Top 5 Customer Loyalty Programs of 2022
BY MARIAH HABERMAN, VP OF MARKETING AT DEFINITION 6
“My whole thing is loyalty.” – Fetty Wap
As a great American rapper once said, loyalty is everything. Perhaps no one knows this better than the marketing teams at some of the biggest brands in the country.
At DEFINITION 6, we talk customer loyalty programs day in and day out. We scoured through the best of the best, and here are our top five:
Delta | SkyMiles
Loyalty programs are big money makers for airlines. (Raise your hand if you have at least one airline-branded credit card in your wallet RN. 🙋) And this year’s expected uptick in travel means even bigger opportunities are ahead for brands like Delta. For starters, the Atlanta-based airline has jumped on the “buy now, pay later” bandwagon—a smart move that allows the brand to boost their alternative sources of revenue while tightening their grip on consumers’ wallets.
SkyMiles Members also enjoy more flexibility (think fewer fees for changing flights) and better personalization, plus miles never expire.
While difficult to confirm, some analysts say that frequent-flyer programs are the most profitable part of the airline business. What’s more, Delta has said its long-term deal with American Express is expected to bring in as much as $7 billion in revenue annually by 2023.
Bottom line: Airline brands like Delta are not afraid to go a little overboard when it comes to winning over their customers long-term.
Sephora | Beauty Insider
How do you make a great loyalty program even better? Just ask the brilliant marketers at everyone’s favorite beauty retailer: Sephora. They launched their loyalty program way back in ’07, making this brand an obvious leader in the customer loyalty game.
Sephora’s loyalty program has three tiers: Insiders, VIB, and Rouge—and which category customers fall into depends on how much they spend at Sephora every year. (Proud VIB here.) The concept is a familiar one to loyalty lovers: spend money, get rewards.
But while the rewards program may serve as the foundation of Sephora’s loyalty program, there’s much more to this brand’s success: In short, Sephora has relied less on transactional loyalty and started leaning into emotional perks. Think personalized birthday picks and even a Brow House Call with Jared Bailey—the brand’s resident brow pro—plus a Francis Ford Coppola Winery tour with a special collection of Sephora products.
And, it’s working. Today, 17 million members subscribe to Sephora’s loyalty program, and this group is responsible for 80 percent of the company’s sales.
Chick-Fil-A | Chick-fil-A One
When I moved to Atlanta in the spring of 2021, I did what any rational new-kid-on-the-ATL-block would do: I became a Chick-fil-A superfan.
Now in 47 states, this Atlanta-based QSR is a dynamo in the customer loyalty space. With Chick-fil-A One rewards, customers can earn 10 points for each dollar spent, with point values per dollar increasing as they reach each new membership tier (I.e. Member, Silver Member, Red Member, and Signature Member).
Chick-fil-A’s membership tiers unlock different privileges, such as the ability to give rewards to friends and family, surprise rewards, bonus point challenges and voting opportunities.
Chick-fil-A’s sales have skyrocketed over the last five years—during a pandemic nonetheless. The chain entered 2022 with just north of $2 billion in cash and cash equivalents—and when it comes to profits per unit, Chick-fil-A is the clear winner in the QSR space. In fact, in 2021, the average Chick-fil-A restaurant pulled in over $8 million in revenues. (For comparison, McDonald’s generated $2.7 million per unit in 2021.) A major part of the brand’s success can be attributed to its loyalty program, which boasts 13 million active users, according to Digiday.
One frosted coffee and some fried nugs…for free? Sign me up!
Starbucks | Starbucks Rewards
Speaking of coffee, Starbucks was an early adopter of the loyalty program and their stamina in the customer loyalty marathon has paid off: It manages the most downloaded loyalty app among QSR customers, according to The Manifest. As of October 2021, the program has nearly 25 million members and Starbucks Rewards now accounts for over 50% of the company’s U.S. transactions.
Of all the brand examples featured in this article, I think Starbucks does the best job of leveraging gamification. Starbucks Rewards credits its customers one star per $1 spent to redeem for free food, drinks and more. And to help you earn rewards faster, Starbucks Rewards offers Bonus Star Challenges, Double-Star days, and fun games.
As we like to say at D6: That’s a latte loyalty.
REI | Total REI Rewards
You know what they say: Bigger risk = bigger rewards. At REI, customers can become an official member by paying a $30 lifetime fee. The buy-in might seem steep but for REI fans, it’s totally worth it: exclusive events (i.e. Now “Re/Supply,” but formerly known as “garage sales”), special discounts, and an annual member dividend are just a few gifts courtesy of this outdoor retailer’s loyalty program.
But that’s not even the most impressive part: For members of REI Co-op, they can enjoy various adventures offered around the world. REI clearly gets the importance of tying an emotional connection to experiential rewards. In fact, research has found that almost 75% of what drives customer engagement and loyalty are emotional perks.
REI has done an excellent job tying its brand purpose to its loyalty marketing strategy. The company has recently announced that it’ll donate $5 for every lifetime membership purchase to the REI Cooperative Action Fund, a public charity that donates to nonprofits that promote justice, equality, and belonging to the outdoors.
Here’s What We Know
Before a brand even considers launching a customer loyalty program, your team needs to fully understand your target audience’s pain points. Then, brands need to build simple programs that customers understand and value.
Balancing transactional and experiential benefits is critical: there can’t be one without the other. Both bring out emotional responses and emotional connections build true, long-lasting loyalty.
Mariah Haberman is the vice president of marketing at DEFINITION 6, an award-winning CX agency based in Atlanta, New York City, L.A. and San Francisco. Mariah is responsible for elevating the DEFINITION 6 brand and overseeing its marketing strategy.