How Does a Loyalty Club Work? Types & How To Create One

Alon Zuck
February 2, 2022
3 min read
How Does a Loyalty Club Work
Alon Zuck
February 2, 2022
3 min read

Getting new customers is laborious and costly. That’s why it’s imperative to hold on to your existing customers once you get the chance. Want to know how does a loyalty club work? A well-designed membership club that rewards customer loyalty and engagement can incentivize repeat purchases and boost profits.


A well-thought-out club membership program can:


  • Attract new customers
  • Retain existing clientele
  • Reactivate dormant customers

Building customer loyalty involves creating experiences that entice customers to repeatedly return to a brand to conduct business. Unlike your traditional point-based loyalty program, a club membership does not require customers to transact over time to earn rewards at a later point in time. Rather, it allows for instant gratification through motivations such as discounts, sales promotions, or free shipping.


The premise of club memberships is simple: to focus on the long-term relationship with a customer. Customers convert and spend more time and money with brands they have relationships with. Let’s look at how you can implement a membership club environment that works for you and your customers.

Types of Membership Club Programs

Most membership clubs have the common goal of retaining customers and increasing customer lifetime value. If executed well, club memberships can help your customers feel good about purchasing from you and increase brand engagement.


Private members’ clubs take a lot of different forms, depending on your product and the objectives of the club program.

1. Points Programs

Point-based club memberships are the most common programs around the commerce world, implemented everywhere from supermarkets to restaurants and nail salons. They’re useful because points accumulate over time and are easy to redeem.


The benefit of point-based systems is that they allow brands to analyze customer buying behavior to better tailor the experience to each customer.

2. Tier-Based Memberships

A tiered loyalty reward system allows customers to unlock new levels based on their spending. The more customers spend, the higher they rise and the more perks they have available to them. Tiered memberships can also create an element of exclusivity that unlocks offers, promotions, or events. The more exclusive the rewards in each tier, the more appealing membership is to customers.


Tiers can also be tailored to customer behavior and include rewards like giveaways or surprise gifts to members.

3. VIP Member Clubs

Who doesn’t like feeling special? VIP loyalty programs like golf clubs and soho houses are typically subscription-based premium memberships that offer additional perks to an existing, free loyalty program.


In other settings, customers pay extra for additional perks like expedited shipping. When accompanied by the occasional exclusive discount or product launch, such programs can increase your profit margins.


An added benefit of premium memberships is that they don’t alienate the customers who don’t want to pay. They just provide features for customers looking to maximize their benefits. But, VIP membership clubs or country clubs only work when the value they provide outweigh the cost.

4. Cashback Programs

When customers sign up and make a purchase, you can offer a certain percentage of the transaction as a cashback to spend with your business at a later time. Cashbacks work well for ecommerce companies as they entice customers to make additional purchases to recoup their money.


Cashback membership programs tend to have higher customer satisfaction because they make customers feel like they’re getting something in return. Also, they’re quite profitable due to increased customer spend.

5. Free Perks Programs

Hosting an event? Why not let your club members attend for free? No monthly dues. Free perks programs gift loyal customers access to exclusive events as well as products and services.


You can also provide customers with gifts such as t-shirts or mugs as they spend more money with you. This way, your customers feel appreciated. Moreover, without monetary dues expected from them, you get to build a sense of community around your brand.


Experiential rewards like events add an emotional element to your relationship with your customers, enabling you to strengthen their connection to the brand.

How To Create a Membership Club

To create a winning membership club, you must first understand your audience and what would entice them to come back again and again. The second step is to genuinely provide value for your customer, make them feel special, and give them something to strive for.


Incentives like welcome discounts, monthly giveaways, and promotional offers can prompt customers to take advantage of the deals. However, to retain customers, you’ll need to provide something more.


Not all membership clubs focus on tiers and discount codes. Some brands choose to pair their membership programs with a cause. Private clubs are communities that gather like-minded individuals based on shared interests or values. Creating a community allows you to connect with customers via their interests or ethical values like sustainability. Community membership supports brand building and can be used to collect insights, to understand your customers better, and curate highly personalized experiences.


The best loyalty programs are customer-centric. Glue Loyalty understands how important it is to listen to your customers as you build out the elements of your club membership programs. Let us help you enhance customer experience and grow a country wide loyal fan base.

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