What Are the Different Types of Customer Loyalty Rewards?

Many businesses use customer loyalty rewards as a way of both demonstrating gratitude to regular customers and to provide an incentive to customers to continue patronizing the business. A rewards program can take on several different forms and may include offering cash back on purchases, a percentage of purchases in the form of store credit, or a point system in which customers can earn free products and additional discounts in exchange for their ongoing business. Customer loyalty rewards programs also vary according to the type of business that offers the program and may in some cases be combined with a private store charge or credit card.

In many areas, competition for business can be fierce, and many companies are concerned about losing customers to both online and traditional businesses. By developing a customer loyalty rewards program, a business may be able to motivate customers to actually pay more money for products or services or delay making a purchase with the promise of cash back, deep discounts, or free products. Some rewards programs are organized by tier, giving special designations and benefits to customers based on the amount of business they give to a company during the calendar year. A tier system not only provides these customers with additional benefits, but may give the customer a sense of feeling elite, thus motivating further purchases and establishing a strong relationship between business and customer.


Both large and small businesses offer customer loyalty rewards programs. While larger businesses often use debit and credit cards to monitor spending, some smaller mom and pop stores rely on punch cards for keeping track of customer purchases. A common offering is a punch card that the business uses to keep track of a customer's purchases, offering a reward after a certain number of purchases is made. For example, many coffee shops reward customers with a free coffee drink after a certain number of drink purchases.

Banks may encourage the use of their debit and credit cards through customer loyalty rewards programs. In many cases, customers may be able to earn a certain percentage of their spending in the form of cash back, which they can then spend as they wish. Other perks that may be included in a rewards program include dedicated customer service lines and access to concierge services that can help cardholders access tickets to exclusive entertainment. In some cases, a credit card company may work with a business to develop a special card that offers customer loyalty rewards from a particular business. A common example of this is a major credit card company that partners with an airline so that credit card users can earn airline miles on each purchase made with the card.



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