Explore the power of loyalty programs in brand strategy

Loyalty program series, part 1

Today we are launching a series about loyalty programs. We’ll look at what loyalty programs exist today, what the trends are, why loyalty increasingly matters matter, and how we can help brands make the most of their loyalty efforts in a seamless, effective way.

Let's start by exploring the power of loyalty programs in brand strategy.

Loyalty is the foundation of any strong brand-customer relationship. Retaining customers is just as crucial as acquiring new ones, and a well-designed loyalty program not only encourages repeat business but also builds a strong emotional connection between brands and their customers.

But what exactly is a loyalty program, and why are they so effective? A loyalty program is a structured strategy that rewards customers for their continued business, typically through points, discounts, exclusive perks, or experiential benefits. While traditional programs focused on transactions, modern loyalty programs prioritize engagement, personalization, and community-building, fostering deeper, long-term relationships.

Loyalty programs matter as they provide value for both brands and customers: Let’s take a closer look at why you, as brand, should carefully design your loyalty program so it matches your marketing and commercial strategy and supports your goals:

• Increasing customer retention: acquiring a new customer can be 5 times more expensive than retaining an existing one, so as a brand you really want to think twice when it comes to existing customers, especially if your budget is tight. A well-designed loyalty program gives customers a reason to stay and reduces churn. (Source: Firework). One example is Sephora's Beauty Insider program, which keeps beauty lovers engaged with tiered rewards, exclusive access to new products, and personalized recommendations, encouraging long-term brand loyalty.

  
  

• Encouraging higher spending: loyal customers spend 67% more than new customers. When incentives align with customer values, brands see higher engagement and revenue. (Source: Coniq). Starbucks Rewards members earn stars for every purchase, which can be redeemed for free drinks and food. The program has been a key driver in increasing purchase frequency and average transaction size.

  
  

• Enhancing customer experience and brand engagement: consumers expect more than discounts, they want exclusive experiences, personalized offers, and emotional connections. 71% of loyalty program members say their membership is meaningful to their brand relationships. (Source: Zinrelo). A great example is Isbjörn Adventure, where Isbjörn of Sweden connects with its audience beyond just selling outdoor gear. By offering curated, eco-friendly adventure experiences tailored for families and young explorers, Isbjörn Adventure strengthens emotional engagement, making customers feel part of a broader outdoor community aligned with their values.

  
  

  

  
  
  
  

• Generating valuable customer insights: loyalty programs provide data on preferences, behaviors, and buying patterns, helping brands refine their marketing strategies and enhance personalization. A perfect example is Norrøna Adventure, which combines adventure travel with brand loyalty. By tracking customer preferences for guided trips, activities, and gear usage, Norrøna gathers insights that inform product development, marketing campaigns, and future brand experiences, ensuring they meet their customers’ evolving needs.

  
  

• Differentiating from competitors: brands with effective loyalty programs see 100-400% higher ROI compared to competitors who don’t offer them. (Source: Sogolytics). Decathlon Travel is a great example of differentiation in the outdoor and sports industry. While many retailers focus on product discounts, Decathlon enhances customer loyalty by integrating travel experiences directly into its ecosystem. By offering adventure trips that align with the gear they sell, Decathlon creates a seamless journey from purchasing equipment to experiencing the outdoors, making their loyalty program unique in a crowded market.

  
  

• Strengthening the emotional bond: A crucial factor in building long-term customer relationships is strengthening the emotional bond between the brand and the customer. Your Brand Travel specializes in creating memorable experiences that foster these connections. According to a study by Harvard Business Review, customers who have emotionally engaging experiences are three times more likely to recommend a brand and three times more likely to repurchase, compared to those who had the least engaging experiences. We strongly recommend that this emotional engagement becomes a central part of any loyalty programs you plan to implement. Investing in these experiences will not only enhance customer loyalty but also increase the likelihood that customers will share their positive experiences with others, thus enhancing your brand's appeal and credibility.

Over the past few years, loyalty programs have evolved. While point-based models remain common, a growing trend is shifting toward experiential loyalty: offering customers exclusive trips, VIP events, and community-driven engagement rather than just discounts. This is what we do at Your Brand Travel.

In the next article, we’ll explore the different types of loyalty programs and how to choose the best model for your brand.