What is Loyalty Program?
Definition
A structured reward system that incentivizes continued subscription by offering benefits based on tenure or engagement level.
Understanding Loyalty Program
Loyalty programs in subscriptions reward long-term commitment. Examples include grandfathered pricing for early adopters, anniversary rewards, points systems redeemable for subscription credits, and exclusive content or features for loyal subscribers. Amazon Prime rewards loyalty through an expanding benefits ecosystem.
Some services offer loyalty tiers — longer subscribers unlock better features or pricing. For consumers, loyalty programs add value to staying with a service long-term, but should not prevent switching if a significantly better option exists.
Related Terms
Retention Rate
The percentage of subscribers who continue their subscription over a given period, calculated as the inverse of churn rate.
Referral Program
An incentive system where existing subscribers earn rewards for successfully inviting new customers to subscribe.
Grandfathering
The practice of allowing existing subscribers to keep their current pricing or plan terms when a service changes its pricing structure.
Engagement
The frequency and depth of a subscriber's interaction with a service, used as a key predictor of retention and expansion.