You know the stats. Keeping existing customers around is five times cheaper than bringing in new ones. Loyal customers spend more, flake less, aren’t too price sensitive, and will recommend you to their friends far more often than one-time purchasers.

But what exactly are you doing to keep those customers around? Amazon has Prime, Starbucks has its Stars, and Sephora has Beauty Insider. What do you have?

When it comes to a loyalty program, the question isn’t whether to have one or not. It’s how to implement one. And if you need any more convincing to launch your loyalty program, here is a nightmarish statistic from management consulting giant Bain & Company: 60-80% of customers who dump you describe themselves as satisfied.

It doesn’t seem to make sense until you think about it for a little while longer. Customer satisfaction is a low bar. It just means your service isn’t horrible. I too am satisfied with most of the businesses I buy from. This is simply because satisfaction means a customer had a pleasant experience.

But you don’t want pleasant. Every half-competent merchant is providing a pleasant customer experience at a minimum. You want your customers to have an exceptional experience, and barring that, give them a reason to come back. Hence a loyalty program. There are several kinds of programs you can implement.

1. Points program

This is the simplest of all loyalty programs. Every time a customer makes a purchase, he gets a point. You can award something like one point for a set amount of dollars spent.

For a point system to work effectively, you have to provide clear convertibility from points to cash or store credit. If not, you can unlock various rewards whenever a customer hits a certain points milestone.

The most important thing is to make the rewards and milestones as transparent as possible. A customer needs to know what the reward is so he can be motivated to work towards it.

2. Tiered program

This is a variation of the points system with a slight twist. While points reset when redeemed, tiered loyalty programs don’t reset the points count. Every new point accumulation milestone unlocks exclusive perks unavailable to customers in lower tiers.

Since tiered loyalty programs rely on exclusivity, they’re best suited to high-ticket items. This makes tiered programs an excellent fit for premium and luxury brands.

3. Paid memberships

This is where the likes of Amazon Prime and Costco fit in. Paid memberships provide exclusive perks to members, like say Prime’s free two-day shipping. Since customers prepay for their memberships, they are incentivized to keep coming back in order to get value for their money. And it shows. Amazon Prime members, for example, spend more than double what non-Prime members spend ($1400 a year vs $600 a year.)

The downside of the paid membership is that it’s incredibly hard for small e-commerce brands to implement.