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,, 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 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 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% 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.)

Related Articles
  1. Savings

    How Volatile Exchange Rates Affect Your Vacation

    Those ever-changing fluctuations can make a difference in anything from your hotel room to an ATM transaction.
  2. Credit & Loans

    Can Corporate Credit Cards Affect Your Credit?

    Corporate cards have a hidden downside. If the company fails to pay its bills, you could be liable for the amount and end up with a damaged credit rating.
  3. Investing News

    What Is The New Credit Card Chip Good For?

    Under current U.S. credit card requirements, credit card issuers are required to issue chip cards as of October 1, 2015. Instead of swiping your card as you do now, you will slide the card into ...
  4. Credit & Loans

    5 Ways to Maximize Your Credit Card Points

    How to get the most bang for your rewards buck.
  5. Investing

    How to Effectively Compare Credit Card Rewards

    There are so many different reward credit cards that are available. Understanding how each type work will help you pick the best card for your needs.
  6. Credit & Loans

    Joint Credit Cards: The Pros and Cons

    A joint credit card may sound like an easy way to split the bills, but make sure you know what you’re getting into first.
  7. Credit & Loans

    Travel Tips: Avoid Exchange Rate Headaches

    How to avoid the most common issues and hassles raised by exchange rates while traveling abroad.
  8. Investing

    Why U.S. Credit Cards Are Getting a Chip and Pin

    With the introduction of EMV technology into U.S. credit cards, consumers should worry less about fraud and counterfeiting.
  9. Credit & Loans

    What Qualifies as a Nonperforming Asset?

    A nonperforming asset is a loan made by a financial institution to a borrower who has failed to make any scheduled payments for at least 90 days.
  10. Personal Finance

    Best Ways to Exchange Currency

    How to avoid fees and get the best deal for your dollar.
  1. Fast Fashion

    Definition of "fast fashion."
  2. Transferable Points Programs

    With transferable points programs, customers earn points by using ...
  3. Luhn Algorithm

    An algorithm used to validate a credit card number.
  4. Roll Rate

    The percentage of credit card users who become increasingly delinquent ...
  5. Truncation

    The requirement mandated by the FTC for merchants to shorten ...
  6. Purchase Money Security Interest ...

    A security interest or claim on property that enables a lender ...
  1. How can I invest in electronic retailing (e-tailing)?

    Electronic retail is one of the fastest growing segments of the economy. Every year, more people are choosing to purchase ... Read Full Answer >>
  2. What countries represent the largest portion of the global retail sector?

    The United States and China are the world's largest and second-largest retail markets, respectively, by total retail sales. ... Read Full Answer >>
  3. How has electronic retailing (e-tailing) changed the consumer discretionary goods ...

    Electronic retailing has changed the consumer discretionary goods sector by increasing price transparency and product information. ... Read Full Answer >>
  4. What is the difference between "closed end credit" and a "line of credit?"

    Depending on the need, an individual or business may take out a form of credit that is either open- or closed-ended. While ... Read Full Answer >>
  5. What is the best way to start to rebuild your credit after a bankruptcy?

    Bankruptcies can be devastating to your credit score. Even worse, a bankruptcy will be listed on your credit report for between ... Read Full Answer >>
  6. What were the primary financial crimes involved in the ZZZZ Best case?

    ZZZZ Best was a company started by Barry Jay Minkow that claimed to be a carpet cleaning business. In fact, it was a Ponzi ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!