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
