back icon Back Insights 11/13/2023

Perk-Based Loyalty Programs: What Businesses Need to Know

Competition among businesses is fiercer than ever. Establishing – and retaining – a strong, dedicated customer base is crucial for long-term success. Enter perks loyalty programs, which is a powerful tool that encourages repeat business by offering tangible benefits to loyal customers. 

For brands, the benefits of loyalty programs are many and well-established. Loyalty programs aren’t just used as a retention tool but for customer acquisition: 75% of customers would switch brands for a better loyalty program. Understanding the intricacies of these programs can be a differentiator for businesses aiming for customer loyalty. 

What are Perks Loyalty Programs?

Loyalty programs featuring perks are structured marketing strategies businesses design to motivate customers to continue using their services or buy their products. These programs reward customers with exclusive benefits or offers. Customers enrolled in perks loyalty programs often receive exclusive discounts, early access to sales or products, bonus items, and more, depending on the program’s structure. 

While loyalty programs may utilize price reductions as rewards, a loyalty program is much more than blindly giving discounts and offers to anyone searching for a good deal. A perks loyalty program is more successful at driving loyalty due to its targeting, structure, and ability to address multiple customer needs. Implementing a perks loyalty program can increase customer retention, higher lifetime customer value, valuable data on customer buying habits, and opportunities to upsell or cross-sell.

5 Key Components of Effective Perks Loyalty Programs

A good loyalty program taps into the “why you should buy” behind the brand and aligns closely with a brand’s purpose. The loyalty program rewards actions that align with brand values and create value for the business through customer retention. Here are five (5) key components of an effective loyalty program featuring perks:

1. Easy Enrollment Process

The first interaction a customer has with your loyalty program is through the sign-up process. If the enrollment process is complex or cumbersome, potential customers might drop out without completing enrollment. Best practices include

  • Multiple sign-up options allow customers to enroll through various mediums, such as in-store, on a website, or via a mobile app.
  • Providing minimal mandatory fields that only require essential information to avoid overwhelming new members.
  • Offer instant rewards such as a sign-up bonus or discount to incentivize enrollment.

2. A Clear Perks System

Customers need to understand the value proposition of joining a loyalty program. While providing great value to a customer, a rewards program must be simple, intuitive, and easy to use. A simple program makes it clear which actions will be rewarded. Brands must reward customers for higher spending, engagement, and brand advocacy. Best practices include

  • Be transparent with perks accumulation and clearly communicate how perks are earned. For example, does “$1 spent = 1 point”?
  • Make the redemption process clear, including how perks can be redeemed and their worth concerning products or services.
  • Allow members to track their perks via a mobile app or website easily.

3. Exclusive Offers

Exclusive offers differentiate members from non-members and give them a sense of belonging and value. Best practices include

  • Members-only sales organize sales where only members can take advantage of discounts or buy certain products.
  • Early access allows members to get a first look or buy new products or services.
  • Special events where only members are invited, fostering exclusivity and a sense of purpose within the brand.

4. Tiered Rewards

A tiered rewards program can motivate customers to spend more to move to a higher tier, increasing their loyalty and an organization’s revenue. Best practices include

  • Define clear tiers for the rewards program. For instance, “Silver (0-500 points)”, “Gold (501-1000 points)”, and “Platinum (1001+ points)”.
  • Ensure that each tier offers incrementally better rewards, motivating members to aspire for a higher status.
  • Regularly review tier thresholds and adjust the points required for each tier, if needed, based on data and feedback.

5. Engaging Communication

“The importance of consistent communication is key to keeping  members informed and engaged. It serves as a valuable reminder of the benefits derived from  program participation and can provide incentives to make the most of their experiences”, says Jeff Zotara, CMO of arrivia.

  • Personalized messages where emails or texts address members by their name and offer personalized product or service recommendations.
  • Regular updates that notify program members about their points status, upcoming sales, or any program changes.
  • Feedback channels create avenues where members can give feedback or ask questions about the program.

Senior couple on smartphone reading online loyalty program perks.

Overcoming Obstacles in Perks Loyalty Programs

Customer Engagement

“Loyalty programs that fail to communicate regularly with their members often lead to a lack of engagement and reduced program activity”, comments Zotara. For example, neglecting to inform members about new rewards, promotions, or program updates can result in missed opportunities for engagement. “To avoid this, you must establish a comprehensive lead nurturing and communication strategy that includes touch points for inactive members as well.”

Use multiple channels like email, SMS, social media, and in-app notifications to keep members informed and engaged. Regularly communicate program updates and offer rewards to maintain top-of-mind awareness and drive ongoing participation.

Data Overload

A loyalty program that lacks proper tracking and optimization measures cannot maximize its potential. Monitoring key metrics and analyzing program performance is necessary to identify areas of improvement and make informed decisions. Identify relevant loyalty program metrics, such as enrollment rate, active member rate, redemption rate, average order value, and customer lifetime value. Then, regularly analyze these metrics and leverage data insights to identify trends, make program enhancements, and tailor strategies to boost performance.

Program Costs

Offering discounts and freebies through a rewards program can add up quickly for a business and take money away from its bottom line. Ensure that the program is structured so that increased customer retention and spending offset the costs of the perks.

A Successful Perks Loyalty Program

Amazon Prime is a perfect example of a successful loyalty program with perks. With Amazon Prime, customers pay a yearly membership fee. Prime membership perks include multiple free delivery options, free streaming for Prime content and Amazon music, and special discounts during shopping “Prime Days.” Prime members can also share their Prime membership with other family members, making the program a value that extends throughout the household.

Future Trends in Perks Loyalty Programs


As data analytics tools become more sophisticated, expect more personalized offer recommendations based on individual buying habits.


Gamification incorporates game elements, like challenges or badges, which can make customer participation more fun and engaging. A gamified program engages the customers in a fun way by encouraging recurring behavior and driving engagement beyond transactions. 

Integration with Tech

The rise of wearable tech and smart devices will offer opportunities for new loyalty program remarketing engagements and new types of reward points redemption.

Leveraging Perks Loyalty Programs for Your Business

To maximize the potential of perks loyalty programs, it is essential to understand your customer base, craft a program that offers genuine value, and constantly adapt based on feedback and industry trends. As consumer habits shift and technology evolves, staying abreast of best practices can make all the difference.

Ready to enhance your customer engagement strategy? At arrivia, we specialize in creating travel loyalty programs tailored to your business needs. Elevate your brand and foster customer loyalty with our expert solutions. Arrivia’s tailored loyalty program solutions hint at innovative possibilities, fostering deeper customer connections and business growth. To learn more about what arrivia can do for you, visit our website and request a demo today!