Striking the Balance Between Inclusivity and Exclusivity in Loyalty Experiences

Fostering customer loyalty today is both an art and a science. The fusion of advanced digital solutions and human-centered values is transforming business-to-customer engagement, shifting the focus from transactions to lasting relationships. This is the essence of modern loyalty.

While loyalty can take many forms, loyalty programs remain a key driver in keeping customers returning, offering both a sense of belonging and appealing perks. The challenge for businesses often lies in deciding how to structure their loyalty programs—whether to opt for a broad, inclusive model or a paid, exclusive one that offsets costs.

But why choose one over the other?

Marcie Smith, VP of Customer Success at Inveterate, shared in the latest Commerce Quarterly that brands are increasingly offering both free and paid loyalty programs, creating a dynamic mix of inclusivity and exclusivity for customers.

Here are some key reasons merchants and customers favor having options when deciding how to engage with a brand's loyalty program:

Paid Loyalty Programs

Who wouldn’t want to feel like part of an exclusive club? That’s the undeniable appeal of paid loyalty programs—they elevate customers from everyday buyers to valued insiders. These programs go beyond basic perks, offering a curated experience that speaks to the customer’s desire for something special.

From limited-edition product drops to personalized discounts, exclusive events, and thoughtful gifts, paid loyalty programs create an atmosphere of exclusivity that customers can’t resist. It’s not just about the perks; it’s about how those perks make them feel—important, appreciated, and part of a select group.

And the ripple effect? It's huge. When customers feel special, they share that experience. Brands like Sunday Swagger saw this firsthand. By offering exclusive product releases and gifts to their paid members, they didn’t just increase customer satisfaction—they ignited a wave of social sharing. Customers proudly showed off their exclusive rewards, creating buzz and envy that drew non-members in, eager to get a piece of the action. But beyond the social excitement, paid loyalty programs have a powerful effect on customer behavior. They don’t just cover the cost of the perks; they drive meaningful growth by encouraging customers to shop more often and spend more. These programs cultivate a loyal base that is invested in the brand's success.

Consider Bambu Earth, a natural skincare brand on Inveterate. By offering exclusive promotions, discounts, and store credit through its paid membership program, Bambu Earth achieved a 162% increase in order frequency and generated over $700K in incremental growth in just nine months. The membership fee was simply an added benefit.

Free Loyalty Program

Paid loyalty programs might be trendy, but don’t overlook the power of a free option. Not every customer is ready to invest upfront, and a free option opens the door for those who might otherwise stick to a purely transactional relationship.

In a nutshell: paid programs secure commitment, free tiers nurture engagement.

Naturally, offering free loyalty programs isn't just about benefiting the customer—it provides significant advantages for merchants as well. Free programs are treasure troves of valuable data. Every time a customer logs in, redeems a benefit, or interacts with the program, it generates a wealth of insights.

These data points allow merchants to better understand customer behavior, preferences, and purchasing patterns. With this enhanced knowledge, you can fine-tune your marketing strategies, create more targeted campaigns, and deliver personalized experiences that resonate with your audience.

Ultimately, these insights help increase customer lifetime value by deepening engagement and encouraging repeat purchases. What might start as a free membership can evolve into a long-term, high-value relationship with your brand, driven by the data you’ve collected and the personalized experiences you provide.

The Dual Approach

Inclusivity and exclusivity are often seen as opposing forces, but when woven together, they create a powerful synergy within a loyalty program.

The free tier opens the door to all, providing an accessible entry point that invites new customers to begin their relationship with your brand. It offers them a taste of value, sparking a connection and laying the groundwork for deeper loyalty. Meanwhile, the paid tier amplifies this experience, offering exclusive rewards, personalized touches, and privileged access that resonate with your most committed customers, turning loyalty into something aspirational and deeply meaningful.

Brands leveraging this dual-tier strategy are gaining a competitive edge. It disrupts traditional views on loyalty programs, yet those embracing it are enjoying higher retention, greater CLTV, and more meaningful customer relationships. This approach not only fuels short-term success but also establishes a foundation for long-term brand loyalty.

Avex collaborates closely with Inveterate to create comprehensive loyalty solutions that deliver meaningful results for Shopify merchants. By combining deep expertise in eCommerce strategy with Inveterate’s innovative loyalty technology, we craft tailored programs that focus on both customer engagement and business growth.

Drive long-term success with a loyalty program built for your brand—reach out to us today!