Best Loyalty Programs For 2011

By Amy Fontinelle | August 04, 2011 AAA

Clear benefits. Achievable rewards. Consistency. Sustainability. A feeling of appreciation. These are the characteristics of a good customer loyalty program. If customers don't understand a program or have the terms changed on them, they'll be uninterested at best and feel betrayed at worst. Guided by these principles, we think we've uncovered five of the best loyalty programs for 2011.

TUTORIAL: Credit Cards

Shop Discover and Discover Rewards
Discover credit card holders can earn 5% cash back in rotating categories throughout the year (as long as they remember to sign up each time). They can also earn 5% to 20% cash back year-round on online purchases from a number of retailers when they log into their Discover accounts, click on a link to a retailer, and pay for their purchases with Discover. Participating in this program are more than 175 stores, including the Apple Store, the Gap family of stores, Drugstore.com, Groupon, Travelocity and many others. (For related reading, see Drawbacks Of Travel Reward Programs.)

Once cardholders have accumulated at least $20 in cash back rewards, they can redeem them through Discover Rewards. Many of these rewards are gift cards that increase the value of the cardholder's cashback bonus by as much as 100%. Here are a few examples:

Amazon MP3: $20 becomes $25

Bed Bath and Beyond: $20 becomes $25

Brookstone: $20 becomes $30

Chili's: $45 becomes $50

Enterprise Rent-a-Car: $20 becomes $40

Ebates
Ebates allows consumers to earn cash back through online shopping. It's free to join and members pay no fees for the service. New members can earn a $10 gift card bonus for Barnes and Noble, Target, Home Depot or Magazines.com upon signing up and making a purchase of $25 or more at any store through Ebates. The company pays out members' cash back rewards quarterly as long as the member has accumulated at least $5.01 in cash back, and consumers can get their payments quickly and conveniently via PayPal (among other options). (For related reading, see 7 Ways Using Your Credit Card Can Save On Summer Travel.)

To earn cash back, customers simply log in to their accounts and click on a link for the retailer they want to shop at. Here is a sampling of the cash back amounts currently available at several popular stores:

Target 3.0%
JCPenney 6.0%
Drugstore.com 8.0%
Kohls 4.0%
Walmart 2.0%
Macy\'s 3.0%
Staples 4.0%
Barnes and Noble 6.0%
Sears 4.0%
Nordstrom 5.0%
Newegg 1.0%
Old Navy 2.0%
Best Buy 1.0%
Sephora 8.0%

Other Ebates perks include daily doubles (double cash back at one selected store each day), store coupon codes and referral bonuses.

Hyatt Hotels
Applicants who are approved for the Hyatt credit card will receive two award nights at any Hyatt hotel worldwide after making just one purchase on the card. The card has a $75 annual fee, but the value of the award nights more than makes up for it. The card also offers rewards points (3 points per $1 spent at Hyatt properties, as well as 1 point per $1 spent everywhere else) redeemable for future hotel stays. The Hyatt card is one of a few to offer no transaction fees on foreign purchases.

The company's loyalty program, called Hyatt Gold Passport, allows customers to redeem points for free nights and room upgrades. The current rewards structure starts at 5,000 points for a standard room at a category 1 hotel (the lowest level). A standard room at a category 6 hotel is 22,000 points. Category 2, which has the largest number of hotels, requires 8,000 points. An online awards calculator makes it easy for customers to see how many points they need to redeem their rewards in particular locations.

Citi Thank You Network
The Citi Thank You Network is the loyalty program for Citibank credit card holders. Many Citibank credit cards offer generous signup bonuses and allow cardholders to accumulate multiple points per $1 spent, so earning Thank You rewards isn't difficult. The rewards aren't spectacular if you redeem points in small increments of 3,500 points will get you a $25 gift card at a number of retailers. But if you have the patience to accumulate 10,000 points, you can choose a $100 gift card at retailers such as CVS, Gap, Kohl's, Land's End, Lowe's, Marshalls, Saks Fifth Avenue and Sears. When you factor in signup bonuses and the ability to earn bonus points in certain spending categories, the rewards can add up to significantly more than 1% back. (For more on sign up bonuses, see Cash In On Credit Card Sign-Up Bonuses.)

Tasti D-Lite
Tasti D-Lite is a low-calorie frozen dessert chain with locations in 12 states and more to come. It is especially beloved by New Yorkers in Manhattan, which has the nation's largest concentration of Tasti D-Lite stores, at 17.

The company's loyalty card, the Tasti TreatCard, is a combination gift card and rewards card. For each pre-tax dollar a customer spends, she receives 1 reward point. At 50 points, members receive a free medium cup or cone. At the store's Times Square location, a medium cup costs $5.29, making the card's reward equivalent to about 10% cash back. Customers also receive a free medium cup or cone on their birthdays.

The Bottom Line
Loyalty Isn't Everything Offering a loyalty program whose rewards are achievable, whose terms remain consistent across time, and that makes the customer feel appreciated is only part of the battle. Even the best loyalty program is useless if the company's customer service reputation is lacking. According to the results of an American Express survey released May 3, 2011, "seven in ten Americans (70%) are willing to spend an average of 13% more with companies they believe provide excellent customer service." Companies that focus on both of these major points of interaction with the consumer, along with fundamentals like providing products that consumers want at prices they want to pay, increase their chances of long-term success. (For related reading, see 6 Major Credit Card Mistakes.)

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