Balancing rewards with profitability is a critical aspect of modern loyalty programs. Many companies are moving beyond traditional discounts to offer innovative perks that enhance customer engagement without compromising margins.
Traditional loyalty programs have long relied on discounts and cashback to keep customers engaged. But in 2025, brands face a new reality: Rising costs, shrinking margins, and customers who expect more than just a percentage off their next purchase. The most successful loyalty programs aren’t just about savings — they’re about creating deeper connections, exclusivity, and long-term value.
To remain profitable while driving retention, companies are moving beyond transactional rewards and adopting creative strategies that align with what their customers want. From instant perks to exclusive access and return incentives, here’s how innovative brands are redefining loyalty in ways that benefit both the business and the consumer.
We'll walk through a few exemplary programs, and how they've innovated to strike the balance between delivering real value to loyalists while maintaining profitability.
Immediate rewards, not points
Most loyalty programs offer rewards on a tiered system, with customers climbing the ladder to higher tiers to earn more rewards. It's a time-honored method, but requires ongoing purchases and patience from consumers. Alternatively, some programs offer immediate rewards to members when they join. These can be stored in the app or wallet as a constant reminder of the benefits, prompting more frequent use.
ASMALLWORLD offers a hotel membership that provides immediate perks for an annual fee, appealing to infrequent luxury travelers. Benefits include discounts across 2,000 partner hotels, priority event access, free breakfast, and hotel credits. This model shifts from traditional point accumulation to offering instant, tangible rewards, enhancing customer satisfaction while maintaining profitability.
Expanding memberships to non-customers
By definition, loyalty programs entice and reward customers to stay with one company. However, consumers don't operate in a vacuum, they interact with multiple brands everyday. Looking beyond the four walls of an existing loyalty program via partners adds new customers and extends the loyalty program. This can be through promotional offers or simply by adding merchant-funded rewards to a loyalty wallet.
South African retailer Pick n Pay expanded its loyalty program by partnering with FNB to offer all FNB customers up to 30 percent back in eBucks points. This strategic alliance not only provides significant value to customers but also drives increased spending and loyalty, benefiting both the retailer and the bank.
Reward with access & “soft perks”
Not every reward has to impact profit margins. Knowing your customers — especially the loyal ones — means understanding what they value. These perks can be large or small, and may not carry any cost, but if done well, they positively impact loyalty program metrics.- Virgin Atlantic’s Flying Club offers a tiered loyalty program that provides members with benefits beyond just flight discounts. Members gain access to exclusive events, personalized services, and the ability to earn and spend points with a range of partners, enhancing the overall travel experience and fostering deeper customer loyalty. Other airlines offer early boarding or free WiFi as rewards—costing the airline little but providing outsized value to their customers.
- REI Co-op members get early access to special sales, exclusive product drops, and limited-edition gear, making them feel like insiders. The one-time membership fee funds perks without eroding margins through constant discounting.
- Nike’s SNKRS app caters to sneakerheads by offering access to new sneaker drops, early releases, and limited-edition collaborations. The program aligns with member passions and drives higher engagement and premium product sales without relying on discounts.
- Net-a-Porter’s rewards program appeals to luxury shoppers who value exclusivity over discounts, offering first access to designer collections, personal shopping, and private sales.
Offering bonus credit for returns
Some innovative retailers and marketplaces incentivize customers to keep their return funds within the platform by offering bonus credits or perks. There's powerful behavioral psychology that applies to returns. Simply returning an item can feel like a loss, it's a missed opportunity. And, loss aversion dictates that if a consumer cashes out the return instead of applying a bonus credit, they've lost the extra value, and feel compelled to keep the funds in-store.
Reducing the friction that comes with processing returns, Anthropologie & Urban Outfitters occasionally offer bonus store credit or free shipping on the next order if customers accept store credit instead of a refund. The merchant may be able to completely zero-out card payment fees (interchange) with a return, and benefit from guaranteed revenue. These programs are smart because they reduce refund leakage, enhance customer retention, and create a stronger connection between buyers and the platform.
The shift from discounts to the future of loyalty
The future of loyalty isn’t about who can offer the deepest discounts — it’s about who can offer the most compelling reasons to stay engaged. Successful programs strike a balance between customer value and business sustainability, leveraging exclusive access, strategic partnerships, and behavioral incentives to build lasting relationships.
By shifting from discount-heavy rewards to experience-driven perks, brands can create loyalty strategies that not only attract and retain customers but also protect their bottom line. The key is understanding what your customers truly value — whether it's early access, premium experiences, or the flexibility to maximize their spending. Those who get it right will cultivate loyalty that lasts far beyond the next transaction.
