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:

  • Dollar-value discounts
  • Percentage discounts
  • Freebies 
  • Gifts for milestones or essential dates
  • Exclusive access to new products

Why are loyalty programs so crucial to ecommerce stores?

It costs 5 times more to earn a new customer than it does to keep an existing one.

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?

Word-of-mouth advertising is alive and well. Ninety-two percent of people across the globe trust recommendations from their friends over paid advertisements or even content marketing. 

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:

Why do people sign up for loyalty programs?
Source: Loyalty One

Trustworthiness is also key to earning loyalty:

Why do people sign up for loyalty programs?
Source: Shopify

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:

Why do people abandon loyalty programs?
Source: Shopify

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 loyalty program points clear
Make loyalty program points clear
Source: Brilliant Distinctions

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:

Make it easy to sign up for loyalty programs
Make it easy to sign up for loyalty programs
Source: World Market

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.

Make it easy to redeem points for loyalty programs
Source: World Market

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:

Show customers how to redeem points from loyalty programs
Source: Really Good Emails

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.

DAVIDsTEA uses the data they collect on loyal customers to send cute personalized email campaigns:

Use the data from your loyalty programs in unique ways
Source: Really Good Emails

Reward your mini influencers.

Engagement involves more than just buying stuff and shopping. By looking for ways to engage customers through your loyalty program, you can increase brand awareness and boost revenue everywhere.

  • Reviews: Reward customers with points for every review they send after buying a product.
  • Content: Let members earn points for sharing your content.
  • Referrals: Set up a special referral program for every friend they encourage to sign up.
  • User-generated content: Give customers extra points for submitting user-generated content like photos on social media with a branded hashtag.

Incorporate interactive features into your loyalty programs.

Interactive features and gamification automatically increase engagement wherever you use them.

Look for ways to make your loyalty program emails fun with virtual scratch-offs, secret doors, or other interactive features that relate to your specific brand. 

A virtual scratch-off card like Bose used here would be handy for revealing rewards points or free gifts:

Use interactive content in your loyalty programs
Source: Really Good Emails

Set up your triggered email campaigns.

Emails based on triggered events are an absolute must for VIP programs.

Your emails should remind customers to sign up, remind them of their points, and clearly show how to redeem them every step of the way. 

For example, let’s say someone buys something on your site but doesn’t sign up for rewards. That’d trigger a special email campaign to show them how many points they would’ve earned. 

If someone is a member and hasn’t visited your site in a while, encourage them to shop by showing them how many unused points they have and what that translates to in a dollar amount. 

CM Commerce makes it easy to create unique segments for your customer list based on activity and point accumulation. You can then use beautiful email newsletter templates to design unique campaigns and send them out automatically:

Set up triggered emails for your loyalty programs
Source: CM-Commerce

Wrap up

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.