Content
Loyalty Programs in eCommerce: How to Attract and Retain Customers
September 16, 2025
14 mins
Loyalty programs are one of the most effective ways to turn a one-time buyer into a repeat customer. The idea is simple: retaining existing clients is far more cost-effective than constantly acquiring new ones, but doing it successfully requires focus and active effort.
In this article, together with Head of Retention Marketing Svitlana Fursa, we explore the different types of loyalty programs and strategies that work best in the eCommerce market. We also share practical insights on how to design an effective loyalty program for your business—one that not only keeps your current customers engaged but also draws in new ones.
A loyalty program is a marketing tool designed to encourage repeat purchases and increase customer engagement. It typically offers customers certain benefits—such as discounts, bonus points, cashback, or exclusive access to promotions—in return for their ongoing interaction with the brand.
The goal of a loyalty program is to strengthen the relationship between a company and its customers, foster long-term collaboration, and increase the average order value.
First of all, having a loyalty program is no longer optional—it’s essential for any business. According to research by Statista, 43% of shoppers use loyalty programs when buying groceries, 28% when purchasing health and beauty products, and nearly 21% in the tourism industry.
Customer loyalty isn’t built solely through excellent service or a quality product. The mechanics of the loyalty program you choose play a crucial role as well. Each type of program has its advantages and suits different business models. Let’s look at the main types of eCommerce loyalty programs.
This is one of the most popular and simplest types of loyalty programs. The concept is straightforward: the more you buy, the more you save. Customers earn points for every purchase, which they can later exchange for discounts, products, or gifts. Its simplicity and transparency make this model versatile across different niches.
This format works particularly well for categories with high purchase frequency, such as mass-market eCommerce, FMCG, pharmacies, pet supplies, and even fuel. In this strategy, immediate savings matter most: customers feel they are gaining tangible benefits with every purchase, which encourages them to return.
Many large businesses have chosen the points accumulation strategy to build customer loyalty. For example, the Boots Advantage Card in the UK is one of the most successful and long-standing loyalty programs in retail. Customers earn 3 points for every £1 spent in-store, online, or through the Boots app, and those points can be redeemed as discounts on future purchases.
Tiered or status-based loyalty programs work on a simple principle: the more a customer engages with a brand, the better the privileges they receive. These can include bonus multipliers, bigger discounts, personalized gifts, early access to new collections, or special promotions. The focus on status is what motivates customers to shop more often and increase their average order value.
This format is ideal for premium segments such as fashion, beauty, travel, and service-based businesses, where what matters is not just the reward but also the feeling of exclusivity. In these industries, customers are less driven by savings and more by the sense of belonging to a “closed club,” enjoying long-term perks, and gaining higher recognition. Many are even willing to spend more just to reach the top tier and unlock the highest status.
A good example of a tiered model is Sephora’s Beauty Insider program. It offers multiple levels—Insider, VIB, and Rouge—based on annual spending. Members earn points with every purchase, which can be redeemed for products or used to unlock perks such as $10 off rewards, exclusive gifts, or early access to launches. Sephora also adds gamification through challenges tied to seasonal campaigns or special occasions, giving customers extra bonuses and keeping the program fresh and engaging.
On the other end of the spectrum, Chanel takes a very different approach. The brand builds desire through layered rewards and restricted access, but without openly advertising tiers or criteria for moving up. There’s no communication along the lines of “You’ve reached Platinum level.” Instead, Chanel maintains its image of exclusivity by positioning rewards as a gesture of appreciation rather than something to be earned. These “unofficial statuses” are subtle and aesthetic, reinforcing the luxury experience while still motivating customers to stay close to the brand.
Thus, tiered programs work especially well in industries where emotions and status play a key role. They not only drive higher customer lifetime value (LTV) but also create a sense of belonging—making customers feel part of an exclusive community of “the chosen.”
Cashback is a loyalty mechanic where a portion of the purchase amount is returned to the customer in the form of money, bonus points, or credited to their balance for future purchases. It’s simple and easy to understand because customers immediately see the benefit of their spending, making the decision to buy quicker and more enjoyable.
This type of program works well for marketplaces, aggregators, electronics retailers, travel agencies, and fintech partnerships. Cashback is particularly effective at driving first purchases from new customers, encouraging repeat sales, and increasing brand interaction frequency—since customers naturally want to make the most of the money or bonuses they’ve earned back.
This loyalty mechanic gives customers access to special conditions that aren’t available to everyone else: member-only prices, early access to new collections or limited-edition products, invitations to private events, and extra services such as free delivery or personal consultations.
Such programs are especially effective in categories where customers value additional perks and a sense of prestige: fashion, cinema, beauty, subscription services, and delivery platforms. The model works on the principle of “pay for privileges”—customers are willing to invest more in exchange for a unique experience and the feeling of belonging to an exclusive club.
The Rolls-Royce Whispers community is a perfect illustration of how exclusive-offer programs elevate loyalty to an entirely new level. Instead of focusing on discounts or points, the brand emphasizes access and privilege. Membership is framed not as a transactional exchange but as an invitation into a rarefied world that money alone cannot buy.
The classic “Invite a Friend” mechanic rewards both the referrer and the new customer. It’s a highly effective form of social proof: people trust recommendations from friends far more than they trust advertising, while the cost of acquiring a new customer remains low.
Referral programs usually act as an extension of the main loyalty system—such as a points-based or tiered model—and are designed to encourage repeat purchases and boost engagement among existing users.
For startups or businesses that are actively growing their customer base, referrals can become a powerful tool for organic expansion. They work especially well for services, apps, banks, and mobility solutions, where sharing a link is effortless and the benefit of inviting a friend is immediate and tangible.
“There are so many mechanics available that it’s no surprise businesses sometimes hesitate to launch a loyalty program. Choosing just one model and expecting it to work effectively forever is unrealistic.
It’s a well-known truth: to succeed, you need to stay flexible and adapt when something isn’t working. The same goes for loyalty programs—if you see it’s not delivering results, don’t ignore it. Adjust your approach and win your customers back".
Svitlana Fursa, Head of Retention Marketing at Promodo
62.2% of users consider gamification an important part of their interaction with a brand. And that makes sense: game mechanics spark interest, build emotional connections, and motivate customers to come back more often.
Gamification can work in different ways:
“To enhance the effect, rewards should be time-limited or have additional conditions for their use. Well-structured reminder chains in direct channels (email, push, chatbots, Viber, SMS) will help increase the conversion of earned bonuses into actual orders.”
Svitlana Fursa,
Head of Retention Marketing at Promodo
We’ve already shared how gamification mechanics can boost sales. A great example is the case study of the jewelry brand Pandora: the subscription rate through gamification exceeded the average results of the previous widget by 7 times. As a result, in just 3 weeks, gamification brought in as many contacts as the brand usually received in 3 months.
Before developing a loyalty program, you need to clearly understand who your customers are and what really matters to them. For younger audiences, gamification and cashback can work well; for the premium segment—status, exclusive events, or personalized gifts; and for family shoppers—points-based discounts and “for the home” savings.
A loyalty program will only work if it matches your customers’ lifestyle and solves their needs, not if it just copies someone else’s experience.
A loyalty program should work seamlessly: if a user places an order, they automatically become a member. For luxury brands or private clubs, access may only be granted after a purchase, not just after registering on the site.
In multi-brand eCommerce, it’s best to combine site registration with loyalty program enrollment so new users instantly get bonuses or higher rewards for their first purchase. This not only boosts conversions but also strengthens loyalty.
It’s important to constantly remind customers about their bonuses and how they can use them on the website or in the app. Research by Devlight shows that 22.7% of consumers most often recall a loyalty program while choosing a product.
A loyalty program on its own won’t automatically increase the average order value. To achieve that, you need a well-thought-out marketing strategy.
For instance, to make email marketing work toward raising order value, you should systematically suggest add-ons to the main purchase. The key is personalization. If a customer buys a phone, offer accessories and remind them about the bonuses they earned from their previous order. This not only increases the average check but also creates more touchpoints with the customer.
Additionally, the loyalty program should be visible at every interaction point: on the website, in ads, and through sales managers. The main goal of any loyalty program is to show customers that they don’t need to go anywhere else, because your brand already has the best prepared for them. After a first purchase, it’s important to follow up with reminders at the right time to keep customers engaged.
Customers must clearly understand how and when they receive bonuses, discounts, or other rewards. In the pursuit of a “unique” mechanic, extra tiers, or complex tasks, brands can easily overcomplicate things. If the program’s rules are confusing, customers won’t bother to figure them out—and their motivation will disappear.
“For example, when multiple promotions are running at the same time and loyalty points don’t apply to discounted products, the customer can’t redeem their accumulated rewards. This kind of complexity creates a negative experience and discourages customers from using the program.”
Svitlana Fursa, Head of Retention Marketing at Promodo
No loyalty program will work without proper customer service. Friendly managers and an effective support team are what keep customers coming back and turn them into long-term clients. Loyalty begins with customer satisfaction.
“Even the most well-designed loyalty program won’t succeed if the customer encounters poor service or low-quality products. If redeeming rewards requires several calls to the contact center, or if the redemption rules are hidden in fine print, the experience leaves a negative impression. Customers value not only the rewards but also convenience, transparency, and a positive interaction with the brand.”
Svitlana Fursa,
Head of Retention Marketing at Promodo
Financial performance analysis. Assess how the program impacts company revenue. Pay close attention to metrics such as average order value, repeat purchase rate, and overall sales growth.
Customer retention rate. Measure how many customers return to make repeat purchases after joining the loyalty program.
Customer engagement. Track how many members actively use your program and how engaged they are — for example, the number of redeemed points, participation in promotions, or exclusive offers claimed.
Customer feedback. Collect insights through surveys, reviews, and complaint analysis. This will help you identify areas for improvement and align the program with customer expectations.
Brand perception. Study how your loyalty program influences brand image, for example, through customer satisfaction surveys or Net Promoter Score (NPS) tracking.
Customer retention is always more cost-effective than acquisition. While investments in a loyalty program can be significant at the start, they pay off in the long run. The key is to choose the right mechanics, invest in the right tools, and understand which benefits resonate most with your audience. Only then will your loyalty program become not just a retention tool, but a real driver of sustainable business growth.
Team Lead of Content for promodo.com
I’m a content marketing manager with over 9 years of experience in business writing. Currently, I lead the content team at promodo.com, where I focus on creating useful, well-researched content that supports marketing goals and helps businesses grow.
I enjoy working with data, expert opinions, and real insights to craft content that’s both relevant and easy to understand. I also have a solid background in SEO — I completed the Search Engine Optimization Course at Promodo Academy, which gave me hands-on skills in keyword research, content optimization, and improving visibility in search engines.
Whether it’s an article, blog post, or case study, I aim to make sure the content is clear, helpful, and aligned with both user needs and business objectives.
Head of Retention Marketing
I've been working in email marketing since 2016. I passed the way from a junior specialist with the thoughts "email is spam in the mailbox?" to the real jedi of retention marketing. I worked with the largest Ukrainian eCommerce projects. I'm keen of the latest technologies and non-standard technical implementations.
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