How to Use Loyalty Programs to Drive Big Ecommerce Bucks
CM Commerce Team
Every brand tells you they value your business, but how many can you name that genuinely show it?
As a small ecommerce business, an effective rewards program can make the difference between explosive growth and barely getting by.
Bain & Company found that, despite having a great experience with a brand, up to 80% of customers didn’t spend money with that brand in the future.
A positive experience filled with stellar customer service, follow-ups, and pricing isn’t enough. You have to show—not tell—customers how much you value their business.
The missing link? Loyalty programs.
Read on to discover some statistics showing why rewards programs are so important in ecommerce. We’ll also explain how to set up a program and stay connected with your customers via email marketing.
What are ecommerce customer loyalty programs and how do they work?
A loyalty program rewards your customers for consistently doing business with your brand. Instead of hoping your fantastic prices and customer service keep them hooked, you tell and show customers up front what they’ll receive for staying loyal to your brand.
These programs add extra value to every transaction.
Ask your mom or grandparent about rewards programs from the 1950s. Grocery stores used to give away free stamps to repeat customers. Later, in the 1980s, earning airline miles was the big thing.
Ecommerce has made reward programs easier to implement than ever. Today, both small businesses and industry-leading brands alike provide rewards and exclusive stuff.
Depending on your profit margins, goals, and audience, you might reward your best customers with things like:
Gifts for milestones or essential dates
Exclusive access to new products
Why are loyalty programs so crucial to ecommerce stores?
Not only is it more cost effective to keep customers, but return shoppers spend 67% more than new ones.
In ecommerce, customer retention is critical. Your shoppers have endless choices at their fingertips and countless brands vying for their attention. Setting up a reward program can deliver several benefits, such as:
Boosting each customer’s lifetime value
Building trust in new customers and existing ones
Finding and understanding your best customers
Identifying potential influencers
Standing out from your competition
Set up a winning loyalty program and your customers are sure to talk or post about it. Who doesn’t love talking about an awesome deal?
With so many outstanding benefits, the question isn’t whether you should start a reward program, but how.
How to set up and promote your ecommerce loyalty programs
Do you remember Pepsi’s point program in the 1990s? Well, it turned into a big lawsuit when one guy exploited a loophole and bought enough points to earn the Harrier Jet shown in a commercial.
You might not be at risk for something quite that wild, but you should develop a careful strategy to deliver the best results and wow your customers.
Know what factors build loyalty in your audience.
Getting shoppers to sign up for your program isn’t enough; you also must entice them to use it and prevent churn consistently.
Figure out what makes YOUR audience loyal. While every brand’s audience is unique, the general consensus shows that folks love earning points they can use at their discretion:
Trustworthiness is also key to earning loyalty:
People want simple loyalty programs that genuinely improve their lives, not glorified advertisements.
Avoid the common loyalty program #fails.
After figuring out what gets your customers to sign up, pinpoint what might cause them to leave. Over half of people who register for your program will end up fading away:
Most leave because the rewards aren’t relevant or it took too long to earn anything worthwhile.
Ideally, your reward system should entice customers to shop with your brand more often, so they can accumulate more points and trade them in.
Set up your benefit system and provide the utmost transparency.
You should be able to explain why someone should join your loyalty program in one sentence.
Simplicity and transparency are key.
Set up a dedicated landing page where shoppers can run through the basics.
You could also offer unique ways to earn points. For example, Brilliant Distinctions lets members earn extra points by watching videos on their website or downloading the app:
Make it easy to sign up at every stage of the funnel.
Your customers should hear about your rewards program at every touchpoint: while browsing, while at checkout, and post-purchase. Let them know how many points they could be earning with each item too, if they haven’t joined yet.
Ideally, give customers the option to add points from earlier purchases within a certain timeframe as well.
World Market highlights its reward program on every page:
Encourage customers to claim and redeem their rewards.
Even with the best offerings, customers may forget they’ve accumulated points.
Email is the perfect tool to remind your customers about what they’ve earned and how to use it.
Set up triggered email campaigns to go out at different intervals after a customer starts earning points or discounts. You could even include personalized product recommendations inside your email to show them what they could buy with their points.
Keep everything simple and easy to understand.
While tier systems are nice for rewarding the most loyal of the loyal, they can also get confusing. If you can’t keep a multi-tier system simple and easy to understand, don’t use it.
Ideally, your point system should be easily divisible by five, ten, or one. For example, a point for every dollar or ten dollars spent.
Look how Starbucks clearly explains how many points the member has and exactly how to redeem them:
Offer something unique in your loyalty programs.
Branding is super important when it comes to reward programs. Try to think of a catchy way to incorporate your brand’s name, mascot, or motto into the name of your program or point system.
For example, instead of points, Starbucks customers can earn stars.
Likewise, look for exciting ways to differentiate yourself from competitors and stand out. Sign up for similar programs and look for ways to level up your own—freebies, contests, content, etc.
Loyalty programs are the secret ecommerce ingredient for winning consistent love from your shoppers. With so many choices available, awesome pricing, and fabulous products aren’t enough; you have to show customers you care.
Some smart tips to optimize your program’s strategy include:
Keep it simple and easy to both sign up and claim rewards at every touchpoint.
Offer something unique and super valuable.
Understand your audience: what drives their loyalty and what they’d love.
Use your loyalty programs for valuable information on your best audience demographics.
Turn your happiest customers into mini influencers.