Four loyalty program examples to give you a competitive edge: Strategies to implement in your next loyalty program!

What do America Airlines, Amazon Prime, and Mastercard have in common? Apart from the fact that these are Goliaths in their respective industries, they have a stellar loyalty program in place to fuel the engagement and participation of the customers. The initiatives are among the best loyalty programs that ignite repeat business worldwide.  

Take Amazon Prime for example. NBC News article¹, about Prime, added, "Prime is Amazon’s paid loyalty program..." Prime is a significant perk of Amazon's loyalty program, but Prime membership offers more than just exclusive savings events. Members enjoy fast, free shipping, a complimentary Grubhub+ membership, Whole Foods grocery delivery, and additional benefits. These perks motivate existing members to renew annually and attract new sign-ups.  

Harvard Business Review² also highlights the psychological concept of "sunk cost." This theory suggests that people are more motivated to use something they've paid for, underlining the importance of rewards in driving behavior. To add more weight here, a Forbes study³ showed that 46% of consumers are willing to pay more for a company or brand with a good loyalty or rewards program.  

In fact, it suggested that 61% of consumers are more prone to stick to a brand or service if rewards programs were placed. This underscores the role of rewards in fostering customer loyalty and driving repeat business for companies and brands. This blog will delve into how leveraging rewards alongside a tailored customer experience can provide organizations with a competitive advantage and help them stand out in the market for lasting customer loyalty. 

Loyalty programs are designed to reward customers for their continued business. These programs offer incentives such as points, discounts, or exclusive benefits to encourage repeat purchases and customer engagement. Depending on their target audience and objectives, businesses can choose from various loyalty programs, including point-based systems and cash-back offers. 

1. Point-based loyalty program example 

Point-based loyalty programs are valuable tools across all industries, and entertainment giant Disney leverages this concept effectively. The Disney Movie Insiders program goes beyond simply attracting new customers. It's a strategic initiative to cultivate lifelong loyalty among the brand's most dedicated fans. This revamped program, formerly known as Disney Movie Rewards, incentivizes fans to watch movies – both at home and in theaters – by offering them attractive rewards. 

Turning fans into cinephiles one point at a time

In a point-based loyalty program, customers earn points for actions like purchases and redeem them for rewards like discounts or free items. It's a way for businesses to thank customers and encourage them to keep coming back. The Disney Movie Insiders loyalty program allows members to earn reward points by watching and purchasing tickets for Disney, Pixar, Star Wars, and Marvel Studios movies. 

The Disney Movie Insiders app offers movie games and augmented reality experiences for members. Moreover, they have made the matter of joining the app easy and seamless as it only requires signing up at Disneymovieinsiders.com to open an Insider account. Once joined, members can: 

• Link their Insider accounts to existing accounts like Fandango or Disney Movie Club to earn additional rewards. 
• Earned points can be redeemed for Disney gift cards, movie ticket vouchers, concessions, collectibles, and discounts. 
• Get 25 points for linking accounts with partners like Regal Crown Club, Fandango, and Atom Rewards.  
• Earn 100 points by purchasing a Standard Movie Ticket, while a Select Movie Ticket earns 150 points.

At home, members can:

• Earn 25 points for linking to Movies Anywhere 
• 75 points per DVD,  
• 100 points for Standard Definition,  
• 150 points for Blu-ray, HD & Multi-Screen Editions, 
• 200 points for 4K UHD & 4K Ultra HD,  
• Lastly, 300 points for a Disney and Premier Access Purchase.

This move by Disney provided members with various opportunities to earn reward points and redeem them for valuable prizes, inciting engagement. 

On top of that, to further incentivize members, Disney offers additional opportunities to earn points, such as linking accounts with participating partners, purchasing movie tickets, and redeeming movie codes. They offered these opportunities to earn points on their social media pages throughout the year, often during holidays and festive seasons. 

These codes, which often expire quickly, encourage members to stay engaged and follow their platforms consistently. Not only did Disney manage to use an omnichannel communication method to reveal their offers, but also garnered the attention of the consumers by being active socially, where most of the consumers would be.

Disney Insider pays off

The program offers exclusive rewards like movie vouchers, gift cards, discounts, collectibles, gaming, and augmented reality experiences. As a result, it created a sense of exclusivity and made customers feel special, but that's not all:

• Disney+ gets an average of $4.03 per subscriber each month. 
• Disney+ has an impressive customer retention rate. A full 78% of subscribers keep their subscription after 6 months, making it the service with the highest loyalty compared to other major streaming options. 
• Disney+ currently has 100 million paying subscribers across 59 countries. 
• The loyalty programs cemented their relationship with the brand and fostered loyalty. 
• Disney added value to earning points and a multichannel experience to improve customer engagement and satisfaction. 

How to perfectly launch a point-based loyalty program considering Disney’s approach? 

Disney+ continues to grow in popularity. In the US, it now makes up 6% of all streaming activity, which is an increase from 5% in the last quarter. So, taking Disney as an inspirational source, you can focus on:

• Offering attractive rewards and experiences: The Disney Insider program offered exclusive rewards like movie vouchers, gift cards, discounts, collectibles, gaming, and augmented reality experiences. It created a sense of exclusivity and made customers feel special. 
• Increasing gift card values: Disney enhanced the program by adding various gift card values. As a result, it allowed members to redeem points for cards ranging from $5 to $100. This increase in gift card options enhanced the perceived value of the rewards program and added more benefits to members. 
• Adding multichannel experience: The program's accessibility across multiple channels, including a dedicated mobile app, enhanced the overall user experience. This multichannel approach simplified the process for members to earn rewards, improving customer engagement and satisfaction.

2. Tier-based loyalty program example

A tier-based loyalty program is a system that rewards customers at different levels based on their engagement or spending with a company. Imagine it like a climbing ladder with increasing benefits the higher you go. One such example of tier-based loyalty is run by Marriott Bonvoy.

Marriott International, Inc. has maintained its position as a prominent brand in the hospitality sector for over 80 years by actively listening to customer preferences and adapting to their actions.

With a diverse portfolio of over 30 brands and close to 8,700 properties spanning 139 countries and territories, Marriott offers extensive opportunities for individuals to engage, explore, and broaden their horizons.

Marriott International, a leading global hotel company, recently reported an impressive 63.5% occupancy rate worldwide. This remarkable achievement raises the question: how did Marriott manage to attain such a high occupancy rate?

The answer lies in their program, and how they go beyond to ensure that their message reaches the right people. They utilized loyalty data and email marketing strategies to effectively promote their program to specific audiences, enhancing visibility and drawing them in. 

Understanding the integrated loyalty program 

Marriott Rewards, now known as Marriott Bonvoy, is a hotel loyalty program that rewards customers for their stays at Marriott properties worldwide. It is an integrated point-based and tier-based reward where members earn points for every eligible hotel purchase, including room rates and other incidentals like dining and spa services.

The points can be earned through hotel stays, credit card spending, dining, spa services, and more. The higher one member climbs through the tiered level, the more points they earn. 

The program has various membership levels, each offering different benefits. The more nights one stays, the higher their membership level and the more benefits they will enjoy. The levels include: 

• Member: Enjoy unlimited travel possibilities, free in-room Wi-Fi, exclusive discounted member rates, mobile check-in, and more. 
• Gold elite: Get 10% more points, priority late checkout, enhanced room upgrade, and more. 
• Platinum elite: Earn 25% more points, enjoy 2 p.m. late checkout, enhanced room upgrade, and more. 
• Titanium elite: Get 50% more points, enhanced room upgrade, welcome gift choice, and more. 
• Ambassador elite: Earn 75% more points, enjoy Your24™ (flexible check-in and checkout), dedicated Ambassador service, and more.

Issues Marriott Bonvoy faced

Although Marriott leveraged the loyalty program to attract customers, their analysis showed that bookings were consistently lower in December, suggesting a seasonal travel trend. Additionally, email communications sent in December had the lowest click rates and generated the least revenue in both 2012 and 2013.

However, open rates remained steady throughout Q4, including December, this indicated that members were still interested in receiving messages from Marriott Rewards. 

So, instead of focusing on promotional offers as usual, Marriott Rewards was advised to boost engagement through member-focused, valuable offers. This approach would help Marriott Rewards' communications stand out among the typical holiday marketing clutter and competitive messaging. To further increase relevance, the offer and communication strategy leveraged end-of-year consumer trends, cultural themes, and program timing. 

Personalized offers, targeted communication: The winning strategy 

Marriott broadened its communication efforts and included seasonal offers to better engage and retain customers. This expansion includes sending more emails and focusing on personalized, curated content to enhance the member experience. With guidance, Marriott introduced an integrated program centered around a "Year in Review" theme in December 2014.  

The program aimed to express gratitude to members for their loyalty by highlighting their 2014 achievements and encouraging participation in 2015 to foster loyalty through bookings. 

Marriott Rewards launched a multi-touch program in December to highlight the year's achievements and engage members. The program included focused "Year in Review" emails and dedicated sections in other ongoing standard messages.

The "Year in Review" program was introduced through Marriott Rewards' flagship monthly newsletter. It educated the members about the loyalty program and its brand portfolio and provided helpful and delightful curated content such as tips and recommendations on visiting world-class cities. 

Marriott Rewards also used an annual message from Bill Marriott, Jr., Former CEO and now Chairman of the company, to express gratitude towards its members and highlight the offerings the company rolled out in 2014. 

Later, Marriott Rewards incorporated "Year in Review" modules in other communications to reinforce the gratitude and program review elements that were critical components of the concept. 

Annual QY starts with a bang! 

Marriott Rewards' Year in Review program showed enhanced engagement and improved booking rates by giving the members what they were looking for. They not only maintained a cohesive theme across various touchpoints but also noticed:

• The click-to-open rate saw a 20% year-over-year growth.  
• An 86% revenue increase compared to December 2012 and 2013.  
• A substantial 30.9% increase in bookings and a notable 38.8% surge in revenue.

How to perfectly launch point-based loyalty programs considering Marriott Bonvoy’s approach? 

The end-of-year campaign significantly impacted the fourth quarter results, marking Marriott Rewards' most successful Q4 in three years and generating the third-highest revenue influenced by email in any quarter. Similar to Marriott, you can try to: 

• Listen to customer preferences: Marriott has maintained its position as a leading hospitality brand for over 80 years by actively listening to customer preferences and adapting to their actions. This has allowed the company to offer extensive opportunities for individuals to engage, explore, and broaden their horizons. 
• Use loyalty data and the right communicational strategy: Marriott utilized loyalty data and email marketing strategies to effectively promote their loyalty program to specific audiences. this enhanced their visibility and drew them in. This approach helped the company achieve an impressive 63.5% occupancy rate worldwide. 
• Address the trends: Marriott's analysis showed that bookings were consistently lower in December, suggesting a seasonal travel trend. To address this, the company focused on boosting engagement through member-focused, valuable offers that leveraged end-of-year consumer trends, cultural themes, and program timing. 
• Give personalized offers and targeted communication: Marriott broadened its communication efforts and included seasonal offers to better engage and retain customers. This expansion included sending more emails and focusing on personalized, curated content to enhance the member experience. The "Year in Review" program was introduced to highlight the year's achievements and engage members through various touchpoints. 

3. Value-based loyalty programs example 

A value-based loyalty program is different from traditional programs that offer points, discounts, or free stuff to customers. Instead of directly rewarding the customer, these programs focus on giving back to causes that resonate with both the company and its customers.

Here's how it works:

• The company aligns with a cause: The business chooses a charitable organization, social issue, or environmental cause that reflects its values. 
• Customer purchases lead to contribution: When a customer makes a purchase, a portion of the sale or a fixed amount is donated to the chosen cause. 
• The customer feels good: By shopping at the company, the customer feels like they're contributing to a positive cause. This can build customer loyalty and encourage repeat business. 

Let’s take Patagonia’s value-based loyalty program as an example. Patagonia is a renowned US retailer specializing in outdoor gear and focuses on environmental responsibility.  Their unwavering commitment to sustainability positions them as an industry leader. 

Patagonia doesn't just manufacture apparel; they champion environmental preservation and have turned it into a core value, and why wouldn't they when 79% of Americans believe that it is either “somewhat” or “very important” for companies to make the world a better place. 

The same study by Harvard Business School revealed that 77% of consumers are motivated to purchase from companies that commit to making the world a better place.

Meanwhile, 73% of investors state that efforts to improve the environment and society have contributed to their investment decisions. Given modern preferences, Patagonia consistently sets the bar for corporate social responsibility by intentionally creating durable products built to last. 

Patagonia builds its brand on values and ethics

Patagonia has earned its reputation not just for high-quality outdoor apparel, but also for its unwavering commitment to environmental responsibility. Founded in 1973 by climber and activist Yvon Chouinard, the brand has cultivated a loyal following that values its purpose-driven approach. 

The company's early years were marked by innovation. Chouinard, initially a climbing hardware supplier, transitioned to clothing. Initially, he faced challenges like material selection and design optimization. Patagonia's iconic Synchilla and Capilene lines emerged from this period of dedicated development. This, in turn, establishes Patagonia with a strong brand identity and company culture that built customer loyalty. 

Patagonia's rapid growth was temporarily halted by the 1991 recession, and this forced a 20% workforce reduction. This experience underscored the importance of sustainable business practices. Patagonia's core belief in environmental protection motivates every aspect of its operations. Recognizing that even responsible production has an environmental impact, the company encourages customers to repair or reconsider purchases before buying new items. 

By taking a strong stance on environmental issues, Patagonia attracts customers who share its values. Unlike brands that rely on traditional marketing tactics like price, promotions, or distribution channels, Patagonia fosters an emotional connection with its audience. This unique approach has solidified Patagonia's position as a revered brand in the outdoor apparel industry. 

Going beyond the charity

Patagonia's commitment to the environment is deeply woven into its ethics and way of doing business. Founded by outdoor enthusiasts, the company has always championed environmental causes. From early donations to grassroots activism to its current pledge of 1% of sales or 10% of profits, Patagonia puts the value where it is much needed. 

Patagonia's focus extends beyond financial support. The company spearheads educational campaigns to raise awareness of environmental issues. Patagonia has been a leader in sustainable practices since the 1990s. From pioneering the use of recycled materials and organic cotton to reducing energy consumption through innovative solutions, Patagonia continuously seeks ways to lessen its environmental footprint.

This dedication to environmental responsibility is not just a trend for Patagonia; it's a core value. Patagonia's commitment to innovation and eco-friendly products fosters trust and inspires customer loyalty.  By operating "from a place of trust and inspiration," Patagonia builds a community of passionate brand advocates. 

Building from the ‘place of trust and inspiration’ 

Patagonia stands out as a champion for sustainability in the apparel industry. Their commitment goes beyond eco-friendly materials. Let's go through their impactful initiatives: 

• Patagonia takes transparency seriously, publishing its supply chain for public scrutiny. This allows for open dialogue and ensures responsible practices throughout the production process. 
• The company is actively working to minimize its environmental footprint. Their goal is to achieve carbon neutrality across their entire business by 2025.  
• Durability and multifunctionality are core design principles for Patagonia products. Their 'Worn Wear' repair program encourages customers to mend their clothes instead of replacing them. Patagonia even educates consumers on proper garment care to maximize lifespan. 
• The brand prioritizes raw materials that are less harmful to the environment and can be recycled. They continuously invest in sourcing eco-conscious materials, explore innovative dyeing techniques, and minimize environmental impact throughout the production process. 
• Patagonia is dedicated to a circular economy. They ingeniously transform used soda bottles, unusable manufacturing waste, and worn-out garments into new polyester fibers for their clothing lines. They aim to transition entirely to renewable or recycled materials by 2025. 
• They actively support activism through educational campaigns that push for systemic change.  They even contribute financially through a self-imposed "Earth Tax," and donate 1% of sales to environmental non-profit organizations. 
• Patagonia is a strong advocate for fair labor practices. They actively support fair trade programs that ensure workers receive fair wages and work in safe conditions.  
• Uniquely within the industry, Patagonia encourages consumers to buy less. Their "Buy Less" campaigns challenge traditional consumerism and promote responsible purchasing habits.

Results 

By prioritizing environmental and social responsibility alongside profit, Patagonia sets a powerful example for the apparel industry. Let's look at what they have achieved so far:

• The 2020 Fashion Transparency Index Report highlights Patagonia as one of the few brands disclosing the percentage of workers who earn a living wage. 
• Patagonia was named as a UN Champion of the Earth by the United Nations in 2019. 
• Patagonia announced it will give away 98% of its stock "to fight the environmental crisis, protect nature and biodiversity, and support thriving communities, as quickly as possible" 
• A Statista study in the United States found that 19% of outdoor fashion owners use Patagonia. Of these owners, 79% are likely to purchase Patagonia again, indicating a high level of brand loyalty. 

How to perfectly launch a value-based loyalty program considering Patagonia’s approach? 

Patagonia has set a powerful example for the apparel industry and beyond. You can aim to: 

• Embed environmental responsibility into the core business: Patagonia has made environmental protection a central part of its mission and operations since its founding in 1973. The company's commitment to sustainability is deeply ingrained in its culture and decision-making at every level. 
• Foster an emotional connection with customers: By taking a strong stance on environmental issues, Patagonia attracts customers who share its values. This unique approach has solidified Patagonia's position as a revered brand that inspires loyalty, unlike those relying on traditional marketing tactics. 
• Go beyond philanthropy: Patagonia's environmental efforts extend far beyond financial donations. The company spearheads educational campaigns, implements sustainable practices, and continuously innovates to reduce its footprint. 
• Prioritize transparency and accountability: Patagonia takes transparency seriously, publishing its supply chain and environmental impact data for public scrutiny. This allows for open dialogue and ensures responsible practices throughout the production process. 
• Sustainability is a continuous journey: Patagonia acknowledges there's no finish line and strives to minimize its environmental impact through practices like using organic cotton and advocating for cleaner energy. 
• Customer pressure drives change: Patagonia highlights the growing customer demand for companies to take environmental action. 

4. Subscription-based loyalty example

Subscription-based loyalty programs reward customers who sign up for recurring purchases or services with exclusive benefits.  These benefits can include discounts, early access to new products, or additional features. One such example of a company that runs a subscription-based loyalty program is Spotify. Moreover, to maximize the awareness of the brand and what it has to offer, Spotify collaborated with Starbucks.  

Spotify is a popular digital music streaming service that provides access to a vast online library of music, podcasts, and videos. Spotify offers both a free, ad-supported version and a Premium subscription plan that allows for ad-free listening, higher audio quality, offline downloads, and more control over playlists.  

In a strategic move in 2015, Starbucks and Spotify joined forces. This partnership provided Spotify users with access to a vast library of curated playlists, while Starbucks employees received complimentary Spotify Premium subscriptions. This innovative collaboration, dubbed a "First-of-Its-Kind Music Ecosystem," successfully reached new audiences for both companies.

Blending music with coffee 

Starbucks and Spotify joined forces with one aim: To enrich the customer experience by making music a central element of the coffee shop's atmosphere. This multi-year deal goes beyond simply playing music in stores and instead aims to connect Starbucks' My Starbucks Rewards loyalty program members with the vast music library offered by Spotify. Through the Starbucks app, customers gained a say in shaping the in-store playlists to foster a sense of control over the ambiance. 

The partnership also introduced the "Starbucks Guest DJ" program, featuring playlists curated by established and up-and-coming musicians, bringing fresh musical discoveries to customers. 

Furthermore, Spotify users were rewarded with "Stars as Currency" for the My Starbucks Rewards program, while Starbucks employees received Spotify Premium subscriptions. This collaboration exemplifies the power of strategic alliances to strengthen brand loyalty and elevate the overall coffee shop experience.

Powering up the listening hours 

This collaboration was a win-win situation for both the companies' customers. It's a significant move, as Starbucks is opening its loyalty program to a third party for the first time. By offering exclusive playlists and rewards, this partnership is poised to be a success for both brands. The deal allowed,

Starbucks to gain a technological edge and attract new customers through Spotify integration. 

Spotify expands its paying subscriber base by offering rewards to Starbucks loyalty members who sign up for premium subscriptions. This partnership also helps improve Spotify's image with musicians who criticize its free tiers. 

For over 40 years, Starbucks has carefully crafted a unique coffeehouse atmosphere where music plays a central role. Since 1994, a team of experts has curated music for Starbucks, creating CDs featuring a variety of genres and artists from around the world.

This program has showcased both legendary and up-and-coming musicians. Legendary artists like John Lennon, Aretha Franklin, and Bob Dylan have all been featured, with some even selecting their favorite recordings for special releases. Seasonal music has also been a highlight, with CDs celebrating holidays and special occasions. 

Increasing subscribers one sip and song at a time 

This unique alliance benefits both parties, offering musicians advantages beyond traditional Spotify programs and a broader platform for music distribution. Let's check how it played out for both Spotify and Starbucks:

• Daniel Ek, CEO of Spotify, announced that Spotify facilitated over 25 billion hours (about 2,900,000 years) of global music listening.  
• The collaboration between Spotify and Starbucks aimed to provide access to over 20 years of popular Starbucks music to Starbucks customers and Spotify's 60 million global music enthusiasts. 
• The partnership between Starbucks' 7,000 U.S. company-owned stores, 10 million MSR loyalty program members, and Spotify's vast user base is termed a "First-of-Its-Kind Music Ecosystem." This unique alliance benefited both parties as it offered musicians advantages beyond traditional Spotify programs and a broader platform for music distribution. 
• By promoting Spotify Premium in Starbucks's stores, it continued its legacy of championing musicians. Howard Schultz, chairman and CEO of Starbucks, emphasized the significance of integrating Spotify's streaming platform into Starbucks' digital ecosystem to revolutionize music discovery for millions of global customers. 
• According to NASDAQ, Apple's digital download sales have been declining. Reports indicate a 13-14% drop in revenue for Apple since the beginning of 2014. The Recording Industry Association of America reported an overall 8.5% decrease in digital downloads for that same year. The reason being cited is the Spotify-Starbuck collab.

How to perfectly launch a subscription-based loyalty program considering Spotify & Starbucks’ approach? 

The case study of the partnership between Starbucks and Spotify offers several key learnings. You can aim to:

• Reward loyalty: Spotify users were incentivized with "Stars as Currency" for the My Starbucks Rewards program, fostering loyalty and engagement with both brands. 
• Build strategic alliances: Strategic partnerships, like the one between Starbucks and Spotify, can strengthen brand loyalty, reach new audiences, and elevate the overall customer experience. 
• Expand subscriber base: The partnership helped Spotify expand its paying subscriber base by offering rewards to Starbucks loyalty members who signed up for premium subscriptions. It improved its image with musicians critical of its free tiers. 
• Enhance customer experience: Both companies aimed to enrich the customer experience by making music a central element. Starbucks offered curated playlists and a sense of control through the loyalty program, while Spotify provided access to a wider music library. 
• Reach new audiences: The collaboration exposed Spotify to Starbucks' large customer base and vice versa. As a result, it increased brand awareness for both. 
• Build a uniquely crafted loyalty program benefits: The program offered incentives for both sides. Starbucks loyalty members earned rewards for using Spotify, and Spotify users gained points in the Starbucks program. 

Conclusion 

Loyalty-based programs are crucial for businesses to attract, engage, and retain customers in today's competitive landscape. Giift's LBMS offers an end-to-end infrastructure to help enterprises build scalable and effective customer loyalty programs. Foster long-term customer relationships and increase lifetime value through Giift's LBMS, that offers:

• Multi-language support to cater to a global audience 
• Seamless integration with CRM, transaction systems, and marketing tools 
• Robust security measures and data protection to address privacy concerns 
• Ongoing support from implementation to program management

By partnering with Giift, enterprises can overcome common challenges in implementing loyalty programs and create compelling offerings that drive customer loyalty and business growth.

Citation 

1. Here’s how to get an Amazon Prime membership for free. (2023, October 12). NBC News. https://www.nbcnews.com/select/shopping/amazon-prime-benefits-cost-ncna1269672 

2. Gourville, J. T. (2014, August 1). Pricing and the psychology of consumption. Harvard Business Review. https://hbr.org/2002/09/pricing-and-the-psychology-of-consumption 

3. Hyken, S. (2024, March 4). Creating your best customer loyalty program. Forbes. https://www.forbes.com/sites/shephyken/2024/03/03/creating-your-best-customer-loyalty-program/?sh=42de4a258210