Key Takeaways
- It can cost between 5 and 25x more to acquire a new customer than to have a returning customer. Loyalty programs incentivize repeat purchasing, and subscriptions make repeat purchases effortless.
- Points programs reward customers for purchases usually by points per purchase or $ amount. This is the most common type of loyalty program and integrates easily with subscriptions to earn and/or redeem points on subscription orders.
- Tiered loyalty programs focus on customer or subscriber spend, incentivizing them to purchase more to increase their benefits such as % off or redeemable points. 39% of customers have made an unplanned purchase just to earn more points or rewards - so use subscribing as a qualifying factor for tiered loyalty programs.
- Paid memberships: a digital subscription type. They offer customers immediate and ongoing benefits for a participation fee; like special membership exclusive product prices or offerings and free shipping. These fees can be recurring or one-time.
- Value based and/or giving rewards give participants opportunities to “gift” points/$ accrued to the charity or giving fund of their choice. They can follow the traditional methodology of points/redemption toward a specific fund or cause, or can follow a similar model where a purchase of a product will have proceeds or an equivalent product going to a good cause.
- Cross-market your subscription and loyalty programs for optimal retention and recurring revenue.
Subscription ❤️ Loyalty Programming = Max ROI from and for your customers
While similar and certainly containing crossover, Subscription and Loyalty programs are two distinct programs that are both focused on enticing returning customers, which can cut costs by 5-25x when compared to acquiring a new one.
Loyalty programs incentivize repeat purchasing, and subscriptions make those orders effortless. Integrating these programs to be as compatible and complementary as possible give you the maximum return on your investment (keep your customers coming back to spend more with you) and your customer’s benefit, too (more savings for them!).
There are quite a few good resources out there to help guide you through creating, integrating, and maintaining your subscription loyalty program. So we did the research for you.
As always, we only cite trusted and verified sources, like accredited research institutes, and partner leaders in the eCommerce space like Shopify or Klaviyo. Today, we’ll walk through the following research:
- Different loyalty program types, their applications to subscriptions, and how to choose the right program for you by thinking of your customer first.
- Loyalty points program, product redemption: Spotlight Tula Rewards
- Tiered loyalty points program, gamification: Spotlight G-FUEL Rewards
- Paid membership loyalty: Spotlight Flaviar Black
- Value based/giving rewards: Spotlight PetValu
- The anatomy of a good rewards landing page
Breaking it down: Loyalty Program types, and their relevance to subscriptions
Like subscription offers, loyalty programs come in many variations. Choosing the right loyalty program for your business depends on your vertical, your brand’s structure, and most importantly, your customers.
It might sound obvious, but the best way to make this decision is the same as with pretty much any other decision for your brand: thinking about your ideal customer profile, and what would appeal to and benefit them. Different customer profiles will have unique value propositions that matter more or less to them. Identify who your key customers are, what pain points they have, and what would resolve those + make them happy to boot.
Subscription and loyalty crossover will also depend on your customer profile and loyalty program type.
So here are the most common types of loyalty programs - with a live brand example for each, how they kept their customers at the forefront of their program choice, and common subscription crossover for the loyalty program type.
🌟 Loyalty Points, Product Redemption: Spotlight Tula
Points programs reward customers for purchases usually by points per purchase or $ amount. This is the most common type of loyalty program and integrates easily with subscriptions to earn and/or redeem points on subscription orders.
Industry: Beauty
Program type: Loyalty Points/Rewards
Customer Profile and Purchasing Behavior: Beauty consumers. Purchasing behavior post pandemic has influenced a rising interest in/preference for skincare (vs. traditional cosmetics), routines, ingredient breakdowns and sourcing, and internet trends/”influencer” recommendations.
Value Propositions: Free product redemptions (try new products for free), bonus points for Auto Delivery orders (encouraging routine), $ off, early access to promos and product launches, birthday gift, dedicated customer support, discounts on routine items.
Tula Skincare, a beauty brand known for their probiotic-first products and subscription program, offers Tula Rewards customers points for online purchases through their Direct to Consumer (DTC) and retailer purchases. They lean into rising beauty customer trends of prioritizing skincare and trying new products to build their routine by offering loyalty program value propositions that focus on trying new products for free or at a discounted rate.
It’s notable that they also incentivize higher spend through DTC (making it more profitable for their brand to cut out the middleman) by giving customers 2x as many points for DTC purchases than a transaction through, say, Ulta or Amazon.
Subscription Crossover Opportunities: Tula offers bonus points for the first order of an auto delivery subscription. In addition to this great subscription x loyalty crossover, you can offer points redemption on upcoming subscription orders, additional points or redemption opportunities for subscription milestones (ie receive a free GWP* on your 5th subscription order), or additional/bonus points for each recurring order successfully placed.
*A note on GWP: Gift with Purchase (GWP) is a common marketing tactic that can be used to acquire and retain new customers (depending on when you offer the GWP). It’s a common subscription offer/benefit that you can set up seamlessly through Ordergroove, but it’s also specifically an excellent subscription loyalty program benefit if blending programs. Set up GWP on a latter recurring order, like the 3rd or 4th subscription order, to encourage brand loyalty. We recommend looking at your current average number of recurring orders/lifetime orders (which you can view natively in our Analytics Dashboard), and adjusting that number +1 to decide which Nth order to offer a GWP on.
🌟 Tiered Loyalty, Gamification: Spotlight G FUEL
Tiered loyalty programs focus on customer or subscriber spend, incentivizing them to purchase more to increase their benefits such as % off or redeemable points.
Industry: Consumables, food and beverage
Program type: Tiered loyalty program, gamification
Customer Profile and Purchasing Behavior: Gamers, younger audiences. Value novelty, "winning," competition, and delightful experiences.
Value Propositions: Discounts/$ off, rewards exclusive
G FUEL, a gamer’s answer to dynamic and delicious energy drinks, primarily appeals and sells to customers who like and are used to a videogame interface. Their rewards program gamifies loyalty, rewarding customers in XP and outlining clear opportunities to “earn” more points with actions like signing up for their mailing list, making purchases, referring friends, and engaging via social media. Gamers can then redeem their rewards based on their “rank;” tying back into the concept of gamification.
Subscription Crossover Opportunities: 39% of customers have made an unplanned purchase just to earn more points or rewards. Tiered loyalty programs are a great opportunity to reward a subscription purchase. Something as simple as including “Brand Subscriber” or “have an active subscription” as a qualifying factor for a loyalty rewards tier can encourage breaking into subscriptions for the first time, which UPenn consumer research has proven can increase a customer’s average lifetime purchases by 1.15x.
🌟 Referral Rewards: Spotlight OLLY
Referral rewards programs leverage word-of-mouth recommendations to reward both advocates and new customers.
Industry: Consumables, nutraceuticals
Program type: Referral rewards
Customer Profile and Purchasing Behavior: Wellness advocates, busy professionals and families. Value easy, enjoyable and efficient routines and mental + physical wellness.
Value Propositions: Automatic subscription rewards applied to advocate's next order, new subscribers get $$ off for one-time or subscription purchases.
OLLY's aesthetically delightful packaging and mission-driven strategy makes it easy to tell compelling, impactful customer stories through channels like social media - making them the perfect candidate for a Referral Rewards program. Referral Rewards typically award an existing customer advocate either $ or a % off for referring a product to a friend. The referred friend will then also benefit from some discount or other benefit when redeeming the referral.
Referral programs incentivize the on-the-go, average consumer to continue to invest in their own wellness, while simultaneously promoting a healthy lifestyle to their loved ones. Influencers and peers alike delight in both the delightful taste, packaging, and mission of OLLY's product, and are able to easily speak to the visual, tangible impact of incorporating OLLY into their daily routine when making recommendations to friends and family.
Subscription Crossover Opportunities: 84% of global consumers believe recommendations from friends and family are the most trustworthy sources of information about products. For subscription programs with solid retention but softer acquisition, referral rewards are an excellent way to incentivize your very best customers (subscribers) to grow your business for you by making product recommendations to their loved ones.
🌟 Paid Membership: Spotlight Flaviar Black
Paid memberships: a digital subscription type. They offer customers immediate and ongoing benefits for a participation fee; like special membership exclusive product prices or offerings and free shipping. These fees can be recurring or one-time.
Industry: Consumables, food and beverage
Program type: Paid membership
Customer Profile and Purchasing Behavior: Spirits enthusiasts, collectors, and tasters. Value exclusivity, priority access, and delightful or rare experiences.
Value Propositions:
Flaviar, a leader of the modern speakeasy movement striving to bring accessibility to the finest and most unique spirits of the 21st century, targets self proclaimed “spirits enthusiasts” and those that appreciate the fine art of distillation. They align this flawlessly with their loyalty program value propositions of early and limited release benefits, access to rare and collectible products, free shipping and special prices/offers to select products.
Subscription Crossover Opportunities: Paid loyalty programs increase purchasing likelihood by 60%, recent McKinsey research has found. And with 27% of replenishment eCommerce subscribers signing on for the subscription model/recurring need for that type of product, decreasing the need to take action for a repeat purchase will streamline the consumer experience, which can convert the 70% of shoppers currently leaving checkout processes due to their complexity. Be sure to highlight in your loyalty program benefits that members can take recurring advantage of all member benefits like discounts and free shipping with a subscription.
And paid membership loyalty programs are actually a type of digital subscription, which we’ll have some exciting updates for you soon on (talk to your Ordergroove CSM if you’re interested in early access to our Digital Subscriptions offerings).
🌟 Value-Based/Giving: Spotlight Pet Valu
Value based and/or giving rewards give participants opportunities to “gift” points/$ accrued to the charity or giving fund of their choice. They can follow the traditional methodology of points/redemption toward a specific fund or cause, or can follow a similar model where a purchase of a product will have proceeds or an equivalent product going to a good cause.
Industry: Pet
Program type: Value based/giving
Customer Profile and Purchasing Behavior: Animal lovers, mindful pet owners who value giving back and mission-driven businesses.
Value Propositions: For every product in an AutoShip subscription, PetValu donates $20 worth of food to the Lions Foundation of Canada Dog Guides feeding program.
PetValu, a family and local oriented chain of pet retailers, focuses on providing pets with healthy lifestyle support through the best nutrition, enrichment, and their Animal Care Experts. Each store is largely owned and operated by a local or small business. This program is unique in that they actually align these core values with their subscription program’s giving based incentive rather than their loyalty rewards program. This is a great example of the connectivity between these two program types. Your brand’s ideal customers would be a great participant of either or both programs if designed in alignment!
Subscription Crossover Opportunities: Like PetValu, you can offer value-based incentives exclusively within your subscription program. If your brand generally pledges or donates a portion of your proceeds to charity or a cause, we recommend highlighting this on your subscription program landing page in addition to your loyalty program page (more on a good subscription program landing page here). If a customer’s repeat purchase is making a difference, let them know!
Anatomy of a good subscription loyalty program landing page
Your brand likely already has a loyalty program landing page if you offer some loyalty rewards. We highly recommend specifically calling out the benefits to subscribing and being a rewards or loyalty member - or, as we call it, being a subscription loyalty program customer.
Make it easy to understand subscription loyalty benefits
Break down your benefits and the process to sign up under a title as simple as “how it works.”
This will usually involve a CTA to create an account, how a customer can earn points or activate their benefits, and then how to redeem or apply those benefits/rewards.
Be sure to call out benefits again below the initial fold of the program breakdown - while it may seem repetitive, it’s important to highlight these within the breakdown of the program functionality alongside an additional section breaking down each benefit your loyalty program offers. When there’s a specific subscription or auto-delivery benefit of a loyalty program, be sure to call this out too.
Get specific: If offering more complex loyalty rewards, break them down for easy comprehension
If offering loyalty rewards like a tiered loyalty program, break these benefits down visually so customers feel confident in their understanding of your extensive benefits. 46% of customers are willing to pay more for a company or brand that has a good loyalty or rewards program; so don't be afraid to call-out your spending thresholds. Rather than seeing these as expenses to gloss over, reframe them as milestones to hit to realize more value and savings, like GNC's example below:
Delineate subscriptions from loyalty, and what falls under both
We recommend creating a visual breakdown of the subscription and loyalty program benefits. Customers may find it confusing to ascertain the differences between benefits of both programs (either singularly or in combination with each other), so something like this breakdown can diffuse confusion and actually drive engagement and acquisition with strong value proposition highlights.
Address common FAQs
Like with any good program landing page, you should break down commonly asked questions and proactively dispel loyalty rewards confusion or anxiety. Don't know what questions to answer? Take a look at a best in class example from Tula below, or don't be afraid to ask your customers. Pull a report of the most commonly referenced questions surrounding loyalty rewards programs from your customer support portal and apply those to your program FAQs.
Marketing Loyalty and Subscriptions: Cross-sell opportunities
Your offer is only as good as what people know about it. Like with other subscription benefits such as SKU swap and Upsell, strategic marketing is key to drive enrollment for your loyalty subscription program. Customers of either program make strategic sense for the other - as our research has shown, repeat purchasing, which has the most profitable ROI for your business, is driven by brand loyalty and benefits that both subscription and loyalty programs offer to your customers.
Display available points in the Subscription Manager with CTAs to redeem
If leveraging a loyalty points program, you should display subscription-eligible available points in the Subscription Manager, with a CTA to redeem applicable points on recurring orders. Customers will only redeem points they're aware can be used - so let them know they can do so conveniently on their next order.
U Beauty empowers their subscribers to stay loyal with a CTA to redeem points on upcoming subscription orders. By letting their loyalty and subscription programs feed into each other, they encourage brand loyalty and honor their subscribers with the best value.
Highlight incurred points on subscription orders
To avoid confusion around subscriptions and loyalty crossover, make customers continually aware that subscribing does earn them just as much (if not more!) loyalty points/benefits.
Augustinus Bader calls out loyalty points incurred on every subscription order to drive awareness of subscription x loyalty benefits.
Market your loyalty program through subscription transactional emails
Subscription transactional emails are mandatory emails that are agnostic of marketing opt-in opportunities. These emails will go to all active subscribers to notify them of actions required or pending charges/orders for their active subscriptions, like when a subscription is started, modified, or canceled.
They’re also great opportunities to highlight and promote subscription benefits and opportunities, like embedding 1-click upsell opportunities within order reminder emails (more on increasing your AOV by 60% here!). So cross-promote loyalty program benefits through these emails with a CTA to start saving with a link to your loyalty landing page, like in the example below:
This order reminder email leverages the power of 1-click functionalities like 1-click delay to prevent overstock cancellations, 1-click upsell to boost subscription AOV, and links to the loyalty landing page to encourage crossover from subscription to loyalty rewards.
Here’s more on subscription program transactional emails, and here’s more on our 1-click upsell functionality.
Marketing your subscription program through loyalty program comms
One of the largest functions of loyalty programs is building a solid mailing list for your marketing communications. These comms can include new product launch announcements, new campaigns, or flash/onsite promotions and sales. You should also be marketing your subscription program regularly through these emails.
Target the right customers by segmenting your customers into repeat one-time purchasers, or customers who have purchased the same product more than once through one-time transactions and who are in your rewards program. Highlight in particular the convenience benefits of subscribing while being a loyalty rewards member. All benefits and value propositions of a loyalty program are only exponentialized through repeat convenience when also subscribed.
ZO Skin Health sends subscription program specific marketing emails to entice one-time converters - highlighting their value proposition of a recurring GWP on every 3rd order.
More on subscription program marketing emails and SMS here.
đź“ť Try it now: Subscription Loyalty Program To-dos
To make the most of the power combination that is a subscription and a loyalty program, be sure to do the following:
- Select the right loyalty program structure for your business.
- Depending on the program type, leverage all subscription crossover opportunities - like making subscribing a qualifying factor for additional loyalty benefits.
- Utilize integrations like our Yotpo integration to apply and redeem points for recurring orders.
- Create a strong loyalty program landing page that breaks down loyalty benefits, highlights subscription crossover benefits, and how to sign up for either/both.
- Market your subscription program to your rewards mailing list, and promote your loyalty rewards within subscription transactional emails like your Order Reminder email.