What behaviours do loyalty programs try to create?

The different types of loyalty programs try to incentivize different types of brand-valuable behaviour.

Points-based loyalty programs

  • More frequent purchases (usually not specific / more valuable purchases)
  • Leaving a positive review
  • Engaging on social media
  • Referring a friend who went on to make a purchase
  • Signing up for an account, otherwise handing over information

VIP loyalty programs

  • More purchases over the long term to get to higher tiers
  • Non-purchase interactions like attendance at exclusive online or in-person events (e.g. Sephora Beauty Insider store events)
  • More and “better” usage of the product as a result of what they’ve learned via events or more personal contact with the brand (this is a very B2B thing for a B2C brand to do, like customer success for VIP customers who are treated like key accounts)

Subscription-based programs

  • Repeat purchases; maybe not frequent, but more stable in the long term
  • More online orders with free shipping; at scale this frees up in-store staff and keeps the warehouse running at capacity
  • Increase valuable non-purchase interactions, like more time spent in-store for free food/drinks
  • Paying for a year’s worth of service upfront; creates switching costs for the year that slowly go down