward. This predictability boosts motivation and creates a clear incentive for return visits.

8. Partnership Loyalty Program

A partnership loyalty program involves collaboration between two or more brands to offer joint rewards and benefits to customers. Instead of earning rewards within a single brand, customers can accumulate points or perks across multiple brands involved in the partnership. This expands the rewards pool and provides more value, encouraging customers to engage with several businesses.

For example, an airline might partner with a hotel chain, allowing customers to earn points for both flights and stays, which they can redeem for discounts or upgrades at either business. This type of program increases customer engagement by offering more diverse rewards and experiences.

Partnership loyalty programs also help businesses tap into each other’s customer base, expanding their reach and attracting new customers. Customers enjoy a more flexible rewards system, while brands benefit from increased exposure and cross-promotion.

9. Community Loyalty Program

A community loyalty program focuses on building strong relationships among customers who share similar interests or values, creating a sense of belonging and exclusivity. This type of program rewards customers for engaging with a brand’s community, whether through social media participation, attending events, or contributing content.

Community loyalty programs foster deeper connections by making customers feel like they are part of a larger, shared mission. This sense of belonging not only increases customer engagement but also encourages word-of-mouth marketing as members promote the brand within their communities. The more customers feel part of a brand’s mission, the more likely they are to stay loyal and advocate for it.

10. Value-Based Loyalty Program

A value-based loyalty program rewards customers for supporting a brand's core values or engaging in specific behaviors that align with those values. Unlike traditional programs focused solely on purchases, this type emphasizes rewarding actions that reflect a customer’s connection to the brand's mission or social causes. For example, a brand focused on sustainability may offer points or rewards for actions like recycling products, supporting eco-friendly initiatives, or choosing green alternatives.

This approach builds a deeper emotional connection with customers by aligning rewards with shared values, fostering a sense of purpose beyond just financial transactions. Customers are more likely to stay loyal when they feel their purchases contribute to causes they care about. Brands like Patagonia or TOMS have successfully utilized this model by rewarding customers who engage with their environmental or social initiatives, thus strengthening customer loyalty and advocacy while promoting brand values.

19 Examples of Brands with Different Types of Loyalty Programs

1. Point-Based Loyalty Program: Starbucks

One of the most popular examples of a points-based loyalty program is the Starbucks Rewards Program. Customers earn “Stars” with every purchase they make at Starbucks. These Stars can later be redeemed for free drinks, food items, or special offers.

The program encourages frequent purchases by clearly showing progress toward rewards. The more customers spend, the faster they accumulate Stars and unlock benefits. This creates a strong incentive for repeat visits and ongoing brand engagement.

2. Point-Based Loyalty Program: Delta SkyMiles

Similarly, airline frequent flyer programs such as Delta SkyMiles allow customers to accumulate miles with each flight they take. These miles are earned based on distance flown, ticket type, or membership status.

Customers can redeem their miles for free flights, seat upgrades, or other travel-related perks. This reward structure encourages travelers to remain loyal to a single airline. Over time, frequent flyers are motivated to consolidate their travel with Delta. This leads to increased retention and higher lifetime value for the airline.

3. Tiered Loyalty Program: Sephora

A prime example of a tiered loyalty program is Sephora’s Beauty Insider Program. Sephora offers three membership levels: Insider, VIB (Very Important Beauty), and VIB Rouge. Customers begin at the Insider level and earn points with every purchase they make.

As spending increases, customers progress to higher tiers within the program. Each tier unlocks enhanced rewards such as exclusive discounts, early access to new products, and special events. This tiered structure motivates higher spend while making loyal customers feel valued and recognized.

4. Tiered Loyalty Program: Hilton Honors

Another example of a tiered loyalty program is the Hilton Honors Program. The program includes multiple membership levels ranging from Member to Diamond status. Guests earn points for each hotel stay across Hilton properties.

As members progress to higher tiers, they unlock more valuable benefits. These perks include free room upgrades, access to VIP lounges, and bonus point offers. This tiered structure encourages frequent stays and long-term loyalty.

5. Value-Based Loyalty Program: Patagonia

A great example of a value-based loyalty program is Patagonia’s Worn Wear Program. The program rewards customers for purchasing used or refurbished gear. It also encourages customers to repair their existing Patagonia products instead of replacing them.

This approach reinforces the brand’s commitment to sustainability and environmental responsibility. Customers receive store credit in return for their actions. By aligning rewards with shared values, Patagonia builds deeper emotional loyalty.

6. Value-Based Loyalty Program: TOMS

Similarly, TOMS operates a value-based loyalty approach rooted in social responsibility. For every qualifying purchase, the brand donates a pair of shoes to someone in need. This model allows customers to feel directly connected to a meaningful cause.

The program reinforces TOMS’ mission-driven brand identity. Customers may also receive special discounts or early access to new collections. By rewarding purpose-driven actions, TOMS strengthens emotional loyalty and trust.

7. Paid Loyalty Program: Amazon Prime

A well-known example of a paid loyalty program is Amazon Prime. Customers pay a monthly or annual subscription fee to join the program. In return, members receive exclusive benefits such as free two-day shipping on eligible orders.

Additional perks include access to streaming video, music, and early access to lightning deals. These benefits encourage members to shop more frequently within the Amazon ecosystem. As a result, Amazon Prime drives consistent revenue while increasing customer retention and engagement.

8. Paid Loyalty Program: Walmart+

Another example of a paid loyalty program is Walmart+. Members pay a monthly or annual subscription fee to access the program. In return, they receive benefits such as free same-day grocery delivery.

Additional perks include fuel discounts at partner gas stations. Members can also use mobile scan-and-go checkout for faster in-store shopping. These conveniences encourage repeat purchases and increase customer loyalty.

9. Partnership Loyalty Program: AMEX

A great example of a partnership loyalty program is the American Express Membership Rewards program. Customers earn points through purchases made with their American Express cards. Points can also be accumulated through a wide network of partner brands.

These partners include airlines, hotels, and retail companies. Customers can redeem their points across multiple partners and categories. This flexibility increases the overall value and appeal of the rewards.

10. Partnership Loyalty Program: Marriott Bonvoy

Another example of a partnership loyalty program is Marriott Bonvoy. Members can earn and redeem points across more than 30 hotel brands within the Marriott portfolio. This wide brand network increases flexibility and choice for travelers.

Marriott has also partnered with airlines, car rental companies, and dining services. These partnerships make it easier for customers to earn points in everyday situations. As a result, the program encourages ongoing engagement across multiple travel-related touchpoints.

11. Unified Loyalty Program: Ozone Coffee

Ozone Coffee runs a unified loyalty program powered by Leat that connects online and offline customer touchpoints. Customers can earn and redeem points seamlessly across Ozone’s webshop and physical café locations. This creates a consistent loyalty experience regardless of where a purchase takes place.

Loyalty is integrated with tools such as Shopify, Lightspeed Commerce, and Klaviyo. This integration allows Ozone Coffee to personalize rewards and communications more effectively. At the same time, the brand maintains a single, unified view of customer data across all channels.

12. Unified Loyalty Program: Konditor

Konditor operates a unified loyalty program using Shopify and Leat to connect its digital and in-store customer touchpoints. Customers can earn and redeem rewards seamlessly across Konditor’s physical bakeries and online channels. Since moving to a unified commerce setup, Konditor has enrolled over 1,000 customers into its loyalty program.

This expansion has created new marketing opportunities and encouraged repeat visits. By capturing customer data across online and physical touchpoints through Leat, Konditor gains deeper insights into customer behavior. These insights help tailor offers and improve overall customer engagement.

13. Community Loyalty Program: Lululemon

Lululemon runs a community-focused loyalty program through its Sweat Collective initiative. The program is designed for fitness instructors, athletes, and highly active community members. Members receive perks such as product discounts, early access to new releases, and invitations to exclusive events.

These benefits go beyond transactions and reward participation in the brand’s lifestyle. By centering the program around wellness and movement, Lululemon builds meaningful relationships with its audience. This sense of belonging encourages long-term loyalty and brand advocacy.

14. Community Loyalty Program: Harley-Davidson

Harley-Davidson builds community loyalty through its Harley Owners Group (H.O.G.). The program brings together motorcycle enthusiasts from around the world. Members gain access to exclusive rallies, local chapter events, and special brand discounts.

These experiences create strong connections between riders and the brand. The shared identity goes beyond product ownership and emphasizes belonging. This sense of community fosters long-term loyalty and a deep emotional connection with Harley-Davidson.

15. Visit-Based Loyalty Program: Floyd's 99

Floyd’s 99 uses a visit-based loyalty program that rewards customers based on how often they visit rather than how much they spend. Customers receive a reward, such as a free haircut, after a set number of visits. This structure encourages consistent return visits and habitual behavior.

The program is tracked digitally, removing the need for physical punch cards. Customers can easily monitor their progress toward rewards. By focusing on visits instead of transactions, Floyd’s 99 drives repeat foot traffic and long-term loyalty.

16. Visit-Based Loyalty Program: TrainMore

TrainMore uses a visit-based loyalty program tailored to fitness environments where visits often do not include transactions. Members are rewarded based on how frequently they attend the gym rather than how much they spend. For every visit, customers receive a $1 discount on their subscription fee.

This approach directly incentivizes consistent gym attendance. The program is tracked digitally, making participation effortless for members. By rewarding visits instead of purchases, TrainMore encourages healthy habits and long-term member retention.

17. Product-Based Loyalty: Wakuli

Imagine a coffee brand rewarding customers with bonus points every time they purchase a specific product multiple times. Or a pet food retailer offering a free bag after every six purchases of the same item. These are classic examples of product-based loyalty, and now, with Leat's enhanced infrastructure, this level of targeting is scalable and automated.

For instance, one of our clients, Wakuli, leveraged product-based loyalty to boost sales in their cold beverages line. By offering double points on every cold beverage purchase, they not only encouraged repeat orders but also created a strong incentive for customers to try and return to this product category. Thanks to Leat’s Orders API, campaigns like these are easy to set up, run, and track in real time.

With product-based loyalty powered by Leat, businesses can move beyond generic rewards and start building habits, promoting strategic items, and making loyalty feel truly personal.

18. Gamified Loyalty Program: NikePlus

NikePlus Membership uses gamification to turn customer engagement into an interactive experience. Members can track workouts and set personal fitness goals through Nike’s apps. The program rewards users with points for completing challenges, such as running specific distances.

Additional challenges include participating in fitness events or training programs. Earned points can be redeemed for exclusive rewards like discounts or access to limited products. This gamified structure keeps members motivated and engaged over the long term.

19. Gamified Loyalty Program: Duolingo

Duolingo applies gamification to encourage consistent language learning. Users earn XP points for completing lessons and exercises. Streaks reward learners for maintaining daily practice habits. Progress levels and achievements provide clear milestones and motivation.

Leaderboards introduce friendly competition among users. This game-like structure keeps learners engaged and supports long-term platform usage.

Conclusion

Loyalty programs are important for businesses looking to build stronger, long-term relationships with customers. By offering different types of programs, like earn & burn, tiered, value-based, gamified, and Unified, companies can meet the diverse needs of their customers. These programs not only encourage repeat purchases but also help create a deeper connection by aligning with customers' values, offering exclusive rewards, or providing fun challenges. Programs like Amazon Prime and Sephora’s Beauty Insider show how loyalty goes beyond discounts, boosting customer loyalty and retention.

The best loyalty programs are those that fit naturally into customers' everyday lives. By creating emotional connections and rewarding experiences, businesses can turn regular shoppers into loyal supporters.