What is a customer loyalty program?

Rewarding your customers is a simple yet powerful marketing strategy to encourage repeat purchases, drive new business, and stand out from competitors.

A customer loyalty program incentivizes shoppers with exclusive discounts, perks, and personalized offers. These free or paid programs lead to long-term brand engagement, and establish emotional connections with shoppers. Loyalty programs can also be used to source valuable customer insights and amplify word-of-mouth referrals.

Why customer loyalty programs matter for B2C brands

For B2C brands, a well-executed loyalty program does more than drive transactions—it nurtures a relationship between brands and their customers. By offering rewards like discounts, points, or exclusive products, brands can increase order frequency and size while gathering valuable customer data to refine their marketing strategies.

Personalization allows businesses to connect with customers on a deeper level by tailoring offers and experiences to individual preferences. 50% of consumers feel valued when they receive personalized offers and discounts. This emotional connection drives up customer satisfaction and strengthens brand loyalty, making it harder for competitors to lure customers away.

During times of economic uncertainty, these programs become even more influential as customers seek added value from the brands they trust. The right offering can be the deciding factor between choosing one brand over another.

Business benefits of customer loyalty programs

Customer retention is a huge benefit of loyalty programs. These programs can also increase customer lifetime value (CLV) by encouraging repeat purchases. Plus, the less money you have to spend on customer retention, the more you can dedicate toward acquiring new customers.

Loyalty programs can help reduce these acquisition costs by fostering organic brand advocacy. Engaged customers are more likely to leave reviews, share referrals, and create user-generated content, further boosting brand credibility.

These programs also serve as a source of first-party data, providing insights into consumer behaviors and preferences businesses can use to revamp their marketing and product offerings.

Customer benefits of brand loyalty programs

From a customer’s perspective, loyalty programs offer tangible value. And data shows many consumers are happy to participate in these programs:

72% of consumers actively participate in retail/ecommerce loyalty programs.
47% of consumers actively participate in wellness and personal service brand loyalty programs.
51% of consumers actively participate in restaurant loyalty programs.
49% of consumers actively participate in hotel loyalty programs.

Exclusive promotions and rewards make shoppers feel appreciated, while personalized experiences speak to consumers’ current needs or interests. Many programs also provide early access to new products or services, giving loyal customers the VIP treatment they’re looking for.

The most common factors that influence consumers to subscribe to brand marketing updates align with loyalty program perks—exclusive discounts or promotions and early access to sales, new products, or events top the list across industries.

Beyond monetary benefits, loyalty programs can also provide a sense of recognition and status. Whether through tiered memberships, VIP perks, or special badges, customers enjoy the feeling of being rewarded for their engagement. When designed well, loyalty programs end up creating an experience that makes customers feel like valued members of a brand’s community.

Types of customer loyalty programs

So, what are the different types of loyalty programs? Here are some of the most common formats, which brands often combine to create their ideal setup:

Points-based loyalty programs are one of the most popular types of loyalty programs where customers can earn points with every purchase and redeem them toward their next purchase or for another type of reward.
Tiered or VIP loyalty programs take this idea a step further, offering different levels of perks based on spending or engagement.
Paid memberships are programs where customers pay a fee to be a part of the “community” and access exclusive member benefits. Retail giants Costco and Amazon are well-known for these types of membership programs.
Value-based loyalty programs may not directly benefit the customer and instead tie rewards to behaviors that support the company’s mission or social responsibility initiatives. 4 in 10 consumers feel that brand values matter more now than they did a year ago.
Referral-based loyalty programs leverage word-of-mouth marketing by incentivizing customers to bring in new buyers.
Hybrid loyalty programs combine multiple elements, offering a tailored approach that maximizes engagement across channels.

How to run a B2C customer loyalty program

A successful loyalty program goes deeper than handing out discounts—it creates an experience customers genuinely want to be part of. The first step is to understand what drives your customers and define what success looks like for your brand. Whether the goal is to increase repeat purchases, gather data, encourage referrals, or improve customer relationships, you’ll need a clear strategy and alignment with customer service teams.

Once the foundation is in place, choose the right loyalty model and integrate it with your B2C CRM to set up tracking and personalization. This allows brands to deliver highly relevant rewards that keep customers engaged. But a loyalty program isn’t a “set it and forget it” initiative. Brands should actively promote their programs, using targeted messaging to reach the most engaged customers and encourage participation.

Regular analysis keeps a loyalty program effective. Pay close attention to customer feedback and behavioral data to fine-tune your offerings and optimize engagement. The best loyalty programs evolve based on customer insights, making them more engaging, valuable, and rewarding over time.

Turn your customer loyalty data into a revenue driver with Klaviyo B2C CRM

Centralized data takes brand customer loyalty programs to the next level. Using Klaviyo B2C CRM, segmenting customers based on their behavior is easy, allowing marketers to send timely, relevant loyalty messages.

With Klaviyo, brands can automate personalized offers through email, SMS, and mobile app marketing, keeping customers engaged without adding extra work for their teams. Real-time tracking means businesses can see what’s working, what’s not, and tweak their strategies on the fly.

Ready to turn your customer loyalty data into a revenue-driving asset? Sign up for Klaviyo to create stronger connections with your audience, get more sales, and build long-term brand loyalty.