Every loyalty programme runs on one of three ideas, or a mix of them. Customers collect points and swap them for rewards. They climb tiers and get better treatment the higher they go. Or they pay a fee and get benefits straight away. Picking the right one matters more than the app, the card or the logo, so here is how each works and when it fits.
Points: reward every purchase
Points are the most familiar model. Customers earn a set number of points for each pound they spend, and the points turn into money off, free products or vouchers.
- Tesco Clubcard gives one point for every £1 spent, and every 150 points becomes £1.50 in vouchers, which are worth more when spent with Tesco’s reward partners.
- Boots Advantage Card gives 3 points per £1, each worth 1p, with higher rates for some member groups on selected ranges.
- Starbucks Rewards gives 10 Stars per £1, swapped for free drinks from 150 Stars, with a Gold level on top for regulars.
When points work best: frequent, everyday purchases where a small reward each time feels fair, such as groceries, coffee, beauty and pharmacy. Points are easy to explain and easy to start. The risk is that they feel like a discount and nothing more, so the best schemes add something extra, like Tesco’s member prices or Starbucks’ Gold level.
Tiers: reward your best customers more
Tiers rank customers by how much they spend or how often they come back, and give each level better perks. Status itself becomes the reward.
- The British Airways Club (formerly the Executive Club) moves members from Blue to Bronze, Silver and Gold as they earn tier points, which can’t be spent and only decide status.
- Marriott Bonvoy sets elite levels by nights stayed each year, from Silver Elite at 10 nights up to Titanium at 75.
- Virgin Atlantic Flying Club moves members from Red to Silver and Gold on tier points earned from flights, and status lasts 12 months.
When tiers work best: businesses where a small group of customers is worth far more than the rest, such as airlines, hotels and premium retail. Tiers give people a reason to choose you every time rather than shop around. They need care, though, because customers notice when they drop a level.
Paid membership: benefits from day one
Paid programmes charge a fee, monthly or yearly, and give members value straight away instead of making them wait for points.
- Amazon Prime bundles fast delivery, streaming and member deals for a monthly or yearly fee.
- Costco only lets members shop at all, and its higher Executive membership adds a 2% reward on eligible purchases.
- Club Pret charges a monthly subscription for half-price barista drinks, up to five a day.
When paid membership works best: when customers buy often enough to feel they’ve earned their fee back quickly. The fee itself builds loyalty, because people want their money’s worth. McKinsey found that members of paid programmes were 60% more likely to spend more with the brand after subscribing, against 30% for free programmes.
Mixing the models
Many of the strongest programmes combine two. Starbucks adds a status level on top of points. Costco adds a reward on top of a paid membership. Airlines pair spendable miles with tiers. If you’re starting out, pick one model and do it well, then add a second once you know what your customers value.
A quick way to choose
| If your customers… | Start with |
|---|---|
| Buy often and spend small amounts | Points |
| Vary a lot in how much they’re worth to you | Tiers |
| Buy so often that a fee pays for itself | Paid membership |
| Visit a few times a year | Points with a birthday or anniversary reward |
Why it’s worth getting right
Loyalty programmes are part of daily life now. In Antavo’s 2026 global survey, 65.9% of consumers said loyalty programmes are part of their everyday lives. And in the 2026 Bond Loyalty Report of US members, 85% said they’re more likely to keep doing business with a brand that has a loyalty programme, and 73% said they spend more as a result.
Programme details checked in October 2026. Schemes change their rules often, so check the brand’s own page for the latest.
Run a programme that people love? The Online Loyalty Awards are free to enter and decided by public vote. See the categories.