Converting customers into loyal shoppers is challenging. First and foremost, you need a foreseeable and repeatable campaign for encouraging customers to purchase from you more.
Well, that's where customer loyalty programs come in handy. Particularly, loyalty programs are becoming more and more important in the eCommerce industry. With the right initiatives, you can convert first-time customers into repeat shoppers and keep your brand top of their minds.
In this post, we'll bring you deeper insights into eCommerce loyalty programs and some of the most remarkable loyalty program examples from famous brands.
Are you ready to explore?
What is an eCommerce Loyalty Program?
An eCommerce loyalty program is a great retention tool that aims at retaining and engaging your current customers. Hence, they will purchase in larger quantities, shop more frequently or interact with your brand more often.
The realm of eCommerce sales is generally featured by high purchase frequency and high churn rates. A lot of companies assume that customer loyalty no longer exists and employs large discounts to stand out from the crowd. Nevertheless, this ever-lasting price war has benefited customers to find the best markdowns, which makes brand loyalty even difficult to gain.
An eCommerce loyalty program will help boost customer loyalty by offering rewards to customers that are frequently interested in the business's products and services.
Thanks to the loyalty programs, shoppers can receive:
- Discounts and rebates
- Free merchandise
The Importance of a Customer Loyalty Program
Acquire new customers on board
Don't let your shoppers wait until they've spent a great deal of money or placed some orders to begin gaining the benefits of loyalty program membership.
Provide your shoppers an instant discount or bonus product for entering your loyalty program, and they're more inclined to sign on and make a purchase.
Boost Customer Lifetime Value
Customer lifetime value is the net profit gained from the overall relationship you retain with a shopper. It monitors how significant a shopper is to you now – and how much this ongoing bond is worth in the future.
The benefit of a customer loyalty program is that you have information about a person's specific purchasing habits. Purchases are likely based on emotional decisions, so this data becomes more important, supporting you in better understanding their requirements.
Win back customers
It is the fact that sometimes a current customer stops buying from you for no reason. And finding a new customer can cost 5 times more than retaining existing ones. Instead of writing off that customer, you can avail of your eCommerce rewards program to generate a custom email offer to win them back.
Collect marketing data
An effective loyalty program will offer analytics on your customers, so you can find out which products they love, when they buy, how much they spend, and other information you can leverage to reinforce your marketing attempts. Clever offers can contribute to more sales and higher-order values.
Keep your customer acquisition costs in check
By employing your digital loyalty program to target offers to your current shoppers, you can increase revenue from those customers and decrease the investment in new customer acquisition to keep your revenue stream flowing.
When you search for new shoppers, your customer loyalty program data can help you find out target audiences similar to your most loyal and profitable shoppers.
Build up your reputation
Loyalty programs have a dual function: to encourage new customers to stick around after buying your products or services and make sure that current loyal customers still feel valued by your operation.
By building a loyalty program, you can enhance your business's customer appreciation and raise the chances that current customers will share this joy with others. The more a client feels appreciated by a brand, the more that client stays loyal to the company.
Lower advertising costs
As you know who your best customers are, you can target your advertising to acquire more new consumers who stay close to an ideal customer profile. These new clients are more inclined to convert into repeat customers. This data can help you mitigate advertising spending by removing advertising in mediums that attract one-time customers or deal-seekers.
What Are The Components of an eCommerce Loyalty Program?
When do your customers get rewards?
A lot of eCommerce consultants suggest providing reward points for activities that improve your customer base, besides offering points for purchases. You might want to reward your shoppers for particular actions like sharing one of your latest purses on Facebook or leaving a review for one of your expensive necklaces.
Another option is to give rewards for referrals. If you've shared a website's discount code with friends, as you will receive a discount if they place an order, you understand how appealing customer referral programs can be.
How many points will your shoppers receive for every activity or dollar spent?
Balance is the key to accrediting points to actions for your store. You won't want to offer so many points that you're losing money on your own reward program. However, you also don't want your customer to feel like the rewards are not worth gaining.
You should start small, with a simple equation like “spend $20, get 1 point” – or whatever ratio suits your average ticket order. Then keep track of your sales and points metrics and make adjustments if needed.
What do your customers redeem their points for?
For instance, can shoppers apply their points at any time to get discounts on orders? Can they apply their points for free delivery, express shipping, or gifts? Make your decisions ahead of time, keep the options clear to your customers and listen for their feedback to make some changes.
Will the points ever expire?
Or can your shoppers keep them forever until they want to use them?
On one side, points that never expire contribute to an easier customer experience. On the other side, an ever-developing cache of points could trigger a cash flow issue if some people simultaneously redeem a lot of points. You'll need to define your limits for saving unused points on the books.
What will be in your fine print?
Most of your shoppers will be satisfied to gain points when they go about their normal shopping and sharing business, but someone might want to game your system in a way that harms your business.
Therefore, the key is to define limits to close loopholes in your rewards offer.
How can you protect your loyalty program against fraud?
Rewards account takeover fraud occurs as outsiders hack your shoppers' loyalty accounts and apply their points to go shopping. Data breaches, stolen credentials, and easy-to-guess passwords all increase the risk of account takeovers. To mitigate the risk and protect your shoppers, you might:
- Ask your customers to use a strong password on their accounts
- Consider providing two-factor authentication (like an SMS code) for customers logins
- Give customers the option to receive text or email alerts if there's a purchase or point redemption over an amount they select. They can reach out to customer service if they don't recognize the transaction.
- Select a rewards program that has built-in fraud protection
Best eCommerce Loyalty Programs That Can Broaden Your Horizons
Here are the list of loyalty programs you can have a look:
1. Starbuck Rewards
It's widespread now for retailers to launch a mobile app to run loyalty programs, but when Starbucks first introduced My Starbuck Rewards via the Starbucks app, it was an innovative idea. Implementing the program via the app makes it simple for customers – no punch card to forget or lose, no sign-in needed.
To get loyalty points, consumers must order or pay with the Starbucks app. Centralizing customer transactions this way generates a colossal amount of data on customer preferences and behavior,
Takeaway drink orders, frequently visited locations, customer lifetime value, seasonal favorites, etc. By directing customers to the app, Starbucks can collect information on all of these habits and more, allowing them to provide more relevant perks and communication to consumers.
If a loyalty app can work for your store, it can be an excellent way to gather and centralize customer data. Otherwise, an efficient point-of-sale system can empower you to collect more of the same information.
2. Nordstrom's Nordy Club
While Nordstrom's Nordy Club comes with a host of features that make the loyalty program great, there is one that stands out from the rest: extra point days. Several times a year, Nordstrom provides top-tier VIP members the chance to gain bonus points on all of their purchases, boosting program engagement and interest.
This model of aspirational marketing at work is fantastic as it plays upon their community members' longing to join an exclusive club. Extra point days indicate the advantage of gaining the upper tiers of their rewards program, making it valuable to be part of the Nordy Club community for both new and current customers.
3. Nike's The Progress Program
Progress is a strong incentive.
The more people think they are closer to approaching a goal, the more dedicated they are to their attempts to achieve that goal.
This is called the endowed progress effect, and it's an excellent psychological trigger you can leverage for your loyalty program to motivate repeat engagement.
For example, Nike promotes an active style. The brand builds different training apps to help members achieve their goals. The Nike Training Club and Nike Run Club apps get users badges and other rewards whenever they gain a new milestone, such as completing the first 5K. This is a typical example of how you can avail of progress to increase engagement.
Moreover, Nikes also recognizes that the more achievements their customers have with their training, the more committed their customers will be. This is because people often attribute their achievements to the person or brand that created the difference.
For instance, if you want to speak another language and you choose software like Duolingo to do so, you'll ascribe any success you gain to the platform. In the same way, Nike supports customers to have better training results, and their customers link these results back to their brand.
4. Boots Advantage Card
In spend-based reward programs, customers collect loyalty points or stamps based on the amount they spend with a brand. For instance, $1 might be counted as 1 loyalty point, with rewards beginning at 200 points and increasing in value from here.
This eCommerce loyalty program is simple to understand, build and maintain.
Boots, a healthy and beauty pharmacy based in the UK and Europe, gives customers a Boots Advantage Card. This Boots Advantage Card has a spend-based system, where customers receive 4 points for each £1 spent in-store or online. Each point equals a penny, so 80 points received on a £20 spend is worth 80 pennies.
This basically is equivalent to a 4% discount on every Boots expenditure with the Advantage Card. It is super easy to use the card. Customers just need to show their cards to staff at POS or choose the Advantage Card icon at checkout online.
Besides, students can get an additional 10% discount on each purchase with the Boots Advantage Card. Boots also contains Mega Points Weekends, where customers can get more points for spending more than X amount online or in-store. For instance, shoppers might gain 1000 extra points (worth £10) when they pay £50 on a Mega Points Weekend.
5. Glow Recipe's Glow Rewards
Glow Recipe can be considered one of the most excellent examples of a fully branded brand community. Overall, their rewards program equates to the rest of their making attempts, enhancing the store values and vision perfectly. Additionally, their program can motivate potential buyers to join the brand community.
With fully branded rewards Bouncy, Dewy and Ultimate tiers that apparently showcase their program advantages like exclusive invites to events, early access to sales and promotions or first access to tester panel, Glow Recipe offers customers a community experience they can't refuse.
6. Indigo's Plum Rewards
Plum rewards have triumphantly helped Indigo build an online community. Indigo acknowledged that the market for physical books was no longer what it had used to be. This made the bookseller develop their product catalog to add a massive number of items, other than books.
Now, Indigo constitutes to be a lifestyle brand with a huge hand in eCommerce. Indigo's Plum Rewards is a great eCommerce loyalty program, providing extra points for community members to make purchases in-store or online. Moreover, the brand holds regular online-only point multiplier events, further encouraging customers to spend their money online instead of in-store.
7. Designer Shoe Warehouse
Designer Shoe Warehouse (DSW) has implemented a traditional loyalty program that grants customers points for every purchase and builds tiers of rewards that shoppers can unlock as they spend more. Their program runs smoothly. There's no punch card that shoppers need to remember. Instead, their online system realizes shoppers by their names, phone numbers, or payment details.
As rewards become automatic, the drawback is that shoppers forget about the program. Shoppers who forget about the loyalty program might not be likely to spend more to receive more. DSW needed a method to engage buyers with the program and remind them where they stood and what they could get by paying more at DSW stores.
In early 2017, DSW ran an email campaign focusing on reminding customers about their program. The campaign includes a personalized email detailing:
- How many points they have to gain their next $10 off certificate
- Deals they're currently qualified for
- A snapshot of their interactions with the brand. For example: how long they have been a loyal member, how many points they've gained, and how much they've saved in the last two years.
What made the campaign work was the personalization level. A loyalty program like this allows the company to access an impressive amount of customer data. DSW leveraged the program to create highly personalized and relevant emails – much different from other generic marketing emails staying in customers' inboxes.
8. Amazon Prime
Amazon is renowned for its Prime membership program. For a flat annual fee, Prime members can enjoy unlimited free two-day shipping on tons of products, as well as other benefits Amazon has included like their streaming service and Prime Day sales.
Amazon encounters intense competition from other retailers like Walmart. You can search for most of the items on Amazon elsewhere. Prime is how they set themselves apart and motivate shoppers to buy products via Amazon only. And it works – Prime members spend four times more than other shoppers on average.
For retailers in similar industries where items and price points are comparatively similar among competitors, your loyalty program can be a differentiating factor and competitive benefit.
9. Tarte Rewards
Cosmetic and skincare retailer – Tarte used their loyalty program as a way to enhance social media engagement and user-created content.
In the beauty industry, customers are increasingly caring about user-created content (selfies and video makeup tutorials) to help them make purchasing decisions. Tarte took advantage of this trend by motivating user-created content and social media engagement. Shoppers can receive rewards points for activities like uploading a selfie with Tarte items, leaving online reviews, and video tutorials – turning them into brand advocates.
Tarte's program proves to us that your eCommerce loyalty program can encourage nearly any behavior you want from buyers. It doesn't need to be limited to motivating to spend more. That means shoppers can maintain their point-gaining motivation in between purchases, and you can reinforce brand awareness and authority.
10. UK Teeth Whitening's Diamond Club Points
UK Teeth Whitening is one of the largest websites offering a number of teeth whitening products. Its products vary from whitening strips, gels, toothpaste, to mouthwash and floss products.
Being a Magento 2 store, UK Teeth Whitening leverages the Reward Points extension to build a loyalty program – Diamond Club Points for its customers. The one and only requirement to join this program is to register. It's so simple, right?
For every £1.00 you spend on the website you will get 1 Diamond Point. One Diamond Point is equal to £0.05p. That means if you accumulate 10 points, you will get 50p off your next order.
This attractive program will encourage customers to buy more and more to receive more appealing and lucrative deals and discounts.
Develop Your Own eCommerce Loyalty Program
Over a long time, eCommerce loyalty programs have shown they're an incredible way to improve customer retention, increase customer lifetime value, and inspire loyalty. The low-key punch card works for some businesses, while a cutting-edge approach to customer loyalty programs can bring enormous value to retailers.
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About the Author:
Ellie Tran is a content creator at Mageplaza. She loves watching movies, baking and traveling. She always desires to learn more about marketing, especially content marketing, to gain helpful skills and knowledge.