A customer loyalty program is a structured way for a brand to reward customers for coming back, usually with points they redeem for rewards, VIP tiers that bring status and perks, a paid membership or rewards for referring friends.
The idea is simple: make the next purchase worth more than the last, so customers choose your brand again instead of shopping around. This page covers how programs work, the main types, real examples and the metrics to track, for teams on Shopify and Shopify Plus.
TL;DR: A customer loyalty program, also called a rewards program, gives customers ongoing value for repeat business: points, VIP status, member perks or referral rewards. It works because members come back and spend more: 84% of loyalty program members say programs make them more likely to repurchase (Salesforce, 2025), and across Smile's platform, customers who redeem a reward spend 31% more per order (Smile data, February 2026). On Shopify, a loyalty program runs on an app such as Smile, because Shopify has no built-in points, VIP or referral program (October 2026).
How Loyalty Programs Work
Most loyalty programs are built from four mechanics. A brand can launch with one and add the others later.
- Earn. Customers collect points for purchases and for actions the brand values, such as creating an account, a birthday, a product review or a social follow. A common starting point is 1 point per $1 spent.
- Redeem. Points convert into rewards: a discount, free shipping or a free product. At 1 point per $1 and 100 points for $5 off, the program returns 5% of spend. Ulta Beauty Rewards, for comparison, gives 1 point per $1 and takes $3 off for 100 points (Ulta Beauty Rewards FAQ, October 2026).
- Tiers. VIP tiers sort members into status levels by what they spend or the points they earn, over a calendar year or their lifetime. Each level gets more than the one below: faster earning, early access, free shipping or exclusive rewards.
- Referrals. Each member shares a unique link. The friend gets a reward on their first order, and the member earns a reward once that order is placed.
A program only works if customers see it where they shop: product pages, a loyalty landing page, the customer account, checkout, Shopify POS in store and email flows that remind members of their balance. Smile runs points, VIP tiers and referrals as one program across those places.
Types of Loyalty Programs
| Type | How it works | Good for | Example (October 2026) |
|---|---|---|---|
| Points | Customers earn points per dollar and per action, then redeem them for rewards | Building a repeat purchase habit | Barnes & Noble Rewards: 1 stamp per $10 spent; 10 stamps convert to a $5 reward |
| Tiered or VIP | Members move up status levels by spend or points; each level earns faster or gets better perks | Concentrating spend from top customers | Ulta Beauty Rewards: Member, Platinum ($500 a year) and Diamond ($1,200 a year), earning 1 to 1.5 points per $1 |
| Paid membership | Customers pay a fee for immediate, ongoing benefits | Frequent buyers in categories where shipping and discounts matter | Barnes & Noble Premium Membership: $39.99 a year for 10% off eligible purchases and free standard shipping in the US |
| Value-based | Rewards tied to what members care about, such as a cause, sustainability or community, not discounts alone | Brands with a mission or a strong community | REI Co-op: a one-time $30 lifetime membership, a typical 10% annual member reward, and $5 of every membership to the REI Cooperative Action Fund |
| Referral | Customers share a link; the friend gets an offer and the referrer a reward after the friend buys | Acquiring customers through people they trust | Lulus: give a friend $20 off a first order of $50 or more, get $20 for each successful referral |
| Hybrid | Points, tiers and referrals in one program, often with bonus events | Brands that want both habit and status | Starbucks Rewards: Stars on eligible purchases plus Green, Gold (500+ Stars a year) and Reserve (2,500+ Stars a year) status |
Points are the format shoppers know best. Asked which types of loyalty programs they belong to, 57% of shoppers named points-based programs, 32% cash back, 24% tiered and 14% fee-based (Salesforce Connected Shoppers Report, 2025). Cash back works like points with dollars as the currency: a share of each order comes back as store credit.
Programs often grow into hybrids. Starbucks members earn 1 to 1.7 Stars per $1 depending on status, and get 2x Stars for bringing a clean personal cup, a value-based reward inside a points program. For tier design, see our guide to tiered loyalty programs; for referral tools, the best referral program apps for Shopify.
Why Brands Run Loyalty Programs
Research on program members shows why brands invest in loyalty:
| Finding | Source |
|---|---|
| 84% of loyalty program members say programs make them more likely to repurchase | Salesforce Connected Shoppers Report, 2025 |
| 85% of consumers are more likely to keep doing business with a brand that has a loyalty program, and 73% spend more as a result | Bond Loyalty Report, 2026 (20,591 US program members) |
| More than three-quarters of consumers say loyalty programs compel them to spend more | EY Loyalty Market Study, 2025 |
| 9 in 10 program owners who measure performance report a positive ROI, averaging 5.3x | Antavo Global Customer Loyalty Report, 2026 |
| 88% of people surveyed worldwide trust recommendations from people they know more than any other channel | Nielsen Trust in Advertising Study, 2021 |
| Customers who redeem a reward spend 31% more per order | Smile platform data, February 2026 |
Published program results show the same pattern at brand level. Applied Nutrition, a UK sports nutrition brand on Shopify Plus, reports 215% higher lifetime value and 76% higher purchase frequency for members than for non-members. Fiesta Tableware reports a 457% increase in lifetime value among members of its program, Plate Pal Perks.
One caution: members self-select, so they are often your best customers already. Read a member versus non-member gap as direction, not proof of cause. For more sourced figures, see our loyalty program statistics.
Loyalty Program Examples
These Shopify brands run their programs on Smile. Each figure comes from the brand's customer story (reviewed September 2026).
- Fiesta Tableware, tiered. The dinnerware brand launched Plate Pal Perks in February 2024 with four VIP tiers named for its own products: Coaster, Salad Plate, Luncheon Plate and Dinner Plate. Perks run from $5 off to 25% off at the top tier. Fiesta reports a 30% conversion lift since launch, and one email to its top point earners sold out surplus inventory in 10 minutes.
- Naturium, points and VIP tiers. The skincare brand's Consistency Club awards points online and, through receipt scanning, for purchases at retailers like Ulta Beauty, Sephora and Amazon. In Q1 2025, 64% of its loyalty redemptions were attributed to Klaviyo email flows.
- Blue Banana, online and in store. The Spanish adventure streetwear brand moved its Adventure Pass program to Smile in one week across its online store and 20+ retail locations. Customers who redeem points show 40% higher average annual purchase frequency than those who do not.
- ROKA, headless. The performance eyewear brand runs loyalty on a headless Shopify storefront and reports a 75% redemption rate among members, who buy 31% more often than non-members.
- HIKOCO, hybrid. The New Zealand Korean beauty retailer runs points, referrals and four VIP tiers (Radiant Rookie, Glow Getter, Beauty Boss and HIKOCO VIP) online and in store. Its top tier buys 13x as often as the base tier, and members show 60% higher CLV than non-members.
For more program breakdowns, see the best DTC brand loyalty programs on Shopify.
How to Start a Loyalty Program on Shopify
Shopify has no points, VIP tier or referral program of its own (October 2026), so loyalty runs on an app from the Shopify App Store. The setup follows five steps:
- Set one goal and a baseline. Record repeat purchase rate, purchase frequency, average order value and CLV before launch.
- Budget the rewards. Choose a reward rate and model how much of it members will redeem, since every point is a future discount.
- Start with points, then add tiers and referrals. A program members understand in one read beats a complex one.
- Put it where customers shop. Product pages, the customer account, checkout, Shopify POS and your email flows.
- Launch with a reason to act, then review. Run a launch bonus such as double points, then review membership, redemption and repeat purchase at 30, 60 and 90 days.
Our guides cover each step in detail: how to create a loyalty program on Shopify for any plan, and how to launch a loyalty program on Shopify Plus for checkout, POS, Shopify Flow and Klaviyo on Plus.
Loyalty Program Metrics to Track
| Metric | What it tells you | How to calculate it |
|---|---|---|
| Redemption rate | Whether members find rewards worth claiming | Points redeemed divided by points earned in a period (Smile uses the last 30 days) |
| Repeat purchase rate | Whether the program brings customers back | Customers with two or more orders divided by all customers in the period |
| Member vs non-member value | What a member is worth next to a non-member | CLV, purchase frequency and average order value, compared between the two groups |
| Membership rate | How much of your active base the program reaches | Members among customers who ordered in the last 30 days, divided by all who ordered |
| Order earning rate | Whether members earn on every order | Orders that earned points divided by all orders in the period |
Redemption is the clearest sign a program is working. In EY's 2025 Loyalty Market Study, the reward redemption rate brands most often reported was 41% to 60%, though definitions vary. The useful comparison is with stores of similar size and industry, which Smile's loyalty benchmarks show for redemption, order earning, reward usage and membership rates. Applied Nutrition runs a 19% redemption rate, above the Smile benchmark for comparable merchants, with 94% of orders earning points. For industry figures, see our loyalty program statistics.
Where Smile Fits
Smile is the loyalty platform behind the Fiesta Tableware, Naturium, Blue Banana, ROKA and HIKOCO programs above. It runs points, VIP tiers, referrals and bonus events as one program, shown on product pages, a branded loyalty landing page, Loyalty Hub in Shopify customer accounts, Shopify Plus checkout and Shopify POS, with one balance online and in store. Member data reaches Klaviyo as five profile properties and eight events. Smile is Built for Shopify and a Certified Technology Partner, a 2026 Shopify Build Award winner, and holds SOC 2 Type II (May 2026). For larger teams, see Smile for Shopify Plus.
Frequently Asked Questions
What is a loyalty program? A loyalty program is a structured way for a brand to reward repeat customers, usually with points they redeem for discounts or products, VIP tiers that bring status and perks, or rewards for referring friends. The goal is to make each purchase add value to the next, so customers keep choosing the brand.
How do loyalty programs work? Customers earn points for purchases and for actions such as reviews or birthdays, then redeem them for rewards like discounts, free shipping or free products. Many programs add VIP tiers that give top customers faster earning and better perks, plus referral rewards for bringing in friends.
Are loyalty programs worth it? For brands that measure them, usually yes: 9 in 10 program owners who measure performance report a positive ROI, averaging 5.3x (Antavo, 2026), and 84% of members say a program makes them more likely to repurchase (Salesforce, 2025). The return depends on reward costs, so budget points as a future discount and track redemption and repeat purchase rates.
What are examples of loyalty programs? Well-known examples include Starbucks Rewards (Stars plus Green, Gold and Reserve status), Ulta Beauty Rewards (points with Platinum and Diamond tiers) and REI Co-op (a one-time $30 lifetime membership). On Shopify, Fiesta Tableware runs Plate Pal Perks, a four-tier VIP program, and Naturium runs Consistency Club, both on Smile.
What is the difference between a loyalty program and a rewards program? In everyday use the terms mean the same thing. Strictly, a rewards program pays customers back for transactions, usually with points or cash back, while a loyalty program is the wider relationship: rewards plus status tiers, member perks, referrals and experiences.
What are the main types of loyalty programs? The six main types are points, tiered or VIP, paid membership, value-based, referral and hybrid programs. Points programs are the most widely joined: 57% of shoppers say they belong to a points-based program and 24% to a tiered one (Salesforce, 2025).
Does Shopify have a built-in loyalty program? No. As of October 2026, Shopify has no points, VIP tier or referral program of its own. Loyalty runs on apps from the Shopify App Store, such as Smile, which add rewards to the customer account, checkout on Shopify Plus and Shopify POS.
