Modern Loyalty Programs for Better Profits

It is at times surprising how many people among marketing or business in general would jump straight to cash-rewards or material rewards when they think of loyalty programs. And odds are, your company might be doing or have considered doing that very same thing. Well, what if there was a better way? What if, instead of losing cash capital to gain loyalty, you lose no cash at all, and gain an even better loyalty? 

Why Material isn’t a Good Incentive

Merchandise and cash are good and fine, you can offer up a free product after your customer buys 10 of them, which is pretty standard. And who wouldn’t want to get a cash-back once they spend countless bucks on your product? But does that make sense? 

You’re basically trying to buy your customer’s loyalty instead of earning them. This might make a total sense at a glance. However, if you give a further thought about it, it is actually counter-intuitive since loyalty should usually be earned instead of bought. Besides, even if you can buy the said loyalty, why would you? You are losing capital in the hopes of obtaining more, and this would not be too beneficial. Especially if it’s the case of startups, or if your company have some resource constraints. 

The question would simply imply to would you rather have a free cup of coffee after staying loyal to your coffee shop for a year, or you get to cut in line every time you come into the shop. Wouldn’t you rather be allowed to get your coffee first? 

Speaking of coffee shops and VIP treatments, one of—if not—the most viable example of this type of loyalty program would be the one designed by Starbucks

If you’re registered for the program, for each dollar you spend, you earn 2 stars which, if accumulated to 300 will elevate you into the VIP status of Gold. And you will need to earn 300 stars per year to maintain that status. Besides the gold status, the stars provide no other benefit. As you would only need to pay $1 per year to achieve the Green level and be eligible to order ahead with your phone so you can skip waiting in line. 

With just a quick read, this program might not seem much, but it also has skyrocketed Starbuck’s revenue by 16 billion dollars

What Made Starbucks Rewards Successful

You may think that the free beverage still helps, but while that might somewhat do, the real reason people would spend $125 dollars per year at Starbucks is the Golden Card. 

You would be surprised as to how far the power of showing off to peers can go. And by rewarding people with proper VIP status, your customers or consumers may feel more comfortable or even more eager to spend what they have for your products for simply the acknowledgment that they are important.

What Other Options Are There?

According to, other cheaper and more effective rewards than money includes Access and Power. While as it says, power is more effective within virtual world-based campaigns, access is another thing worth investing into. Sometimes, companies underestimate the lengths at which customers that are already loyal would want.  

Perhaps giving them access to your new line of products earlier or access to 15 minutes head-start on a crazy flash-sale or even simply access to meet the CEO in person to have lunch and a nice chat with them. These somewhat feeble things can really drive those people that are in love with your product enough to buy an abundance of them the feeling of happiness and acknowledgment they would want. 

But of course, in the end, loyalty programs, no matter how tempting the incentives are, will never prove useful unless they are engaging enough to let the customers stay inside said program. As even Starbucks Rewards apply various gamification via its mobile app to let the users feel content. Besides loyalty programs, learning about what to use in applying gamification can also help streamline your program and cut back on losses.