Loyalty programs have two main purposes—retain old customers and attract new ones. According to KPMG, 75% of consumers prefer brands with good loyalty programs, and 43% stay loyal to these brands.
If that’s exactly what you need, but have no idea where to start, you’re in the right place.
In this article, I will show you 5 best paid loyalty programs examples, as well as 7 tactics you can apply to build yours and increase sales.
The ROI of paid loyalty programs
- Paid membership programs are an investment that leads to long-term ROI.
- Members of paid loyalty programs spend more time and money with the brand than those in unpaid programs.
- Loyalty programs that charge for membership offer exclusive benefits, rewards, and bonuses, leading to higher and longer-term customer retention.
- Paid loyalty programs boost larger purchases through special discounts, premium products, and point accumulation. For example, you can offer, "Get $2 off when you spend $20 on your next purchase."
- Loyalty programs with membership fee encourage higher purchases with special offers and monthly rewards. They increase purchase frequency and lead to sustained sales even after the program ends.
- Loyalty programs attract new consumers to try your product. If they like it, they become permanent, loyal customers.
Paid loyalty programs vs free loyalty programs
Both paid and free loyalty programs attract more customers and sales, but they have key differences.
Free loyalty programs are cost-free and attract a wider audience initially. Paid loyalty programs require a membership fee and target specific, more beneficial customers who tend to stay loyal in the long run.
I've noticed a significant difference in expectations between paid and free loyalty program members.
Free program members don't expect much, while paid members expect substantial perks, handsome packages, and lucrative offers to justify their spending.
If designed well, both types can help businesses acquire more customers.
However, don’t forget that loyalty programs have costs to set up and maintain, such as rewards and marketing. Also, meeting customer expectations for rewards is important; otherwise, it could lead to dissatisfaction and lost loyalty.
Keep in mind that not all customers may be interested in accumulating rewards, and managing the program can divert resources from other business priorities.
And finally, relying too much on discounts may attract short-term deal-seekers instead of loyal customers. That’s why you need to do this wisely.
To help you understand how things work, I'm going to share five paid loyalty program examples.
I’ll also give you tips on creating the best rewards programs that avoid complexity, high costs, or low engagement.
5 Best Paid Loyalty Program Examples
Starbucks Rewards
Starbucks popularized paid loyalty marketing programs with its exclusive "Starbucks Rewards" program, which rewards over 30 million members worldwide through a points-based system.
Perks:
- Free coffee on signup
- Free refills of beverages
- Birthday treat
- Free customized drink on the collection of 25 stars
- Free cold brew, lattes, or a hot breakfast for 200 stars
- Free sandwich, protein box, or a takeaway coffee bean bag for 300 stars
- Free merchandise worth up to $20 for spending 400 collected stars
Results:
- 16% boost in the yearly revenue
- 33 million members across the globe by 2024
How does the Starbucks loyalty program work?
Starbucks' point-based program encourages customer engagement by rewarding members based on their purchases. Members earn stars for every dollar spent in-store and double stars for loading money onto digital cards.
They also receive extra stars during promotions and on special Delta airline travel days. These stars can be redeemed for rewards, keeping members involved and loyal to the program.
The members earn points within six months. After that, they expire.
Sephora loyalty program
Sephora's loyalty program, with over 17 million members in North America, offers access to luxury products customers might not typically buy.
Recently, they introduced "Beauty Insider Challenges" to motivate customers to shop online and in stores, earning them access to exclusive products.
Perks:
- Access to an exclusive online community where members connect, share tips, and provide feedback
- Vouchers and brand samples in the Sephora Reward Bazaar
- Personalized product recommendations via email and account
- Exclusive discounts and special offers
- Free gifts
Results:
- The members of Sephora loyalty improved customer engagement by 22% after its launch.
- Cross-sells increased from 13% to 51%.
How does the Sephora loyalty program work?
The program offers three membership levels—Beauty Insider, VIB, and VIB Rouge.
Each level has its own requirements and perks. Beauty Insider is free for everyone to join. To reach VIB status, members need to spend between $350 and $1000, and for VIB Rouge, it's over $1000. Members earn 1 point per dollar spent.
Originally, there was a physical membership card, but now Sephora's mobile app handles everything, including tracking and redeeming points.
Higher-tier members get early access to new product launches.
AdiClub by Adidas
AdiClub is another example of one of the world's most extensive loyalty programs. Due to its attractive offerings, it was also crowned the most successful loyalty program for retail businesses in 2021 and 2022.
Perks:
- Level 1: Members get exclusive access to the CONFIRMED app for sneaker releases, free shipping, and early access to selected drops.
- Level 2: Members receive access to the Adidas Running and Training apps for two months, birthday gifts, special discounts, and offers.
- Level 3: Members enjoy all Level 1 and Level 2 rewards + personalized product options during purchases.
- Level 4: This is the most exclusive program, offering all previous perks along with special event tickets, priority customer support, 12-month access to the Adidas Running and Training apps, and access to the CONFIRMED app.
Results:
- The program currently has over 240 million active members all over the world.
- The purchase frequency of the members is 50% more than the nonmembers.
- The members provide two times more CLV than the nonmembers.
How does the AdiClub program work?
AdiClub works similar to Starbucks' loyalty program, where members earn 10 points for every dollar spent.
To join, you just need to shop with the brand. And once you're a member, you earn and can use points for discounts whenever you like.
One of the most popular discounts is a 15% off voucher for 800 points. Members can also enter sweepstakes and giveaways starting at 100 points.
Lastly, loyal members receive a variety of free products as part of their membership perks.
Lego Insiders
Lego Insiders works like other referral programs. As a member, you earn points that you can use for discounts and benefits. Points come from purchases in stores, online, and on social media.
Perks:
- Discount codes reduce the cost of the next purchase. The more points earned, the higher the discount available.
- Promotional codes.
- Early access to sets allows estimating product availability before general release.
- Lego Life magazine provides deep insights for readers.
Results:
- It helped the company grow by 4% by 2022.
- The revenue increased to 65.8 billion.
- In 2022, operating profit reached DKK 17.9 billion, driven by the Lego Insider program's strategic initiatives.
- The cash flow increased by 1 percent to DKK 15.4 billion.
- The company saw a 60% increase in spending on environmental initiatives.
How does the Lego insider program work?
VIP membership is automatic for members; they simply join. Non-members can sign up on the website by scanning a code.
Members earn points by shopping: 1 DKK spent equals 1 point, or 1 Euro equals 7.5 points. Registering pets can also earn members extra points. Points can be used for vouchers, special offers, and gifts.
My bath & body works rewards
My Bath & Body Works loyalty marketing program lets members earn points on every purchase. They can use these points to enjoy perks and offers before they expire.
Perks:
- Special discounts on every other purchase using promo codes and discount codes.
- Birthday gifts for members.
- Exclusive rewards for selected members.
Results:
- The Bath & Body Works members make up about 75% of US sales in the industry.
- The reward program today has about 38 million members from all across the globe.
- The retailers opened about 30 new off-mall stores in Q2 to accelerate their growth.
How does My bath & body program rewards work?
Customers earn 10 points for every dollar they spend on Bath and Body Works products. Once they accumulate 1000 points in their account, they can redeem them for products worth up to $17.
How to create a successful paid loyalty program?
Whenever you’re looking at how some of the best paid loyalty programs function and what results they bring, it’s natural to feel inspired. However, what would be even better is to distill their secrets and see how they can be replicated so that anyone can generate positive ROI.
Precisely what I’ve tried to accomplish in this section. Break down their secret sauce backed up with practical guidance on how to set this up yourself. No fluff, long paragraphs, or big words. Let’s get cracking.
1. Purchase-based and actions-based rewards
Action-based & purchase-based rewards refer to all the gifts, free services, and goodies you would grant your program members as a gesture of gratitude for supporting your brand.
The best way to maximize this is to offer what your customers seek most when joining the program. Think about your popular products, things commonly mentioned in reviews and on social, etc. Plus, you must ensure that your perks are better and more accessible to customers than your competitors.
To do this, you need to do 2 things. Number one, look at your data and let it tell you a story. Number two, study your competitors' loyalty programs and mark each perk and benefit they grant customers on every level.
Last but not least, do the math. Sure, it’s smart to provide all the perks whose worth and value exceed what the customers have paid at an upfront entry fee. But you also have to make it profitable and efficient internally. Create a win-win situation between the two.
Here are a few perk examples that are quite popular and how you can set them up without taking weeks or, worse, months to launch.
One of the best customer loyalty programs examples is Stella & Dot. They run campaigns where customers receive surprise gifts on their fourth and seventh orders.
They don’t reveal gifts in advance, keeping customers excited based on positive reviews and past experiences of previous gift-getters.
This tactic is quite popular and profitable among users at Gameball and here’s how it works:
Then, all that’s left to do is to choose what type of a surprise I want and then set up a cool, personalized message for the customers that I can send either via email or mobile.
Another interesting tactic is the one Starbucks is leveraging with great success. The principle is simple—reward customers after their purchases and try to create “hot streaks”. For example, when someone buys the same product twice in a specific time window, we can give them a reward, thus increasing repeat purchases.
The third tactic that’s bringing amazing results is when you incentivize customers with rewards such as Free Shipping or Percentage-Based Discount.
We’re all aware how a big of a barrier shipping costs can be for online shoppers. So offering Free Shipping after certain conditions are met is a great way to ramp up your conversion rates. If I want, I could combine this with a scarcity tactic and add the expiry date for this promotion.
As for Percentage-Based Discount, our data suggests it is one more profitable way to increase both revenue and average order value. A frequently used tactic is to offer, for example, a 20% discount for a minimum purchase amount or for specific collections in your store.
Here’s an example:
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2. Tiers and leaderboards
Setting up tiers and leaderboards, similar to those in popular games, can make your loyalty program way better. This system helps you see which customers are most valuable to your brand.
For example, customers who spend more on your products rank higher on the leaderboard.
Here are my tips for organizing leaderboard levels:
- Survey your customers to learn their preferences and behaviors. This will guide you in deciding how many program levels to offer based on demand.
- For brands with five or fewer products or services, a single-level program should be comprehensive enough. However, if your brand has more than 10 or 15 different products (SKUs), multiple levels may be necessary. You can also tailor the levels based on your product lines.
- Study the loyalty marketing programs by top competitors and design yours to be straightforward.
- Encouraging customers to earn points to climb the leaderboard can motivate them to spend more to maintain their top position.
- You can offer a one-time payment or monthly subscription, depending on the tier they choose. Some programs also offer yearly subscriptions. It's your decision which option to use, and you can offer three choices with varying benefits.
Here’s one of my favorite tier-based program setups:
3. Segmentation and automation
I approach this step in two ways—first, by segmenting to understand customer preferences better, and second, by using automation to streamline and improve the customer experience with our loyalty program.
Segmentation strategy:
- Divide your customer base into smaller groups based on geography, demographics, preferences, and seasonal trends
- Focus on the largest customer segments to tailor your loyalty program
Automated system design:
- Create a clear and engaging system to explain your loyalty program to new customers
- Highlight the benefits and perks upfront to attract interest
- Explain each service and feature in detail and point out what makes your program unique
Here are some extra tips worth taking note of:
- Offer different membership fee options like monthly, annual with savings, or lifetime memberships
- Clearly outline requirements and fees for each option to help customers choose.
- Guide customers through the signup process after they agree to your terms
4. The referral program
Referral marketing rewards customers for bringing new members into a program. Integrating it with your reward system benefits both your business and customers.
Adding a multi-level marketing component allows customers to earn incentives for referring others and also receive a share of the incentives earned by their referrals.
For instance, that's exactly how 1Pass Fitness improved its engagement, loyalty, and retention.
They successfully increased purchase frequency by 100%, boosted average order value (AOV) by 33%, and improved average revenue per user (ARPU) and customer lifetime value (CLTV) by 4%.
I’m going to show you a top performing referral tactic I’ve seen across Gameball data. The trick is in setting referrals up so it works after someone refers their friend and they complete their first purchase.
By doing so, both referrer and referee unlock their rewards, which can be customized any way you want. This is how successful referral programs generate consistent results, without losing months on creating internal tools that will facilitate such setups.
✅ Take action: Want to test this win-win referral tactic for your business? Start here for free, no card required.
5. Introduce a variety of rewards
More rewards can attract more people to join your program and appeal to a wide range of customers. Consider organizing your reward system horizontally instead of using a vertical approach with multiple levels.
Think of it as building a pyramid—infrequent buyers enjoy broader but less valuable benefits, while frequent and high-spending customers unlock premium perks and luxury services.
These rewards can include occasional treats like birthday gifts, first purchase bonuses (like free coffee at Starbucks), seasonal discount coupons, and more.
By rotating these offerings every few months, you keep customers excited and engaged without their interest waning over time.
6. Collaboration & partnerships
Here's another expert tip: view your competitors as collaborators rather than adversaries.
Don’t compete head-on as a small business in a market dominated by larger players. Consider partnering with other companies at a similar scale. By pooling different expertise, you can collectively challenge industry giants.
However, be cautious about collaborating with too many firms. Large mergers and partnerships can sometimes fail due to conflicting opinions and differences.
7. Create a 2-in-1 loyalty program
Two-in-one loyalty programs give customers flexibility when deciding to join a rewards program.
To attract new members at no cost, offer basic perks like a loyalty badge or a shoutout on social media. This helps create a positive impression.
Allow customers to try out premium perks for a trial period during their free membership. Once they see the benefits and use them regularly, they'll be more likely to subscribe to the permanent premium plan.
This approach meets different customer preferences, rewards participation, and boosts overall engagement.
Summary
Creating a paid loyalty program takes time and careful planning, but the rewards are worth it.
If you're new or not widely known, starting with a free program is usually better.
For established businesses with a strong customer base, launching a paid program alongside a free one could work well. If you lack ideas, you can always inspire yourself with top loyalty programs, but make sure to add your own touch to avoid being a non-creative “copy-paste”.
