The Best Customer Incentive Program Examples To Drive Loyalty

Customer incentive programs are one of the most effective ways to boost retention, engagement, and sales. Research shows that 75% of consumers prefer brands that offer rewards, and businesses with strong loyalty programs grow revenues 2.5 times faster than their competitors.

In this article, we’ll explore top proven customer incentive program examples, showing how they work and why they’re so successful.

What is customer incentive program

A customer incentive program is a marketing strategy that rewards customers for specific actions, such as making a purchase, referring friends, or staying loyal to a brand. These programs encourage engagement, boost retention, and drive sales by offering perks like discounts, points, cashback, or exclusive benefits.

1. Points-based loyalty programs

Points-based loyalty programs are among the most common and effective ways of marketing incentives for customers. These programs reward shoppers with points for every purchase, which they can later redeem for discounts, free products, or other perks. The more they shop, the more points they earn – encouraging repeat business.

Example

For example, Starbucks’ Star Rewards program allows customers to earn stars with every purchase. Once they collect enough stars, they can redeem them for free drinks, food, and merchandise. The program also includes bonus point challenges and double-star days to keep customers engaged.

This is the most popular customer incentive program example. Today, many big brands, especially names in F&B, follow Starbuck’s strategy.

How it works?

• Get points: Customers earn points based on their spending (e.g., 1 point per $1 spent).
• Redeem points: Points accumulate and can be redeemed for rewards such as discounts, exclusive products, or free shipping.
• Bonus points: Some brands offer bonus points for actions like signing up, referring friends, or engaging on social media.

Points-based loyalty programs work because they encourage repeat purchases, as customers are motivated to return and earn more points to redeem rewards. This frequent user incentives program also gamifies the shopping experience, making it feel more interactive and rewarding, which keeps customers engaged. Additionally, these programs significantly boost customer retention.

A study by Epsilon found that shoppers enrolled in a points-based program are 80% more likely to continue purchasing from the same brand, highlighting the effectiveness of this incentive strategy. This type is one of the most customer incentive program.

2. Two-sided referral programs

A two-sided referral program rewards both the referrer and the new customer when a successful referral is made. This type of incentive encourages existing customers to bring in new buyers while ensuring that the referred customer also benefits from the program.

Example

Tesla’s Referral Program is a great example of a two-sided incentive system. Customers who refer friends can earn benefits like free Supercharging miles, while the referred person gets exclusive discounts on their new car. Similarly, Dropbox’s referral program gave both the referrer and the referred user extra storage space, leading to massive user growth.

Currently, Tesla is the most renown brand implementing 2-side rewards program, but Dropbox is the one that made it famous. Dropbox rewarded both the referrer and the referee with extra storage space (typically under 1GB).

Dropbox’s customer incentive program example became a role model for software brands for a decade. However, this model isn’t as common today due to the risk of abuse. High-tech fraudsters can easily create multiple fake accounts to claim rewards. As a result, referral incentives are now more popular in retail and other industries where fraud is harder to scale.

How it works?

• A customer receives a unique referral link
• The referrer promotes the brand by sending their link via email, social media, or messaging apps
• The new customer applies the referral code or link to receive a discount, cashback, or another benefit
• Both parties get rewarded. The referrer earns a reward, such as store credit, cashback, or a discount on their next purchase. The new customer also enjoys a perk, creating a win-win scenario.

Two-sided referral programs are powerful business incentives examples because they create mutual benefits, making it more appealing for customers to share. Consumers trust referrals from people they know, making this an effective and cost-efficient customer acquisition strategy. Additionally, referred customers tend to be higher-value buyers, with some studies showing they spend 16% more on average than non-referred customers.

3. Tiered loyalty programs

A tiered loyalty program rewards customers based on different levels of spending or engagement. As customers move up the tiers, they unlock better rewards, such as exclusive discounts, early access to sales, or VIP perks. This customer service incentives higher spending by offering progressively better benefits.

Example

Sephora’s Beauty Insider program is a great example. It has three tiers: Insider, VIB, and Rouge, where customers earn more rewards as they spend more. Rouge members, for instance, get exclusive product launches and premium discounts that lower-tier members don’t have access to.

How it works?

• Customers sign up for free or paid membership: Most brands allow customers to join at the base level without any cost, while premium tiers may require a higher spend or subscription.
• Spending or engagement determines tier placement: Customers earn their way into higher tiers based on how much they spend or engage with the brand.
• Higher tiers offer better rewards: The more customers spend, the better perks they receive. This can include birthday gifts, free shipping, or members-only sales.
• Ongoing engagement keeps customers motivated: Since customers don’t want to lose their status, they are more likely to continue spending to maintain or reach the next level.

This type of program leverages exclusivity to drive engagement. Customers feel motivated to spend more to reach the next tier and unlock better rewards. The exclusivity factor creates a sense of achievement and brand loyalty.

4. Experiential rewards

Experiential rewards go beyond discounts and free products by offering customers unique, memorable experiences. These could include VIP events, exclusive brand collaborations, personalized services, or early access to new collections. Instead of focusing solely on monetary incentives, experiential rewards create an emotional connection between the brand and its customers.

Example

Nike’s Nike Membership program provides experiential perks like free fitness classes, expert styling advice, and early access to limited-edition products. Instead of just offering discounts, Nike creates an exclusive community for its members, making them feel more connected to the brand.

How it works?

• Customers earn rewards through purchases or engagement: Brands track customer activity, such as spending, social media engagement, or referrals, to determine eligibility.
• Exclusive experiences are unlocked: Depending on the program, customers can redeem points or reach certain milestones to gain access to special events or perks.
• The experience strengthens customer loyalty: By offering something unique that competitors don’t, brands deepen their relationships with their customers, encouraging long-term engagement.

Experiential rewards make customers feel valued and special, which leads to increased brand loyalty.  77% of consumers prefer brands that offer personalized experiences over standard discounts. These unique buying incentive examples encourage emotional engagement, making customers more likely to stick with a brand.

5. Free samples or products

Giving away free samples or products is an effective incentive strategy that allows customers to try before they buy. This approach builds trust, increases brand awareness, and encourages future purchases. Free samples can be included with an order, given away in-store, or distributed through special promotional campaigns.

Example

Lush is known for offering free samples of its handmade cosmetics, allowing customers to test products like skincare creams and shampoos before committing to a purchase. 

How it works?

• Brands select products to offer as free samples: This could be a new product launch, a best-seller, or a complementary item to an existing purchase.
• Samples are distributed through various channels: Companies may give them away in physical stores, include them in online orders, or partner with influencers or affiliates for promotional campaigns.
• Customers try the product and are more likely to purchase: If they enjoy the sample, they may buy the full-sized version or explore other products from the brand.

Free samples create a risk-free shopping experience that encourages trial and builds customer loyalty. According to an Amazon study, 92% of consumers say they are more likely to buy a product after trying a free sample. Additionally, sampling campaigns have been shown to boost sales conversion rates by 25-30%, proving their effectiveness in driving long-term customer engagement.

6. Membership programs

Membership programs offer exclusive benefits to customers who subscribe or pay a fee to join. These programs create a sense of exclusivity and reward loyal customers with perks such as free shipping, early access to products, special discounts, or premium services. Some brands offer free membership programs, while others charge a recurring fee for added value.

Example

Amazon Prime is one of the most well-known paid sales incentives for customers, offering free shipping, exclusive discounts, and access to streaming services for a yearly or monthly fee. Similarly, Nike Membership provides members with early product drops, free workout programs, and personalized shopping experiences – all at no cost.

How it works

• Brands create a membership structure: This could be a free loyalty club or a paid subscription model with premium perks.
• Customers sign up: They may register for free or pay a recurring fee (monthly or annually) to access benefits.
• Members receive ongoing rewards: Perks can include discounts, priority customer service, free shipping, or early access to new collections.
• Exclusive engagement strengthens loyalty: Members feel valued and are more likely to continue shopping with the brand.

Membership programs enhance customer loyalty by offering long-term value and exclusivity. Membership perks create a stronger emotional connection with customers, leading to higher retention rates and increased lifetime value.

7. Discount and coupon incentives

Discounts and coupons are some of the most common incentives that encourage customers to buy products or services. They provide immediate value by reducing the cost of a purchase, encouraging customers to buy more frequently or spend a higher amount. These incentives can be in the form of percentage-based discounts, fixed-amount coupons, or special deals like “Buy One, Get One Free” (BOGO).

Example

Sephora, for example, frequently offers exclusive discount codes and seasonal sales for its Beauty Insider members. These personalized discounts, based on shopping behavior, drive engagement and encourage frequent purchases.

How it works?

• Brands issue discounts through different channels: Coupons and promo codes can be sent via email, SMS, in-app notifications, or printed receipts.
• Customers apply the discount at checkout: Some brands offer automatic discounts, while others require entering a code or meeting a minimum purchase requirement.
• The incentive drives conversions and repeat purchases: By offering time-limited or personalized discounts, brands encourage customers to make purchases faster and return for more deals.

Discount incentives tap into consumers’ desire for savings, making them more likely to complete a purchase. Discount-driven promotions can increase conversion rates by 10-30%, making them a powerful tool for customer retention and acquisition. 

Customer incentive program examples: Learn from the best business

Customer incentive programs drive engagement, boost loyalty, and increase sales. A well-designed customer incentive program example can include points-based rewards, tiered perks, or referral incentives—each serving a unique purpose.

Loyalty programs encourage repeat purchases, while referral programs attract new customers. Understanding shopping behaviors helps brands create incentives that maximize retention and long-term growth.

As consumer expectations evolve, brands that implement strong customer incentive program examples build lasting relationships and stay competitive. Ready to enhance customer loyalty? Start crafting a program that rewards both your customers and your business.