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Types of Loyalty Program Benefits – What Should You Offer Your Members and When?

This article is part of our Ultimate Guide to Loyalty Programs.

Loyalty programs are important to brands for many reasons.

They make your customers feel special and valued, and successful ones improve your bottom line.

Rewarding your customers for their loyalty with valuable and unique benefits can set you apart from the competition.

According to our 2020 Premium Loyalty Data Study, 87% of consumers who are satisfied with the special benefits offered by a retailer’s premium loyalty program will likely choose that retailer over a competitor that is offering a lower price.

But make sure your loyalty program benefits are valuable and relevant to your customers. Most consumers prefer a mix of transactional and experiential benefits in a loyalty program.

How quickly they receive their benefits can impact loyalty program performance as well.

Here’s a breakdown of the types of loyalty program benefits plus some interesting stats around the speed at which they’re offered to members.

Transactional Loyalty Program Benefits

Transactional benefits hold an important place in any retail loyalty program. They make consumers feel like smart shoppers because they help your members save money (acquiring points, birthday rewards, discounts, etc.)

Most free loyalty programs involve making purchases, accumulating points, and receiving a reward sometime in the future. Premium loyalty programs offer these benefits instantly, 24/7 in exchange for a membership fee.

Consumers will always seek traditional benefits such as discounts and free shipping.

These benefits are some of the first ones that your customers will experience from your loyalty program and serve as a vital hook in retaining them as members.

According to the 2020 Premium Loyalty Data Study, benefits that would motivate a consumer to invest in a premium loyalty program include free shipping (66%), instant discounts that can be used whenever they shop (60%), and free giveaways (56%).

These types of benefits generally fall into four categories: Rebate/cash back, discounts, frequency punch card, and points.

Rebate/Cash Back Program: Rebate programs allow customers to earn money back from prior purchases and redeem it after a certain amount of time or set amount.

Discounts: These benefits are usually either a percentage or dollar off amount for a particular item.

Frequency/Punch Card Program: These are what many consumers think of when they talk about loyalty programs. Receive a “punch card” (these days, they’re usually virtual), buy 10 things, and get the 11th one free.

Points Program: Points equate to loyalty currency for members. Customers earn points based on the amount they spend with the company. Points-based loyalty programs are quite common, especially with airlines, restaurants, and credit card companies.

For example, Petco Pals Rewards is a points program. For every $1 spent, members earn 1 point. When they accumulate 100 points, they receive a $5 coupon.

The points expire 45 days after the issue date and if a member’s account is inactive for 180 days (meaning no purchase activity), the points balance is reduced to 0. So, for infrequent shoppers, this detail makes it challenging to use the rewards before they expire.

As mentioned above, instant discounts and free shipping with no minimums are typically related to premium loyalty programs where members pay a fee.

Either way you look at it, transactional benefits like those above pull consumers in. After all, who doesn’t like to save money?

But experiential benefits elevate the member experience and creates sustainable connections between brands and consumers.

As much as consumers are drawn to discounts and material benefits, receiving special treatment from a brand experience solidifies the customer-brand relationship and instills that feeling of exclusivity.

Experiential Loyalty Program Benefits

While transactional loyalty program benefits are necessary ingredients in building brand advocates, experiential benefits elevate the member experience and create sustainable connections between brands and consumers.

Experiential benefits focus on exclusivity and making people’s lives better.

Just like with instant transactional benefits, premium loyalty programs typically include experiential benefits that are available 24/7.

Consumers want material benefits, but they also want special treatment. And, quite often, that special treatment comes in the form of experiences.

Some of those experiential benefits include in-store shopping events, concierge customer service, VIP checkout or parking spaces, and special experiences like fitness classes.

Loyalty program members want that feeling of exclusivity, which triggers that visceral response to the benefit.

For example, lululemon’s premium loyalty program has an annual fee of $128. That fee is basically negated right off the bat because members receive a free pair of yoga pants.

Along with free shipping, members receive curated events and workout classes. Those are experiences unique to lululemon, which help form strong bonds between the company and members.

The Neiman Marcus InCircle loyalty program has eight member tiers, each offering at least one type of experiential benefit.

Some of the InCircle experiential benefits include:

  • Exclusive sales and other special store events.
  • Concierge service, which can arrange personalized travel itineraries and secure in-demand restaurant reservations.
  • A fitting room experience, which comes with personal shopping assistance and snacks.
  • Exclusive, customized travel experiences (the trip itself is not free), as well as complimentary valet parking, salon services, and in-store dining.

CVS launched its CarePass program in 2019.

This premium loyalty program gives consumers an opportunity to receive elevated benefits like instant discounts, free shipping, and 24/7 access to a live pharmacist.

This has resulted in a 15%-20% average increase in purchases after a member joins.

Many consumers have a strong desire for elevated loyalty program benefits.

So, while transactional benefits make consumers feel smart, experiential benefits make them feel special.

More brands are investing in experiential marketing over product marketing, especially since Millennials and young generations value experiences so highly.

For example, Sephora’s Beauty Insiders program not only includes points and discounts, but also exclusive experiences like in-store makeovers for higher tier members.

REI is another prime example of a retailer that built its premium loyalty program around experiential benefits. The American retail and outdoor recreation services retailer charges a minimal $20 lifetime membership fee, which earns customers various transactional benefits.

But what sets REI apart is its experiences. These once-in-a-lifetime adventures transform customers into lifelong brand advocates.

Brand Speed Around Offering Loyalty Program Benefits

While transactional benefits are important, especially for acquisition purposes, experiential benefits raise your loyalty program to a distinct level.

And the speed around the delivery of benefits looms as a key retention tool.

Consumers want what they want when they want it.

And consumers want loyalty program benefits now. Instant gratification is very important to them. One of the main reasons premium loyalty programs are on the rise is members receive benefits immediately and have access to them 24/7-365.

According to our 2020 Premium Loyalty Consumer Data Study, 40% of consumers expect benefits immediately from premium loyalty programs.

The ability to provide faster benefits caters to heightened consumer expectations for instant gratification. And those heightened consumer expectations intensified since COVID-19 began more than 14 months ago.

Retailers realize the importance of providing fast loyalty program benefits.

According to our 2021 Loyalty Industry Data Study,  86% of retailers who offer benefits within the first week say their loyalty program members shop at least once a week — that number drops to 63% for those who offer benefits within the first month.

Retailers that offer benefits sooner also experience faster ROI: 62% of respondents who offer benefits within the first week see ROI within the first six months. For those who offer benefits within the first month, only 21% see ROI within the first six months.

Know Which Loyalty Program Benefits are Right for Your Members

There’s no better way to find out what your customers want in a loyalty program than by asking them.

A great loyalty program has elements of transactional and experiential benefits so figure out what is important to your customers and give it to them as quickly as you can.

From our data, it’s clear that the faster members receive program benefits, the more engaged they become, and your ROI will be greater.

Everyone talks about experiential benefits these days, but don’t discount transactional.

A combination of transactional and experiential benefits in your loyalty program can create strong emotional connections.

These types of customer relationships are incredibly impactful when you consider program members with emotional connections to a brand have a 306% higher lifetime value.

Transactional and experiential benefits offer consumers the best of both worlds. If you offer an attractive range of benefits in your loyalty program, consumers will join, engage, tell others about it, and stay.

Click here to read the next article in the Ultimate Guide to Loyalty Programs series: Loyalty Program Goal Planning – Are You Set Up for Success?


ebbo helps brands achieve their customer loyalty goals with full-service, end-to-end solutions and also creates original educational content straight from the experts to help loyalty marketers stay on the cutting edge of customer engagement.

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ebbo™ is an all-in-one loyalty company. With our data driven strategy, full-service approach, and the unwavering support of the people behind the platform, our dedicated team will work with you to understand your loyalty goals, innovate solutions and help you build customer engagement on repeat.

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