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Rewards Programs : Which is Best Fit for Your Business
Rewards Programs : Which is Best Fit for Your Business

From frequent-flier deals to we-miss-you discount deals, rewards programs have been acting as powerful tools to accelerate customer loyalty life cycle. Although sometimes the tactic is misunderstood and misapplied, they are still one of the top strategies to easily identify customer behavior, refine your business model, and motivate sales. But choosing the right Reward Program can make all the difference.

Why do you need a reward program format?

Reward Programs are not just meant for your customers. To achieve a well-rounded business growth, it is always smarter to display your loyalty to your customers, employees, clients, and partners as well. Each will have to be designed and executed based on the relationship you plan to build with the other party and the actions you anticipate them to take in order to make that relationship sustainable.

In this article, let us try to understand the various customer reward programs and how to pick the right one for a business.

Customers today don’t have to stick to any business. They have simply too many options for everything. So, for whatever reason, if a customer chose to buy from you, it is important to reward that behavior to persuade them to coming back.
Let me remind you of the good old CAC (Customer Acquisition Cost) and CLTV (Customer Lifetime Value) ratio once. Investing in customer relationships always results in directly proportional business value in the future.


Whether your north star metric is CLTV (Customer Lifetime Value) or MRR (Monthly Recurring Revenue), loyalty programs can navigate your customer acquisition and retention expeditions in the right direction.

Choose a Reward Program format

When it comes to rewarding your customers, you can tailor a variety of options based on the type of business you run. The key is to choose a reward program that will encourage each customer to engage with the business and return again and again. Here are some of the most popular rewards programs for small businesses:


Coalition Programs: This model creates a perfect win-win situation between brands. If you are a smaller or relatively new brand, partner up with a fairly known one that compliments your product to grab your customer’s attention. This can include anything from early access to new products to discounts for the partner brand to freebies on purchase. Such as food delivery apps partnering with local warehouses and offering free deliveries.

Discounts: Easily the most popular reward program ideal for newly launched brands/products. It is a great tactic not only to attract customers but also to get them to try your product or service. Discounts are not only for new customers but also a great tool to impress regular loyal customers.

Cash back programs: These are the most straightforward reward programs. You simply pay for something and get your money back as a statement credit or check from a major bank or credit card company. You can also take advantage of your in-house wallet system to deposit the cashback for the customers to use in their future purchases. Ideal to increase the momentum of sales and ensure future engagement.

Earn-burn loyalty programs: These are for businesses with higher purchase frequency to speed up the decision-making process of the customer. These programs can entice those who are known as ‘heavy buyers’ or ‘heavy users’. This can be an excellent step to enter Gamification mode.

Gamification: This is the most successful format of user experience in the last decade. Gamification precisely is all about introducing game mechanics into non-game environments such as websites, applications, and systems to exhilarate users to stay longer and engage. The same tactic is being adopted in the reward programs through scratch and win, badges, trophies, seasonal challenges, tiered loyalty programs and more. It is definitely a continuous hustle, but if you can grab your customer’s pulse, it can do wonders.

Club Cards: Establishments with good inter-brand partnerships can take their customer experiences to the next level using memberships. This can help businesses gain better insights into their customers’ loyalty levels. Eventually, you can integrate wallets, perks, freebies, and accounts into the same membership. Ideal for brick-and-mortar businesses.

Point-based rewards programs: These are a little complex programs to design because they require customers to spend money first before getting anything in return. But they are a great way to attract your customers, especially if you're selling something that's expensive, highly in-demand or difficult to find. You can use them to motivate your customers to buy more of the product, which is one of the best ways of getting them back into your business again!

“Businesses with reward programs are profitable than the competitors who do not”

It's important to remember that the best reward for your customers is what motivates them most to do business with you again. This works because it gives people what they want, but also gives them what they need. This can be anything from freebies and discounts, or even just a feeling of goodwill towards you and your company.

Give your customers the reward that motivates them the most.

You’re probably wondering, “Which one should I choose?” The answer is: it depends. Depends up on various segmentations. Here are some. 


Deeper understanding of your customers makes it easy for you to vote for the right reward program / loyalty program. Constantly review and re-work on your segmentation periodically. Keep your customer attrition and retention statistics (for both your business and your industry/market in general) handy. These numbers add great value and clarity to your segmentation. Here are some most common customer economics metrics.


These are just a few. You can define your own metrics based on your business challenges and goals. Once you have a system to track the data, you can then create a strategy to attract, engage, impress, and retain your customers way more effectively.

Each reward program has its own unique benefits and drawbacks. You can look at the rewards that motivate your customers (or employees) the most and see which ones will work best for you. For example, if someone wants a free pizza every week then maybe an email subscription isn't the best option because they'll just forget about it after a while. But, if they're more interested in free pizza on their birthday or another special occasion, then that might be more effective as a reward program!

This might be a right moment to mention that we partnered with many global businesses and especially consumer brands to improve their customer experience. Building platforms for their loyalty programs is one of our most popular solutions. We love a good brainstorming session (might I add, a no-strings-attached one) on new-age business challenges. Write to us. [email protected]