How to Create a Loyalty Program for the Modern Consumer

Customer experience now shapes all parts of business. That includes what happens after someone buys from you. Consumers expect brands to engage and value customers as people, going beyond the transaction to create lasting relationships.

What is a customer loyalty program? A modern definition

A customer loyalty program is a structured marketing strategy that rewards customers for repeat purchases and engagement with a brand. To meet the needs of today’s customers, loyalty programs must adapt accordingly. Brands have to go beyond transactional rewards to bring the customer into the brand community, offering valuable benefits that reward loyalty on multiple levels. 

In this article, we’ll explore what today’s customer loyalty program should look like and how brands can use these features to create a meaningful experience.

This article shares insights from ShipStation’s Innovation Delivered summit. Ecommerce experts shared tips for building strong businesses that focus on customers. Learn more about Innovation Delivered and watch all event sessions here.

Move beyond points to experience

Loyalty programs are almost synonymous with earned points, and for good reason. Points are easy to understand and satisfying to earn and use. But in the age of relationship-first customer interactions, they’re no longer enough to keep customers engaged.

Today’s customers belong to an average of 15.5 loyalty programs, but their levels of engagement and actual brand loyalty have dropped. A 2024 survey by Boston Consulting Group (BCG) found customers are more likely to switch programs if the brand fails to provide valuable, experience-focused benefits.

The value of intangibles

Offering experiences doesn’t mean dispensing with points. BCG data shows points still work well for repeat buyers. This is especially true for customers over 35. However, for the 18- to 34-year-old cohort, experience-based benefits are catching up. 

Younger consumers gravitate toward:

• Free digital content
• Exclusive brand interactions
• Digital engagement opportunities
• Access to experiences

These special perks make customers feel like VIPs. This shift represents a move from transactional loyalty to emotional loyalty, where customers connect with brands on a deeper level.

Creating an ‘inner circle’

We talked about advanced loyalty programs at our recent event, Innovation Delivered, where we held a session titled “Beyond Checkout: Designing a Post-Purchase Experience That Sticks.” One of our guests was Sham Aziz, founder of thecxway, a customer experience consulting group.

When asked his thoughts on loyalty programs, Aziz quickly talked about making customers feel special.

Participants know they’re getting something valuable that others can’t access. Those scarcities and in-group feelings strengthen emotional connections with the brand. 

This in-group membership doesn’t replace the financial benefits of loyalty membership. Even the youngest BCG respondents still appreciate loyalty points. Experiences create deeper connections. They give brands new ways to be part of customers’ daily lives.

Use technology for seamless check-ins, not complex rules

To make your loyalty program members feel like part of an exclusive club, you need to make it easy for them to join and use. Friction erodes the feeling of exclusivity, especially when customers have to work to take advantage of benefits they’ve earned.

Loyalty program members have already engaged with your brand and are looking to enjoy the rewards. It should be as easy as possible for them to earn and use rewards, whether points-based or otherwise. Whether through a dedicated loyalty program app or integrated ecommerce platform features, the goal is seamless interaction.

Aziz learned about the value of friction-free loyalty programs while working with a top department store:

“What we did was think about how to build a club of exclusivity: allowing people to join, making it easy [to] install. On their mobile devices, they can have a QR code, so when they get to the register, that can be scanned. They don’t have to sit there and go through the email address, try and spell it… anything that gets in the way of giving over your details. You scan, and you’re checking in.” -Sham Aziz, founder of thecxway

These mobile-first experiences put the customer at the center of the project. We live in a time when 98% of Americans own cell phones and 91% own smartphones—a higher percentage than ever before. QR codes, apps, and mobile logins reduce friction across multiple touchpoints. Participation is effortless and shoppers feel seen, served, and understood.

Build community around your brand

Traditional loyalty programs have focused on the one-on-one connection between the customer and the brand. As the broader customer experience has taken center stage, brands are extending that connection outward to create brand communities. These show up online in many forms, including:

• Social media groups
• Online self-support forums
• User communication hubs
• Website-hosted question-and-answer wikis

Research indicates that these online brand groups help customers feel more connected. People start to feel like the brand is part of the person’s sense of identity. That person is more likely to interact with the brand and other community members on a deeper level, and those interactions reinforce their feeling of belonging. 

Customer loyalty program ideas that build community

Aziz thinks brand communities and loyalty programs work well together. As he explains in the “Beyond Checkout” session, loyal customer communities can have ripple effects beyond individual relationships: “You, as a brand, can bring those like-minded individuals and groups together so they spend time with each other. If we play that forward and put them in front of each other, and give them a space to interact with each other, they get to do that through the power of your brand.”

Developing a loyalty program as a “fan club” is a novel concept, with plenty of room for brands to innovate.

Leverage data to make it personal

If your goal is to build a loyal customer base, personalization is essential. A recent global survey shows that:

• 96% of consumers are more likely to shop with brands that personalize their messaging.
• 9 in 10 people want more personalized communications than they currently receive.
• 80% ignore messages they see as irrelevant.

Personalization is particularly important for loyalty programs, where the goal is to show customers how much you value them. Loyalty program members should get better service as “elite” customers. Fortunately, brands have the resources to deliver.

Incentivized data collection

You have immediate access to the customers in your loyalty program. Whether you communicate via email or have a loyalty program app or dashboard, you can reach out any time and ask for their thoughts.

By offering points or other rewards in exchange, you can make this conversation a win-win situation. That’s what Beyond Checkout panelist Amanda Eddy has accomplished with her growing jewelry brand, Amanda Deer Jewelry.

Eddy recently launched a new rewards program that rewards customers for certain types of engagement. Customers can now earn points for leaving a review, which provides the brand with valuable insights into what their customers want and need. The brand also benefits from having additional online reviews, which 96% of customers read before making a purchase.

This customer loyalty program demonstrates how the right loyalty program technology can scale with growing companies.

Another option is to offer rewards for completing surveys, phone interviews, or customer focus groups. The more time-consuming the activity, the higher the reward should be. These customer relationship management loyalty programs create a feedback loop that benefits both parties.

Analysis-driven personalization

Even before you gather one-on-one data, you have a lot of information about your program members. You know what they buy, how they use their rewards, and what they get in touch about.

Use this information to offer rewards and benefits that members genuinely want. For example, if you learn that 80% of your members spend their points on experiential rewards, you might choose to offer more options in that category.

You may not be able to analyze every customer’s individual preferences, and that’s OK. Technology as simple as Excel can help you aggregate data to gain insights into your membership as a whole. Then, as your program grows, you can use more advanced analytics tools. 

Aziz is a big believer in the potential of AI-powered analytics, which offer a wealth of information.

This is, as Aziz puts it, “the holy grail of personalization.” It’s information from the customer, about the customer, directly related to their experience as a loyalty member.

Brands can use that type of information to hyper-personalize their rewards offerings. You might segment your rewards to target different buyer group interests or tailor messaging to members’ engagement levels. 

You can even use data-driven insights to promote your loyalty program to potential members, based on their browsing and purchase activity.

Integrate loyalty across the entire customer journey

Your customers expect an omnichannel experience—a seamless journey across multiple touchpoints with a brand. They want to log onto their loyalty dashboard and see that you remember what they’ve bought, where they’ve shopped, and how they’ve interacted with customer care teams.

Research indicates that omnichannel service can help brands retain more customers and earn more referrals. High-value loyalty programs are a key part of the equation, particularly for customers who have a more established relationship with the brand.

When these customers engage with the loyalty program, they expect it to be easy to use. They want to earn and use rewards across all channels without friction or delays, no matter how minor.

Using technology to create seamless loyalty experiences

A friction-free experience is especially important for brands with online and in-person shopping platforms. Eddy’s Amanda Deer brand has recently launched this style of program and has achieved early success, thanks to top-notch tech stack integration:

“We recently launched our first loyalty rewards program, which is something that our customers have been asking for. We use a product called Loyalty Lion, which plugs in with our tech stack—Shopify, Klaviyo, which we use for our email, [and] Judge Me for our reviews. All of those things together help the product work great for customers.” -Amanda Eddy, owner and designer of Amanda Deer Jewelry

This integrated program allows Eddy and her team to incentivize reviews and integrate loyalty rewards with email marketing. This supports her brand’s focus on making customers feel like they belong. She works hard to build community as a small business owner.

Design for long-term relationship building

Customer experience has evolved to go beyond the transaction, and thriving loyalty programs reflect that shift. They create a place for the customer-brand relationship to grow and develop, leading to a bond that feels personal.

Eddy has created her entire brand community, including her loyalty program, around that philosophy.

Eddy has built the Amanda Deer loyalty program around long-term value. She provides opportunities for customers to express what they love about their purchases and what they would like to see improved. Customers feel valued and receive tangible benefits, such as branded items for reaching a certain loyalty level. 

This is a perfect example of how customer loyalty reward programs should work. It adds value and encourages customers to stay in touch, while keeping the brand and its quality offerings front and center.

Enhance your post-purchase experience with a great loyalty program

Loyalty programs are more than just opportunities to reward your best customers. When done well, they’re long-term customer retention strategies that strengthen the brand relationship and build a community around your products and services.

At ShipStation, we understand the importance of the post-purchase experience. We released Beyond Checkout to help brands provide a “wow” experience in the days and weeks after buyers place their order—and long past that, if brands play their cards right.

The key is to create an integrated post-purchase experience, from the “Thank you for your order” message to leaving a review, earning points, and processing a return if necessary. The easier the end-to-end process is, the more readily customers will turn to the brand when making another purchase. To learn more about loyalty and its role in your post-purchase experience, watch the full Beyond Checkout session. One key takeaway can transform your customers’ experiences, from order to ship and beyond.

Candace Barnette

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