Companies that design and execute programs that are built on customer needs and are closely integrated with broader brand and marketing goals find that the cost can be unexpectedly low - and the returns surprisingly high. For others, the price of simplistic or poorly planned programs can be painful. This report examines how smart brands - including both those new to the game and those that have been playing it for a while - make their programs rewarding for company and consumer alike. Companies offer many different types of rewards in their loyalty programs. Most programs generally pull one or more of three kinds of loyalty levers. - Earn-and-Burn Levers. Customers reap the benefits of their purchasing activity (earn) with rewards at preset thresholds (burn). - Recognition Levers. Repeat customers are eligible for differentiated services earned on the basis of, for example, total account balance or total amount spent. - Customer Relationship Management Levers. CRM levers use purchase data that is captured and mined to develop tailored communications and targeted offers. Many programs employ, or rely too heavily on, only one of the three main loyalty levers (most commonly earn-and-burn), inhibiting effectiveness. Each lever has its shortcomings. The high cost of earn-and-burn program rewards undermines the loyalty margin. Recognition-based programs limit the number of participants. CRM-based programs can undercut both incremental share and program size. The best programs use a combination of all three approaches and invest in the incentives that increase incremental share while maximizing the loyalty margin. Get the full story at The Boston Consulting Group