So You Want a Loyalty Program: Here's Where to Start

Most loyalty programs don't fail because of bad technology. They fail because someone copied a competitor's model without asking what behaviour they were actually trying to change. Points get slapped on, a tier system gets bolted in, and six months later engagement has flatlined and nobody can say why.

If you read our recent look at YEGplus, Wayfair Rewards, and the AIR MILES rebrand, you already know these programs aren't different flavours of the same idea. They're different answers to different problems. That's the part worth taking with you if you're building your own: the mechanic only works if it matches the problem you actually have.

Start with the behaviour, not the rewards

Before you pick points, tiers, or perks, answer a more basic question: what are you actually trying to drive? Frequency, basket size, retention, referrals, or first-party data capture are all different goals, and they call for different mechanics. A program built to increase visit frequency looks nothing like one built to capture email addresses and purchase history. Skipping this step is the single most common reason loyalty programs launch and then quietly underperform.

Pick your mechanic to match the goal

Once you know the behaviour you're chasing, the mechanic follows:

• Points-per-dollar works when the goal is frequency, and your customers already buy often enough to make redemption feel achievable.

• Tiering works when the goal is aspiration or status, giving your best customers something to work toward beyond the next discount.

• Partner perks work when your category is saturated and everyone already has a program, so the differentiation has to come from somewhere adjacent to the core product.

• Referral and survey-style earning work when your business is inherently low-frequency, since they let members earn (and engage) between purchases rather than only during them. This is exactly what makes YEGplus interesting: most of what drives engagement has nothing to do with flying at all.

Budget matters here too. Referral rewards and tiering based on existing purchase data are close to free to set up. Points-per-dollar systems usually require new infrastructure to track and redeem, which is a real cost most brands underestimate going in.

Decide build vs. partner vs. coalition

This is the biggest cost decision you'll make. Joining an existing coalition, Scene+ or Triangle Rewards, for instance, means no platform to build and an existing member base to tap into, but also less control over the experience and a cut of the value going to the coalition partner. Building in-house gives you full control over the mechanics and the data, but it's expensive, and it's why an airport or a national retailer can afford to do it and a smaller brand usually can't yet.

Building on a Smaller Budget

Most of the examples making headlines this year had real budget behind them. If you don't, the coalition route above is still your fastest low-cost entry point, but you've got other options too. Start with a simple, low-tech mechanic, a punch-card-style reward or a tiered discount based on purchase history someone can track in a spreadsheet, before investing in any kind of platform. Referral and review-based rewards are worth leaning into hardest here: they cost almost nothing to run, and every redemption doubles as word-of-mouth marketing you didn't have to pay for separately.

Design for the apathy problem, not just the sign-up

Getting someone to join your program is the easy part. Mintel's research on the Canadian loyalty landscape points to apathy, not distrust, as the real threat: members sign up, then quietly stop engaging once the initial incentive wears off. If your program's only touchpoint is the moment of purchase, you're vulnerable to exactly this. Building in reasons to engage between purchases, the way YEGplus does with surveys and referrals, is what keeps a program alive past month one.

Common pitfalls

A few mistakes show up again and again:

• Copying a competitor's mechanic without matching their purchase frequency. A points system built for a coffee shop won't work for a furniture retailer, and vice versa.

• Over-complicating the earning structure. If members can't quickly understand how to earn and redeem, they won't bother.

• No plan for non-transactional engagement, leaving the program with nothing to offer members between purchases.

Before you build: a gut-check

Ask yourself these questions before committing to anything:

• What specific behaviour am I trying to change?

• Does my chosen mechanic match how often my customers actually buy?

• Can I realistically afford to build this in-house, or should I be looking at a coalition instead?

• What will keep members engaged in the gaps between purchases?

• Am I building this because it solves a real problem, or because everyone else seems to be doing it?

If you can answer all five clearly, you're in better shape than most of the programs launching this year.