Maximizing Loyalty Program ROI

I analyzed 100+ loyalty programs in the last 30 days. Most brands still run loyalty like it’s 2009: Earn points, get a discount, repeat. The top 10%? They’re using loyalty to change behavior- not just reward it. If I were Head of Loyalty at a $10B+ brand today, here’s exactly what I’d do to build a program that drives LTV, repeat purchases, and real retention: 1. Stop Giving Away Loyalty - Make Them Pay for It Costco, RH, Barnes & Noble. When customers pay upfront, they buy in - literally and psychologically. Forget free points. Paid memberships = commitment, retention, higher LTV and emotional sunk cost. 2. Make Loyalty Required, Not Optional - Integrate Directly into Payments Starbucks preloads!!! When rewards are embedded in how people pay, behavior shifts faster, and for longer. This is probably the biggest opportunity in loyalty right now. 3. Forget Delayed Points - Instant Gratification is More Important Immediate dopamine beats theoretical future savings. Slow accumulation = slow engagement. Instant offers = repeat behavior. The 2nd purchase matters more than the 10th. 4. Make Loyalty Emotional, Not Transactional REI, North Face, Sephora. Customers want to belong, not just save. Identity, community, and shared values are outperforming cashbacks and discounts in driving long-term loyalty. Loyalty isn’t just a discount strategy, it’s a brand strategy. 5. Invest in Status + Experiences, not Generic Perks This isn't just theory – with companies like Rapha and Lululemon offering loyalty members exclusive product drops, community events and behind-the-scenes experiences. Lean into waitlists and exclusive product drops. Less financial. More status + psychological “being in the club.” 6. Reward Engagement, Not Just Transactions MoxieLash, Pacifica, Lucy & Yak. UGC. Reviews. Referrals. Loyalty now means participation. The modern flywheel starts before checkout - and lasts far beyond it. ~~ Bottom line? If your loyalty program is still playing a game from 15 years ago, your customers are going to find better options. Today, the best brands in 2025 aren’t just rewarding loyalty- they're engineering it. PS: We analyzed 100+ programs across QSR, retail, travel, and fintech. Next week I’ll share the Top 30 loyalty programs leading the way. Stay tuned🙏

Way too many e-commerce brands run bare-minimum loyalty programs that don't move the needle. Points. Discounts. It gets old quick. Your top 10% of customers likely drive 40-65% of your profit. But are you treating them like the VIPs they are? Or just sending them the same generic emails as everyone else? Brands that are crushing it right now are building tiered VIP ecosystems that transform transactional shoppers into high-LTV brand advocates. Speaking from 4+ years of experience, I’ve learned a few things that actually work: --> Early access drops that make top customers feel like insiders --> Exclusive product variants unavailable to regular customers --> Private Slack/Discord communities connecting your best customers --> Physical gifts that arrive unexpectedly (not just on birthdays) --> VIP-only virtual events with your founder/designers Data doesn't lie. Well-designed VIP programs consistently deliver 3-5x ROI compared to acquisition campaigns. These programs also cost dramatically less than constantly chasing new customers. Stop treating loyalty like a cost center using discounts, and start treating it like the profit driver it should be, like leveraging experiences, exclusivity, or building relationships. Your competitors are leaving millions on the table with lackluster VIP strategies. The opportunity is massive for brands willing to invest in their best customers the right way. Who's doing VIP programming exceptionally well in your category? Curious to hear some examples.

You don’t build loyalty through rewards—you reward customers for already being loyal. Big difference. Loyalty programs are primarily designed for customers who have already demonstrated consistent engagement and loyalty to your brand. The goal isn’t to create loyalty through rewards, but to recognize and strengthen it. By offering rewards, perks, and recognition, you can maximize their lifetime value, whether by increasing purchase frequency, boosting basket size, or encouraging referrals. Tactics like tiered rewards, exclusive access, and personalized incentives help reinforce their commitment and make them feel valued. 𝗦𝗲𝗰𝗼𝗻𝗱𝗮𝗿𝘆 𝗙𝗼𝗰𝘂𝘀:  For customers with the potential to become loyal, the strategy shifts. These customers have shown higher engagement but haven't fully crossed into the loyal customer category. To convert them, 𝗽𝗲𝗿𝘀𝗼𝗻𝗮𝗹𝗶𝘇𝗮𝘁𝗶𝗼𝗻 is key. Tailor rewards based on their behaviors and preferences to create a sense of exclusivity and recognition. It’s also crucial to stay top of mind through strategic touchpoints—whether via targeted email campaigns, loyalty app notifications, or personalized offers that speak directly to their interests. Offering a path to higher-tier rewards as they engage more frequently can further motivate them to commit to your brand long-term. 𝗖𝗮𝘀𝘂𝗮𝗹 𝗖𝘂𝘀𝘁𝗼𝗺𝗲𝗿𝘀:  Casual customers require a different approach. They won’t become loyal overnight, and the objective here is gradual nurturing. For this segment, it's all about increasing touchpoints and staying relevant. Broader offers, such as discounts, time-sensitive promotions, or entry-level rewards, help keep them engaged without overwhelming them. The goal is to activate them periodically, ensuring they interact with your brand from time to time. By keeping consistent offers flowing, you maintain visibility, and over time, some of these casual customers may transition into the potential loyal customer segment. ----- Ultimately, loyalty is about retention, not conversion. The focus is on maintaining a strong relationship with those who already support your brand and steadily nurturing others to deepen their commitment over time.

Three years back, One of my friend faced a drop in repeat purchases in a fast-growing online marketplace. Instead of blindly increasing discounts, the team turned to SQL and data analytics to uncover the real reasons behind customer churn. SQL-Driven Approach 1. Identifying Lapsed Customers SELECT customer_id, COUNT(order_id) AS total_orders, MAX(order_date) AS last_order_date FROM orders GROUP BY customer_id HAVING COUNT(order_id) > 1 AND DATEDIFF(day, MAX(order_date), GETDATE()) > 60; 🔹 Insight: Target customers who haven’t ordered in 60+ days. 2. Discounts vs. Organic Purchases SELECT customer_id, COUNT(CASE WHEN discount_used = 'Yes' THEN 1 END) AS discount_purchases, COUNT(CASE WHEN discount_used = 'No' THEN 1 END) AS organic_purchases FROM orders GROUP BY customer_id; 🔹 Insight: Identify if customers only buy with discounts—these may not be loyal customers. 3. High-Value Customers Who Stopped Ordering SELECT customer_id, SUM(order_value) AS total_spent, MAX(order_date) AS last_order_date FROM orders GROUP BY customer_id HAVING total_spent > 500 AND DATEDIFF(day, MAX(order_date), GETDATE()) > 90; 🔹 Insight: Focus retention efforts on high-value customers. Challenges & Solutions Slow Queries? ✅ Added indexes on customer_id & order_date. Who to target? ✅ Used cohort analysis to find optimal re-engagement timing. Retention vs. Profitability? ✅ Ran A/B tests—loyalty perks worked better than heavy discounts. Business Impact ✔ 18% increase in repeat purchases with targeted campaigns. ✔ Optimized loyalty program to reward engagement, not just discounts. ✔ Reduced churn by identifying & acting on key retention signals. 💡 Key Takeaway: SQL isn’t just for reporting—it’s a powerful tool for understanding customer behavior and making smarter business decisions. What data-driven strategies have you used to boost retention? Let’s discuss!

Loyalty programs aren’t just about rewarding customers – they’re a powerful tool for driving profitability. Understanding the economics behind points can unlock significant value for businesses. Here are some key concepts: - Cost per Mile (CPM) / Cost per Point (CPP): This is how much it costs to issue a point. For example, if a company spends $10,000 to issue 1 million points, the CPM is $0.01 per point. - Value per Point (VPP): This is what a customer gets in return. If a customer uses 10,000 points to redeem a $200 reward, the VPP is $0.02 per point. - The Golden Rule: VPP > CPM = Profit. If customers believe they’re getting more value than it costs the business to issue points, loyalty thrives. But there’s more to it, how can you leverage loyalty? 1) Selling Points: Many companies sell points to banks and partners at a markup, turning a tidy profit. Example: If it costs you 1 cent per mile to issue, but customers think they’re getting 2 cents of value, they’ll keep earning and redeeming while you laugh all the way to the bank. 2) Breakage: Points that expire or go unused are pure profit. Similar to unused gym memberships, breakage is a hidden revenue stream. Example: If a bank buys your airline miles for 1.5 cents each, but your actual cost is 1 cent, you just made an easy 50% profit margin. 3) Dynamic Pricing: Programs often adjust how many points are needed for a reward, maximizing profitability. Many airlines like to make it hard for customers and bank on breakage-like a gym that makes money off people who never show up. 4) Premium Tiers & FOMO: Top-tier members get better rewards, driving engagement. Status becomes addictive, encouraging more spending. When done right, loyalty programs create a win-win. Customers feel rewarded, and businesses see increased revenue. After all, loyalty isn’t just a sentiment – it’s a strategic advantage. #loyaltymarketing #loyaltyprograms #customerloyalty #customercapital

Loyalty isn’t about discounts—it’s about ROI. (Here’s how one campaign brought in $41K.) At The TOKE Agency, we don’t just talk loyalty—we make it work. A recent campaign brought 463 customers back to a dispensary. The result? Over $41K in sales in a single month. That’s 12% of their monthly revenue—generated just by reconnecting with customers who had gone quiet. How did we do it? A smart strategy turned casual shoppers into repeat customers without cheapening the brand with endless discounts. The ROI spoke for itself—and it was proof that loyalty isn’t just a feel-good buzzword for our client. It’s a profit-driving strategy. At the end of the day, loyalty isn’t complicated. It’s about showing up for your customers in ways that matter—and watching them show up for you.