5 proven loyalty programs that really pay off

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According to ProfitWell, 80% of future profits come from just 20% of existing customers. Clearly, then, any effort to keep yours engaged is a worthwhile investment, and loyalty programs are one of the oldest and most popular ways to do this.

In other words, these programs retain existing customers by rewarding them for their interaction with your brand, usually through points, discounts, perks, or free products. A 2019 Yotpo study found that 67.8% of shoppers equate brand loyalty with repeat purchases. It's no surprise, then, that brands have created associated programs to encourage repeat purchases.

Here are some proven program categories:

If you have a credit card, you're probably familiar with points programs, where you spend a certain amount to earn a certain number of points. These are usually convertible to cash or store credit in the case of retail brands. Starbucks has one of the most popular in the world: you use an app or card to pay for orders and earn points. In the United States, customers can start redeeming rewards once they reach 25 points (or "Stars," as the company calls them). The brand also runs annual sticker-based point programs during the holidays in select countries, which encourage customers to collect a certain number of stickers to earn a limited-edition Starbucks diary.

Related: How Brands Can Turn Short-Term Rewards into Long-Term Loyalty

Paid or premium programs encourage customers to pay a membership or subscription fee in exchange for benefits. Perhaps the most recognizable example in this category is Amazon Prime Membership, which rewards members with a free subscription to its streaming app, free US shipping, and other added values.

Some brands like Barnes & Noble have membership programs that give members discounts on items and early access during sales. The key to enticing customers to enroll in a paid loyalty program is to offer something that is perceived as valuable and useful, and among the most successful examples of related applications were recently listed by AVADA. /p> 3. Tiered

Tiered loyalty programs follow the same concept as point-based examples: the difference being that members get different rewards when they reach each level, rather than everyone getting the same thing. These programs present members with a specific status name each time they level up.

For example, most airlines have tiered loyalty programs measured in miles. Qatar Airways, the airline of Qatar, has a Privilege Club for its frequent flyers. New members start at the lowest level, called "Burgundy", followed by "Silver", "Gold", and "Platinum". As members progress, they gain more privileges and benefits. For example, once members reach the Silver level, they get access to the lounge, while one of the benefits of the Platinum level is a free 55-pound baggage allowance each time they fly.