10 Ways to Increase Customer Loyalty Program Engagement

Engaging customers in loyalty programs can directly impact your business's bottom line - engaged members spend 67% more, and retention is 6–7 times cheaper than acquiring new customers. Yet, while 70% of consumers sign up for loyalty programs, many fail to stay active.

Here are 10 proven strategies to keep your customers engaged:

1. Make Rewards Personal: Use customer data to offer tailored rewards and experiences.
2. Add Game-Like Features: Incorporate challenges, badges, and surprise bonuses to make participation fun.
3. Build Multiple Reward Levels: Encourage long-term engagement with tiered benefits.
4. Use Mobile Apps Effectively: Simplify access to rewards and integrate seamless features.
5. Connect All Sales Channels: Sync in-store, online, and app experiences for consistency.
6. Create Members-Only Benefits: Offer exclusive perks like early access or VIP events.
7. Keep Program Rules Clear: Simplify earning and redemption processes to avoid confusion.
8. Stay in Touch with Members: Use personalized, timely communication to maintain engagement.
9. Team Up with Other Companies: Partner with brands to expand earning and redemption options.
10. Listen to Customer Input: Use feedback to improve your program and show customers you value their opinions.

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These strategies can transform passive members into active, loyal participants, driving long-term growth and higher customer satisfaction.

10 Innovative Customer Loyalty Programs (And How To Start ...

1. Make Rewards Personal

Personalizing rewards can turn loyalty programs into experiences that truly connect with customers. According to research, 90% of consumers prefer loyalty programs with a personal touch. Companies that embrace this approach see a 6.4% boost in annual revenue, compared to just 3.4% for those that don't.

While the typical consumer is a member of nearly 15 loyalty programs, they actively engage with fewer than 7. This gap highlights a key opportunity for businesses ready to invest in personalization.

By using customer data, you can create tailored rewards. Take Sephora's Beauty Insider program, for example. They analyze purchase history to deliver customized recommendations and exclusive offers. This strategy pays off - customers who receive personalized rewards can have a 22% higher lifetime value.

"Segmentation is the cornerstone of crafting personalized loyalty experiences that truly resonate with customers. By understanding the unique preferences and behaviors of different customer segments, we can tailor loyalty rewards and communications in a way that feels personal and relevant. This targeted approach not only elevates the customer experience, but also fosters deeper emotional connections and loyalty to the brand."

• Erin Raese, Global SVP, GTM & Strategy, Annex Cloud

How to Implement Personalization

• Track cross-channel behavior: Monitor how customers interact with your brand across various platforms.
• Celebrate milestones: Recognize special occasions like birthdays or membership anniversaries with rewards.
• Adapt in real-time: Leverage AI and machine learning to analyze customer patterns and adjust offers dynamically.

DSW's VIP program is a great example of these principles in action. They offer members tailored promotions based on shopping history, along with perks like free shipping and early access to sales. This approach has been highly effective in driving repeat purchases.

Timing also plays a big role. Sending rewards at the right moment can double click-through rates. By leveraging customer data, you can craft rewards that feel unique and encourage continued engagement.

2. Add Game-Like Features

Incorporating game-like elements can dramatically boost engagement, with studies showing a 47% increase in participation and a 22% rise in brand loyalty. By combining personalized rewards with gamification, you can turn routine interactions into exciting challenges.

For example, a national clothing retailer created an interactive digital beachfront house experience. Featuring scavenger hunts and quizzes, this initiative led to a staggering 184% increase in purchase completion rates.

Game Elements That Work

Some gamification strategies are proven to be especially effective. Here are a few key elements that can drive results:

• Points and Progress: Allow customers to track their achievements, encouraging them to stay engaged.
• Challenges: Design time-sensitive tasks that promote specific behaviors.
• Achievement Badges: Celebrate milestones and accomplishments to keep users motivated.
• Surprise Rewards: Offer unexpected bonuses to keep things interesting and engaging.

These features aren't just fun - they deliver measurable results.

"A lasting relationship is built by providing a unique experience and tapping into the consumer's desire to play and be rewarded rather than simply making a purchase." - Mastercard Data & Services

Examples of Gamification in Action

Virgin's Red app is a standout example of gamification done right. Their nationwide treasure hunt combines virtual and physical challenges, where participants collect digital coins with mystery point values. Exclusive "vaults" containing premium rewards further elevate the experience, driving significant user engagement.

A tech company took a similar approach with daily gamified activities. By introducing trivia games and collect-and-win challenges, they achieved:

• A 50% increase in return visits
• An 80% jump in community engagement
• Noticeable sales growth from higher participation

To make gamification work for your brand, tailor the experience to your audience. Victoria's Secret's PINK Nation app is a great example, featuring daily trivia contests and social media challenges that resonate with their fashion-savvy users. The key is balancing entertainment with rewards that encourage the behaviors you want.

Don't underestimate the power of mobile platforms. A telecommunications company saw huge success with a mobile-first gamification strategy, generating 95,000 game plays per minute during peak times. They also tripled traffic to partner websites by offering weekly prizes and exclusive deals through mobile games.

3. Build Multiple Reward Levels

Tiered rewards are a powerful way to boost customer participation and loyalty. By offering multiple levels of rewards, businesses can encourage both immediate and long-term engagement. Research even shows that tiered programs generate 1.8x higher ROI compared to single-level programs.

Creating Effective Tier Structures

The key to a successful tiered program is making each level both reachable and appealing. A great example is Sephora's Beauty Insider program. It uses a three-tier system where, during holiday events, entry-level members get 10% off, while top-tier Rouge members enjoy 20% off. This creates a strong incentive for customers to move up the ranks.

Here’s how tiers typically perform:

These numbers show how structured rewards can significantly improve customer engagement.

Proven Tier Benefits

Programs like The North Face XPLR Pass showcase the value of tiered perks:

• Free shipping on every purchase
• Early access to limited-edition collections
• Invitations to exclusive member-only events
• Opportunities to join special collaborations

"Tiered loyalty programs aren't just about discounts and rewards; they're the monogamy of the customer relationship. They're a commitment to keeping your customers happy, engaged, and never feeling the need to wander." - Alexis Priddy, CEO of YellowWebMonkey

Making Tiers Work

To get the most out of a tiered program, consider these strategies:

• Show progress clearly: Let members see how close they are to the next level.
• Offer multiple ways to earn points: Include activities like purchases, referrals, or social media engagement.
• Differentiate benefits: Ensure each tier offers unique and worthwhile rewards.

Nike Membership is a great example. They combine exclusive content, like training resources via their Run Club app, with tangible rewards. This gives members multiple ways to progress and stay engaged.

Personalizing the Experience

Adding a personal touch can elevate any loyalty program. Marriott Bonvoy, for instance, assigns dedicated Ambassadors to top-tier members. This premium service not only delivers exceptional value but also motivates customers to strive for higher tiers. Personalization like this can make each level feel more rewarding and aspirational.

4. Use Mobile Apps Effectively

Mobile apps make it easier for customers to access rewards and enjoy personalized experiences, which can lead to higher engagement. The secret lies in creating an app that’s simple to use and genuinely useful.

Key Features That Keep Users Engaged

The best loyalty apps focus on what customers actually use. Take the Starbucks Rewards app, for example. It lets users order ahead, pay easily, and track rewards - all in one place. This focus on convenience is a big reason for its success. By prioritizing features like these, you can make mobile interactions more appealing and effective.

Smarter Mobile Strategies

7-Eleven has nailed this with features like Mobile Checkout and AI-driven personalized rewards, earning the app a stellar 4.8/5 rating in app stores. Here’s what works:

• Simplicity is key: Stick to core features that deliver value.
• Personalization matters: Use customer data to offer tailored rewards without overstepping boundaries.
• Easy access: Make sure users can quickly see their points and rewards.
• Smooth integration: Link mobile features to in-store experiences for a unified feel.

"The challenge is that you have to convince shoppers that your app is worth space on their phone and worth paying attention to." - Sean Claessen, EVP of Strategy and Executive Creative Director at Bond Brand Loyalty

What to Avoid

Did you know 71% of users delete apps because of too many notifications? Pampers Rewards avoids this by keeping interactions meaningful. Their scan-and-earn feature makes it easy for users to collect points and redeem rewards. Steering clear of overloading users while focusing on features they care about can make all the difference.

Advanced Features That Add Value

QuickChek’s app upgrade is a great example of adding more without making things complicated. Their "Pump Points" system ties fuel rewards to in-store perks while keeping navigation simple and rewards easy to access.

To create a standout mobile experience, focus on features like these:

• Simplify transactions: Make payments and reward redemptions quick and easy.
• Offer instant benefits: Clearly show progress toward rewards.
• Link everything: Connect online and in-store interactions seamlessly.
• Be transparent: Only collect necessary data and communicate how it’s used.

5. Connect All Sales Channels

Creating a connected shopping experience across all channels is a game changer for customer engagement. Studies reveal that 73% of shoppers switch between online and in-store interactions during their buying journey. Businesses with integrated loyalty programs see big results: an 80% boost in store visits, a 250% increase in purchase frequency, and 13% higher order values per transaction.

By combining personalized and gamified strategies with integrated channels, loyalty programs can deliver even better outcomes. For example, Revolution Beauty linked its direct mail and digital platforms by sending personalized mail reminding customers of their points balance. They reinforced this with matching website pop-ups. This simple integration led to a 20% rise in loyalty redemptions - without offering additional discounts.

Here’s how traditional loyalty approaches stack up against modern ones:

• Old way: Points tracked separately
  New way: Rewards synced in real-time
• Old way: Limited redemption options
  New way: Redeem rewards across all channels
• Old way: Disconnected customer data
  New way: Unified customer profiles
• Old way: Basic point collection
  New way: Multiple ways to earn rewards

Popeyes UK also showcases success with their “Winner, Winner, Chicken Spinner” program. This initiative works seamlessly across kiosks, counters, and online orders. By integrating just 20% of their offline customer data with online systems, they found program participants were three times more likely to return within a month.

"Modern loyalty programs serve as the backbone of customer-centric retail strategy. They act as a powerful engine for collecting and unifying customer data across all touchpoints, from in-store visits to mobile app interactions."

• Łukasz Słoniewski, CEO at Omnivy

These examples highlight how syncing data across channels can significantly boost customer engagement.

If you're looking to improve channel integration, here are some steps to consider:

• Centralize data into one real-time system for customer information.
• Train your teams to assist with rewards and make the most of customer data.
• Sync your systems, including point-of-sale, CRM, mobile apps, and e-commerce platforms.
• Personalize experiences using insights from cross-channel data.

With 91% of customers more likely to engage with brands that provide tailored recommendations, integrating your sales channels can help you build stronger customer connections.

6. Create Members-Only Benefits

Offering perks exclusively for members can strengthen emotional ties and increase customer engagement. Research shows that consumers are 56% more likely to join loyalty programs that provide special treatment and tiered rewards. Plus, customers with an emotional connection to a brand tend to stay loyal for an additional 20 months and deliver up to four times the lifetime value.

To stand out, members-only benefits should go beyond standard discounts. For instance, Under Armour’s loyalty program includes perks like early access to merchandise, exclusive events, and athlete content.

Here’s how some brands are using exclusive benefits to boost engagement:

These examples show how tailored perks can strengthen customer loyalty. The numbers highlight the importance of creating experiences that make customers feel valued.

"A big part of being an empowered consumer is they want to feel rewarded, heard and special. Coupons are not going to do it anymore." – Kimberley Ring Allen, founder of Ring Communications

Want to roll out your own members-only benefits? Here’s how:

• Host exclusive events: Take inspiration from Papa Johns UAE, which held a tasting event in May 2024 where platinum members previewed new menu items alongside executives.
• Offer early access: Like Kith, give your loyal customers first dibs on new products or custom merchandise.
• Create VIP identifiers: Introduce special badges or labels to recognize and celebrate top customers.

"Putting something really uniquely beneficial and memorable in front of a customer builds the sort of emotional bond that a [purely] transactional relationship never can." – Ian Baer, founder of strategic marketing insights platform Sooth

7. Keep Program Rules Clear

For a loyalty program to thrive, members need to easily understand and use it. Research shows that 81% of customers prioritize ease of understanding when deciding to join a program. If the rules are too complicated, engagement drops significantly.

Simple, clear rules can drive participation in three main areas:

Programs like Starbucks and Philip Kingsley demonstrate how clarity enhances customer interaction. Starbucks sends welcome emails that explain how to earn points and navigate program tiers. Philip Kingsley highlights key program details on its loyalty page, ensuring members always know how to earn and redeem rewards.

"Complexity is the coward's way out. Breakthrough simplicity requires empathizing (by perceiving others' needs and expectations), distilling (by reducing to its essence the substance of one's offer) and clarifying (by making the offering easier to understand or use)."
– Irene Etzkorn, Chief Clarity Officer at Siegelvision

To keep your program rules crystal clear:

• Create explainer pages: Dedicate a page to outlining how members earn and redeem points.
• Use plain language: Avoid confusing industry jargon or overly technical terms.
• Simplify terms and conditions: Eliminate unnecessary exclusions or fine print that might discourage members.
• Send regular updates: Use email reminders to keep members informed about their progress and available rewards.

These steps ensure loyalty programs remain easy to understand, helping customers stay engaged and active.

8. Stay in Touch with Members

Clear program rules and personalized rewards are important, but consistent communication is what keeps loyalty program members truly engaged. Research shows that 65% of consumers interact with fewer than half of their loyalty programs. This makes staying connected with members a top priority.

To make communication effective, tailor it to different stages of the customer lifecycle:

These strategies ensure that communication remains relevant and targeted. Research also reveals that 27% of consumers are open to daily contact, while 22% prefer monthly or less frequent updates. Email is the go-to choice for most, with 66% of consumers selecting it as their primary communication channel.

"Customer communications are essential to creating a great customer experience, especially for loyalty programs. Clear, consistent, and targeted communications are critical in improving loyalty program success." - BrandMovers

Here’s how to make your communication strategy more effective:

Personalize Your Outreach

• Celebrate birthdays and anniversaries with special rewards.
• Tailor messages based on member preferences and past behavior.
• Send tier-specific updates, like Sugarfina’s tier-up notifications.

Time Your Messages Wisely

• Start with weekly touchpoints to build engagement.
• Experiment with different frequencies to find what works best for your audience.
• Notify members about expiring points or limited-time offers.

Focus on Content That Adds Value

• Announce new rewards or program updates.
• Provide progress reports to show how close members are to their next reward or tier.
• Recommend products based on their preferences.

Adorama sets a strong example by offering bonus points on first purchases made within 30 days of signup. This tactic not only drives immediate engagement but also establishes a communication rhythm with new members.

9. Team Up with Other Companies

Collaborating with other businesses can expand the reach and appeal of your loyalty program. By working with partners, you can offer customers more ways to earn and redeem rewards, making your program more attractive. In fact, over one-third of consumers say that access to partner brands is one of the most appealing aspects of loyalty programs.

The key is to find partners that align with your brand and resonate with your customers.

Choose the Right Partners

Successful partnerships often involve two types of businesses:

A great example is the Delta SkyMiles and Starbucks collaboration. Starbucks' 34 million Rewards members can earn double rewards on Delta travel days, along with other exclusive promotions. This partnership works because both brands cater to similar customers but in different ways.

Create a Strong Value Exchange

Once you've chosen the right partners, the collaboration needs to deliver clear benefits for everyone involved. Take Marriott Bonvoy's partnership with Uber as an example. Their members can earn points on Uber rides and Uber Eats orders, creating everyday opportunities to earn rewards.

"Together, these partnerships create more value than either brand could achieve on its own." - arrivia.com

Steps for Success

To make these partnerships effective:

1. Define Objectives: Clearly outline goals, marketing plans, revenue-sharing terms, and how customer data will be used.
2. Track Performance: Monitor key metrics like redemption rates, customer preferences, and overall satisfaction.
3. Review Regularly: Schedule check-ins to evaluate performance and adjust plans as needed.

For instance, when Pharmasave expanded its partnership with Air Miles in September 2024, the results were impressive. Jackie Langlands, National Director of Merchandising and Marketing at Pharmasave, shared, "We saw the benefits in terms of customer engagement, loyalty and front store sales that were higher than they were in the rest of the country".

Explore New Opportunities

Consider potential partners in these areas:

• Everyday spending: Coffee shops, pharmacies, convenience stores
• Essential services: Utilities, telecom providers
• Lifestyle brands: Fitness, wellness, and entertainment
• Travel and hospitality: Airlines, hotels, car rentals

Choose partners that enhance your program while offering real benefits to your members. For example, co-branded travel cards have shown to drive 32% more spending per month compared to standard credit cards.

10. Listen to Customer Input

Once you've fine-tuned your program, the next step is to actively listen to your customers. Loyalty members can provide valuable insights - use their feedback to make your program even better.

Use a Variety of Feedback Channels

Not everyone likes to share their thoughts the same way. Set up different ways for customers to provide feedback, such as:

These methods not only help you gather insights but also strengthen your engagement strategies.

Offer Rewards for Feedback

Encourage customers to share their opinions by offering rewards. For instance, Country Archer provides a $25 coupon for completing email surveys.

"Customer feedback is a potential boon to every business. Without it, people work blindly, keeping their fingers crossed that everything is okay."
– Brandon Carter, Former Writer and Marketer for Access Development

Act on Feedback and Keep the Conversation Going

Gather feedback, identify recurring themes, make improvements, and let your members know about the changes. Doe Lashes uses quiz results to offer tailored product recommendations, while Perfume Online turns 1-5 star ratings into actionable data.

Keep refining your program based on member input. Share updates and milestones through multiple channels. Amazon Prime does this well - 71.8% of its members feel the membership fee is worth it for the perks provided.

Conclusion

The average American household is part of 14 rewards programs, but only 6 are actively used. This gap shows how important it is for loyalty programs to truly stand out and deliver value that customers care about.

Here are some real-world examples of what works:

Even small changes can lead to big results. For instance, improving customer retention by just 5% can increase profits by 25–95%.

So, what should you do next? Start with these steps:

• Track Your Current Metrics: Measure enrollment, engagement, and attrition to understand where you stand.
• Use Real-Time Data: Analyze program performance regularly to catch and fix weak spots fast.
• Make It Personal: Use AI to create tailored rewards and communications that resonate with your audience.
• Boost Engagement: Add features like gamification, surprise perks, or exclusive offers to keep customers interested.

Remember, loyal customers account for 80% of future revenue. By focusing on these strategies and continuously refining your approach, you can turn your loyalty program into a major driver of customer retention and business growth.

As McKinsey & Co. points out, your regular customers are the backbone of your program. They're the ones who ensure its success and bring consistent value to your business.

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