Creating Cross-Functional Customer Loyalty Programs

Most loyalty programs fail because founders skip this question: what specific behavior are we trying to change?   Not "engagement" or "retention" - those are outcomes, not behaviors.   I mean specific behaviors: buying monthly instead of quarterly, trying new products instead of the same SKU, referring friends, staying subscribed longer.   The program you build depends entirely on that answer.   First, understand your baseline: What's the purchase frequency now? AOV? How many products does a typical customer buy? What's the LTV difference between your best customers and average ones?   Once you know that, you can identify what's preventing customers from doing more of what you want. Usually it's friction (shipping costs, minimum thresholds), lack of awareness (they don't know about other products), or motivation (no reason to consolidate purchases now vs. later).   Then match your program to the barrier:   → If you're optimizing for purchase frequency:   This works when customers naturally want to buy often but something's preventing them. Amazon Prime removes friction with free shipping, fast delivery. Your version needs to remove your friction - maybe that's minimum order thresholds, shipping costs, or decision fatigue.   Do the math first: If someone buys 2x/year at $50 margin each, you're working with $100 AOV. A $99 membership fee leaves $1 to cover perks. That's why frequency-based programs fail below 6-8 purchases annually.   → If you're optimizing for order value:   Stop training customers to expect discounts. Reward large purchases with things that don't erode margin: early access to new products, free samples of premium SKUs, priority support.   The question: What would make someone consolidate their purchase right now instead of splitting it across multiple orders?   → If you're optimizing for product adoption:   This works when trying multiple products predicts retention. Reward exploration directly (points for first purchases in different categories, samples of complementary products).   The math: What's the LTV difference between single-SKU customers and multi-product customers? If it's significant, you can afford to invest in getting people to try new things.   → If you're optimizing for emotional connection:   Stop paying customers to like you. Build experiences they can't get elsewhere: community access, founder conversations, input on product development, behind-the-scenes content.   This works when customers already have high intent but you're competing on commodified features. The program creates switching costs through belonging, not economics.   The framework:   • What's preventing customers from the behavior you want? (friction, awareness, or motivation) • What's the LTV difference if you successfully change that behavior? • Can you afford to invest that difference in the program? • What reward actually removes the barrier you identified?   Figure out your barrier first. Then build the program around removing it.

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🙏

"Points for purchases" is killing your brand. That's what Phil C., CEO of Upzelo, told me during our recent Chew On This episode. And after seeing the data from 4,000+ brands, I believe him. Here's what's actually working in loyalty and retention → Phil's journey is fascinating. Before Upzelo, he built the world's largest fitness platform with a 1.45% churn rate. Now he's helping brands reimagine loyalty programs. What he taught us: While most DTC brands are still playing the points game, they're bleeding customer value and watching CAC skyrocket. Instead, here are 3 strategies to ensure your loyalty program brings value to your customers and your brand: 1. Stop Chasing Transactions Traditional approach: Points for purchases Modern approach: Reward customer success Phil shared how one UK brand connected health data to their loyalty program. Every workout became a reason to engage, not just every purchase. 2. Meet Customers in Real Life Your customers don't live inside your Shopify store. One of Phil's clients, a motorcycle gear company, built their entire program around Saturday group rides. The result? 3,500 new program members in 3 weeks. No email blasts. No ads. Just organic sharing between riders. 3. Measure Real Impact Drop these vanity metrics: - Program signups - Points earned - Reward redemptions Instead, track what drives growth: - Purchase frequency - Category adoption - Real-world sharing 4. Goal achievement At Obvi, we're already seeing the impact of this approach. When we shifted from points-based rewards to focusing on customer fitness goals and results, our retention impact transformed. The Big Revelation → The best loyalty programs don't feel like programs at all. They feel like a natural extension of why customers chose you in the first place. Want to build real loyalty in 2024? Stop trying to buy it with points.  Start earning it by helping customers succeed. Huge thanks to Phil Carr for sharing these insights from his work with over 4,000 brands. Want the full playbook? Check out our Chewonthis DTC episode where we break down: - Moving beyond transactional loyalty - Building retention through real-life connections - Measuring what actually drives growth

Quick question for DTC founders: Your repeat purchase rate starts dropping. What's the first thing your team suggests? "Install a loyalty app. Give them points. Give them 15% off." It is the single fastest way to murder your brand’s perceived value. Here’s what actually happens: You hook up a loyalty program. You send the automated "You have 100 points!" email. And your most loyal, high-intent fans, the ones who were already going to buy...now stop. They wait. They look for the code. They refuse to pay full price ever again. You aren’t building "loyalty." You’re building a Discounting Spiral. You’re teaching your audience that your product isn't worth the MSRP. You’re turning your brand into a digital bargain bin, and your margins are bleeding out in the process. A loyalty program isn't a strategy. It's one tiny, often-mismanaged slice of the Retention Pie. If you want customers to stay for 3 years, not 3 weeks, you need a 4-Part Retention Engine. 1. The "Non-Bribe" Incentive: Stop the 10% off codes. Use early access, "vault" products, or free mystery gifts. Make them feel like an insider, not a coupon hunter. 2. The SKU Expansion Loop: If you only sell one thing, why should they come back? You need "Adjacent SKUs." If you sell coffee, you need the mug. If you sell skin cream, you need the applicator. Give them a reason to explore. 3. The "Identity" Community: People don't buy products; they buy versions of themselves. Your brand needs to be the "uniform" for who they want to be. If they don't feel like they belong to your world, they’ll leave for a cheaper version on Amazon. 4. The Invisible Subscription: Don't hide the "Subscribe & Save" behind a tiny checkbox. It should be the default, seamless path of least resistance at checkout. Most DTC brands are "Strong" at Part 1 and "Failing" at the other three. And that’s exactly why your LTV is stagnant and your CAC is climbing. You don't need more "points." You need an audit to tell you where revenue is leaking. I’m looking for 2 DTC founders this April who are tired of the discounting hamster wheel. We will rip apart your current flow. We’ll find where the "Value Leaks" are. We’ll show you exactly how to stop the "Margin Murder" and build a brand people actually respect. Ready to stop bribing your customers to stay? Click the link in the comments below to book your Audit. Let's fix the math.

Loyalty Isn’t a Marketing Play Anymore — It’s a Supply Chain Strategy Subway brought back Sub Club after 20 years — and didn’t just revive it, they rebuilt it around value: - Every 4th footlong is free - Points convert directly into Subway Cash - Exclusive offers and rewards - Perks like free birthday cookies - A sweepstakes that could land four customers $10,000 or even an authentic Subway bread oven Most people will look at this and see a smart loyalty program. But here’s the real reason this matters in today’s consumer environment: Consumers are value-hunting, not brand-switching. Traffic patterns across QSR and casual dining show the same thing: demand is there — but only if the value proposition is unmistakable. Loyalty programs aren’t a “nice-to-have” right now; they’re one of the few proven ways to stabilize demand, protect frequency, and keep the customer engaged while sentiment remains fragile. Behind the scenes, this puts huge pressure on: - Forecasting — redemption patterns change order patterns - Inventory planning — promos drive volatility across proteins, produce, and bread - Distribution — more frequent, smaller, or less predictable replenishment needs - Data integration — loyalty data only matters if Supply Chain, Ops, and Marketing are actually talking to each other - Labor allocation — reward-driven spikes require smarter scheduling and throughput planning Loyalty is now a demand signal. It shapes production. It drives distribution. It influences menu strategy. It even affects network design. QSR brands that win right now aren’t the ones shouting the loudest — they’re the ones aligning loyalty, supply chain, pricing, and execution as one system. And that takes leadership capable of connecting the dots, not just running campaigns. If you’re seeing these dynamics inside your operation — or feeling the pressure to deliver value without compromising margin — I’m happy to share what I’m hearing across the industry. — Christian Goulding Managing Director – Supply Chain, Ops & Engineering | StevenDouglas #ExecutiveRecruiter #SupplyChainRecruiter #OperationsRecruiter #FoodandBevRecruiter #CPGRecruiter #BoutiqueSearchFirm

When it comes to customer loyalty, many marketers default to discussing points, rewards, and cash-back programs. While these elements have their place, they often miss the mark when it comes to fostering true loyalty and a sense of belonging. Real loyalty is built through creating a community and culture that resonates with your customers. Take ClickFunnels, for example. Their success didn’t just come from their platform; it was bolstered by live events and awards that celebrated their users' achievements. This sense of recognition and belonging drove loyalty and referrals, as users felt like they were part of a bigger movement. Uber, too, has leveraged in-person interactions to build a strong community among its drivers. Beyond offering rewards, they hosted events and parties, fostering a sense of identity and camaraderie that a simple points system could never achieve. Similarly, in the healthcare staffing industry, organizing events for nurses created a unique culture and language, driving a deeper connection and loyalty than any monetary reward could provide. Even in more niche markets, like BattlBox, we see this principle in action. Their recent $100,000 giveaway event didn’t just offer a prize; it created an unforgettable experience where participants got to shoot a tank at a target. This type of engagement builds a sense of community and excitement that transcends typical loyalty programs. Moreover, BattlBox is continuing this trend with their upcoming BattlGames, a contest designed to further unite their customer base through shared experiences. The best communities are often run by the people who throw the best parties. Sure, points and rewards have their place, but they pale in comparison to the loyalty built through personal recognition and community engagement. These interactions cultivate a sense of identity and belonging, driving a loyalty that no amount of points can replicate. So, next time you think about customer loyalty, remember: it's not just about the rewards. It’s about creating moments, recognition and experiences that resonate deeply with your community.

Loyalty is failing. Gen Z & long-term commitment. 22% of Gen Z consumers consider themselves loyal to one brand is a clear warning for legacy loyalty strategies. Unlike previous generations, Gen Z doesn’t see brand loyalty as a long-term commitment, they’re loyal to moments, not just names. +43% increase in engagement and sales conversions among Gen Z Beauty brands offering "limited-edition drops" and collaborative experiences. +71% Gen Z say they would rather spend money on an experience than a product. >>Loyalty is FAILING, but why<< +Transactional systems feel outdated: Point-based rewards for repeat purchases don’t excite this audience. They expect more than discounts or free samples. +They’re brand-agnostic but experience-driven: Gen Z freely switches between brands if the experience, aesthetic, or values feel fresher or more aligned with their identity. +They buy into stories, not just products: They want to align with brands that represent something, social causes, cultural movements, or communities they relate to. >>DYNAMIC LOYALTY<< What’s this? as it name indicates its a system that rewards interaction, aligns with their values, and constantly evolves. And that is what your brand needs. → Create experience-driven loyalty programs: Offer early access to limited drops, invite-only events, or backstage content. Think like a fan club, not a punch card. +Example: A loyalty tier that unlocks tickets to a pop-up experience or an exclusive AR filter. →Let them co-create: Invite Gen Z customers to co-develop product ideas, designs, or campaign themes. Give them ownership in your brand’s creative journey. +Example: Voting on packaging designs or joining beta tester groups. →Align with their values: Sustainability, inclusivity, and social good aren’t nice-to-haves. they’re expectations. Use loyalty programs to reward actions too, like recycling, sharing causes, or supporting small creators. +Example: “Earn loyalty points by returning empties or attending a sustainability workshop.” →Deliver constant novelty: Rotate limited editions regularly. Use scarcity and surprise to create FOMO and buzz. +Gen Z doesn’t commit to a single brand, but they’ll keep returning if each visit feels fresh and share-worthy. →Go omnichannel but social-first. Should live across TikTok, Instagram, pop-ups, and web. Let them earn or unlock rewards through social engagement, not just purchases. +Example: A user gets exclusive content or perks for creating UGC with your brand. Bottom Line. Loyalty must be earned over and over through experience, relevance, and emotional connection. Think dynamic loyalty: a system that rewards interaction and go for it. Find my curated search of examples and get ready for your next HIT. Featured Brands: Balmain Benefit Chanel Charlotte tilbury Cerave Fennty L’Oreal OGX YSL #beautypackaging #beautybusiness #beautyprofessionals #experienceretail #luxuryexperiences #genz

What if, buying Aashirvaad aata could fund your Goa stay through Blockchain-based loyalty points? Crazy? Yeah impossible? No ITC can enable such a scenario. Just imagine, If you buy aashirvaad aata as a loyal customer for so long, you could have stayed in Goa for free! How? Loyalty points. FMCG Brands have frequent consumption and a Blockchain-based loyalty program is the best way to incentivize even more long-term consumption. ITC has a broad portfolio—foods (Aashirvaad Atta, Sunfeast biscuits, Bingo! snacks, Yippee! noodles), personal care (Fiama, Vivel), and more. These are purchased regularly, making a blockchain-based loyalty program an ideal method to reward repeat buying. Beyond FMCG, ITC spans hotels (ITC Hotels), paperboards, packaging, agri-business, and other ventures. A unified loyalty system can encourage consumers who typically buy, say, Sunfeast biscuits or Aashirvaad atta to also explore higher-end or less familiar ITC products—for example, exclusive hotel dining experiences or premium personal care lines. But why? India’s FMCG sector is extremely competitive and customer loyalty is the key to success here. How a Blockchain-Based Loyalty Program Could Work - Multi-Brand, Single Token - Universal Redemption(Only a Blockchain-based token can simplify this) - Tiered Rewards & Gamification - Real-Time Transparency & Trust - Integration with Existing Channels through a separate app Potential Benefits & Outcomes - Higher Cross-Category Sales - Enhanced Customer Retention - More trust in the system - Easier and smoother redemption - New Marketing Opportunities - Data-Driven Insights (purchase patterns in real time) Conclusion For ITC Limited, which operates a diverse suite of consumer, hospitality, and agribusiness brands, Loyalty Points is an effective Web3 strategy to: - Capitalize on frequent FMCG purchases by rewarding customers with tokens. - Drive cross-selling across ITC’s expansive product and service portfolio (from daily staples to premium hotel stays). - Build on the trust and innovation that already characterize the ITC brand #Web3 #Blockchain #ITC #Tokens #RWA

In today's competitive high street retail landscape, staying relevant to new generations and shopping trends is key. Partnering with brands and retailers daily, I witness the exciting changes taking place to drive increased share, customer retention, and acquisition through effective cross-channel personalization strategies. 1. Harnessing the Power of AI for Predictive Insights. By leveraging AI to analyze customer behavior, businesses can identify trends and preferences, enabling personalized messaging and tailored offers. This data-driven approach fosters loyalty among existing customers and attracts new ones. 2. Adopting Personalized Product Discovery (PDP). Implementing PDP customizes the shopping experience based on individual preferences. Dynamic search features suggest products aligned with past interactions online, while in-store digital kiosks enhance personalized recommendations, merging online and offline experiences seamlessly. 3. Creating a Unified Customer View. Integrating data from various channels provides a comprehensive understanding of the customer journey. This unified view enables consistent communication, real-time personalization, and effective tracking of customer engagement. 4. Cultivating Customer Loyalty through Personalized Rewards. Tailoring loyalty programs to individual spending habits and preferences using AI and customer data enhances customer loyalty. Exclusive events, early collection access, and personalized discounts resonate more with customers, fostering long-term loyalty. 5. Elevating Creativity Across All Channels. Creative excellence enhances personalized strategies. Compelling visuals, authentic storytelling, and innovative campaigns across email marketing, social media, and in-store promotions captivate customers and drive engagement. Creative design elements play a crucial role in building loyalty. By embracing these strategies, high street retailers can navigate personalization successfully, creating engaging customer experiences that nurture loyalty and attract new clientele. For further insights, feel free to reach out directly!

Games and loyalty programs are just alike—you get a rush every time you play, it's all about leveling up, and the best ones keep you coming back. After countless conversations with brands, I keep hearing the same thing: "We want to gamify our loyalty program, but where do we even start?" So let me break down the 7 key steps in creating a loyalty program your customers can't help but love: 1️⃣ Know your players First things first—dive deep into your customer data. - What motivates them?  - What are their habits? Your gamification strategy needs to speak their language. Your analytics will show you the patterns. 2️⃣ Set clear winning conditions (for your brand) Your goals shape everything—from reward structures to achievement systems. Focus on bottom-line impact with metrics like customer lifetime value and churn reduction. 3️⃣ Choose your game mechanics This is where it gets fun. Make a live leaderboard where top customers compete monthly for exclusive rewards, or achievement badges that unlock special perks after completing specific purchase patterns. The key to any game mechanic? Make sure they create natural competition (either external or internal) and keep curiosity high. 4️⃣ Make it personal Generic rewards are forgettable. Use AI and predictive analytics to tailor incentives to individual preferences. When rewards feel personal, they mean more. 5️⃣ Be everywhere they are Your gamified program should flow seamlessly across all touchpoints—mobile, web, and in-store. Remove friction at every step of the customer journey. For example, a customer starts a scavenger hunt on mobile, continues in-store, and completes it online - earning rewards at each step. 6️⃣ Reward consistency Create milestone-based rewards to spark regular engagement. Here’s an example: Snowball weekly challenges into monthly achievements, seasonal collector's badges, or special status levels unlocked through consistent participation. 7️⃣ Measure, learn, adapt Track everything. Your data tells you what's working and what isn't. Strong gamification strategies evolve with real customer behavior. Let your metrics guide program improvements. When done right, gamification isn't just about making loyalty "fun"—it's about creating deeper, more meaningful connections with your customers. Thinking about gamifying your loyalty program? Let's talk about turning your customer experience into something worth playing for.