5 Types of loyalty programmes

5 Types of loyalty programmes
5 Types of loyalty programmes

Whether you’re paying for accommodation, shopping for food, or clothes, it’s always better when you save money while at it. Loyalty programmes are designed to provide you with a better spending experience through discounted rates, cash backs and other exclusive offers. Rioma Cominelli, Director at First Loyalty Plus, says that people often assume that loyalty programmes all have the same rewards, but no two programmes are identical. “Retailers, banks, restaurants, travel agencies and others offer consumers loyalty cards, but they rarely outline what makes them different from rest. So, consumers generally sign-up without knowing how they will benefit, or how much they need to spend to qualify for certain discounts,” she says.

Rioma adds that there are mainly five loyalty programmes, and consumers should assess which one will work best based on their spending habits. “A great loyalty programme is one that benefits both the consumer and the service provider. People want to know that they are saving and not constantly spending money with little to no rewards,” she says.

Rioma outlines the 5 loyalty programmes available:

1. Point-based loyalty programme: Most South African retailers offer their customers a loyalty card that they can swipe with every purchase. It is by far the most popular programme in the country. It allows you to accumulate points that you can use towards your next purchase or convert them to discounts or cash-backs. This programme usually provides preferential offers on products or experiences, but the benefits differ across programmes, so you need to research which one offers you more savings.

2. Tiered loyalty programme: This programme is similar to the point-based programme. You still need to earn points, but the difference is that you accumulate points to move up a level that carries better rewards than the previous one. The downside of this type of programme is that you usually need to spend sums of money before you can move up a level so you don’t necessarily reap the rewards as quickly as you would on a point-based programme.

3. Partnered loyalty programme: A partnered programme usually involves a consumer purchasing from one brand then reaping the rewards from the partner brand. An example of this is the partnership between travel agencies and properties, or spas. You receive discounted rates on experiences or accommodation when you make a booking through the travel agency. The idea is to provide you with more convenience.

4. Value-based programme: This programme is also known as a mission-based programme, and it allows you to accumulate points or contribute a small amount of your purchase towards a social-cause organisation. A value-based programme lets you make a valuable contribution to an organisation of your choice — whether it be a school, an animal rescue organisation, or a feeding scheme — it all depends on where you’d like your money to go.

5. Paid loyalty programme: Consumers receive immediate benefits like discounted rates, free activities, cash-back and more on a paid programme. This programme is usually very exclusive and involves other partners where you can redeem the available rewards, which means you’re saving on multiple experiences, products or accommodation. The monthly fee is generally very low, and the savings guaranteed and exclusive discounts on holidays, meals, spa deals, movies, cruises, shopping and more often far exceed the monthly fee, making this a very trendy way to get more for a (lot) less!

“Most programmes, if not all loyalty programmes are beneficial and provide savings, convenience and an overall better customer experience. Best yet, you will always walk away with something,” concludes Rioma.

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