Benefits of Loyalty Programs for Fashion and Apparel Brands

May 30, 2023
9
minutes
Benefits of Loyalty Programs for Fashion and Apparel Brands

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Things are heating up in global retail markets, and that is forcing us to think about retaining customers for the long-term. One way that fashion and apparel brands are tackling the harsh competition is with loyalty programs. These programs are designed to create motivation by rewarding shoppers for continued loyalty. But how do they work and what are the benefits? In this article, we will dive into details on how loyalty programs can transform your retail business.

Understanding fashion and apparel through figures

First let’s check out the figures behind e-commerce and probe just how much potential there is. Well we know that fashion and apparel is and will remain one of the most powerful gross markets in the world. Businesses all over the world are making a push for the highly scalable and lucrative industry. E-commerce merchants report that on average, 30% of their revenue is generated online. This previous figure is thought to be quickly growing, justified by the excellent user acceptance rates. 

E-Commerce in numbers:
  • Projected e-commerce growth rate 2023-2027 of 9.99%
  • The apparel segment is expected to have 3.38 billion users by 2027
  • Average revenue by user is $371.10
  • User penetration is expected to hit as high as 42.6% by 2027
  • Fashion alone is estimated to reach $0.99 Trillion in 2023

Source: Fashion E-Commerce Segment Statistics 

These figures represent the endless possibilities we have in e-commerce and explain why so many businesses are rushing to tap in. But e-commerce is not without its unique challenges, such as the climbing costs of acquisition and poor conversion rates. These challenges are only growing more prominent due to intensifying competition. How can loyalty programs help overcome these challenges?

Understanding loyalty programs in the apparel industry

If you’ve shopped around you might have noticed a popular trend towards customer loyalty programs.These programs are marketing strategies designed to keep customers interested over longer periods. How you structure your loyalty program is entirely up to you, with many creative options available. The key is in the rewards that you offer, making shopping at your store worthwhile. Typically rewards can include but are not limited to discounts, special gifts or exclusive offers. The most common type of loyalty programs in the apparel industry are point-based systems, which use in-store points that can be exchanged for a variety of options.

What are loyalty programs?

Loyalty programs are best understood by the problems that they resolve. E-commerce has a unique list of challenges such as the climbing costs of customer acquisition and the poor tools available for engaging customers. Loyalty programs purpose a reward centric strategy that rewards customers with cumulative points for each purchase. Most loyalty programs come in the form of simple apps that easily integrate into your e-commerce store. They make it easy to start and engaging for customers to use.

Common types of loyalty programs in e-commerce apparel

The most common types of loyalty programs are point, tiered and subscription systems. Point based programs are by far the most common, this is where shoppers earn points for each dollar they spend and then redeem them afterwards for rewards. Alternatively, tiered programs offer progressive levels where each level increases in value. These perks like point multipliers or exclusive benefits to differentiate between levels. And subscription programs charge customers a basic subscription fee that unlocks a whole bundle of different exclusive rewards in exchange. 

Point loyalty program:

A great example of a point based loyalty program is Mango’s social conscious and super advantageous loyalty program. It has a fun theme and touches on important topics like donating to the poor. For each action you receive a set of “likes” and later use those likes to redeem awesome rewards. Mango has definitely one of the most creative programs out there.

Mango's point based loyalty program
Tiered loyalty program:

A wonderful example of a tiered loyalty program is the Black Card by Box Raw that offers different levels of membership. At each upgrade customers receive additional points for each dollar they spend, a level up reward and free products. Box Raw has done a great job of making a highly attractive program that gets more and more desirable as you go.

Box raw tiered loyalty program description

Subscription loyalty program:

Lululemon is our favorite pick for a subscription base loyalty program for the way that they build around health and fitness. As soon as you subscribe to the program you gain access to thousands of workouts, discounts and access to partner studies with a reduced price. But those rewards are just the beginning of your fitness journey and this loyalty program fits just right for the brand.

Lululemon loyalty programs feature description

Suggested Reading: Creative Examples of Loyalty Programs

Engaging and retaining customers

We know that it’s essential to keep things interesting for shoppers and loyalty programs are perfect for the job. As a win-win for both brand and customers, these programs make it easier to attract and keep valuable customers. Let’s dive into the benefits of customer loyalty programs.

Personalized offers and discounts

Definitely a major benefit of loyalty programs has to be your ability to offer personalized incentives to customers. The process starts by gauging customer preferences and then creating customized offers for that added bit of persuasion. As an example, if you manage to figure out a specific style your customer likes, you can send them an email with a few suggestions. The more accurate your reading of customers, the more effective your suggestions can be. Try and avoid using general product recommendations, as they could be counter productive to your goals.

Exclusive access to new collections

Customers love exclusive collections and early access, especially loyal members who have an active purchase history. Exclusivity is a great motivator in general and can be a focal point for your loyalty program. The sort of reward structure you use can be very creative and could help you relate your brand's values and support your themes. Early access is an excellent example of how you can create buzz for your new catalogs. By giving your most loyal customers a  first look at your exclusive catalogs, you can create strong relationships with your dedicated shoppers that is simply unmatched by any other kind of reward. 

Building long-term relationships

Building a bond that lasts the test of time is a real challenge and loyalty programs are the best tools we have available to us. We accept that it may be difficult to continuously predict the winning formula, but loyalty programs provide you an edge in the game. While we admit that there is a lot more that plays into customer loyalty, a strong program may be the leverage that you need. We see a clear trend towards loyalty programs caused by a general rise in acquiring new customers. Driven by the belief that they can maximize the value of your core customer base, loyalty programs are a new perspective on e-commerce marketing.

Overall, loyalty programs are a pivot away from transactional relationships, they leverage your main selling point and build a core customer base. The obscurity in e-commerce is well known and practical solutions are scarce, that is why loyalty programs are considered as an overall improvement to the traditional online shopping experience. While their application can vary in performance depending on your industry, in apparel they are a realistic option.

Enhanced customer experience

Working on the customer experience is an important aspect in e-commerce that can make a world of a difference. Apart from the engagement they create with rewards, loyalty programs are an opportunity to enhance the shopping experience. Consider some of the ways they can improve the customer experience listed below. 

Tailored recommendations and styling Tips

Apart from the effect that tailored recommendations have on conversions, they also deliver the right suggestions at the right time. For shoppers that are interested in personalized tips, these recommendations can pass as a curated service. When implementing personalized campaigns, customers tend to feel more connected to your brand. To cultivate an even stronger connection, consider offering a discount for special customers and make it known that you appreciate them.

Streamlined shopping experience

Customers that have a recorded history of purchases are far easier to convert compared to those shopping at your store for the first time. Since those initial barriers are out of the way, the whole shopping experience is more relaxed and shoppers know what to expect. In addition to greater familiarity, loyalty programs also improve the way shoppers interact with your store and make your store more accessible.

Improved customer support

Loyalty programs are an excellent opportunity to isolate your core customer base and to improve your relationship with them through customer support. By offering dedicated support channels, shoppers can rest assured knowing that you are attentive to their needs. This system can be especially beneficial with customers who require extraordinary attention. The fact that you are prioritizing loyalty members gels very well with shoppers and can reflect positively on your brand.

Overall, loyalty programs work very well to enhance the customers experience and can be an excellent opportunity to improve the perception of your brand. By tailoring your product recommendations, streamlining the shopping experience and focusing on customer needs; you can make loyalty members feel extra-special. It is essential for businesses to consider loyalty programs as part of their overall customer service strategy, the difference can make your business stand out amongst the crowd.

Boosting brand reputation and awareness

Fundamental to all brands is how they are perceived and their values. The implementation of a loyalty program can help your brand along that process.

Encouraging word-of-mouth

In a social world, word-of-mouth is known as amongst the most persuasive and prolific market mechanisms. Social advocacy is perhaps the strongest indicator of growth potential and brand strength. Shoppers can share how much they enjoy your loyalty program and also benefit from the act of sharing with rewards. It is common for loyalty programs to reward referral and social media shares with points or discounts. This makes it common and also very worthwhile for shoppers to advocate their favorite brands.

Stronger brand identity

Loyalty programs can help reinforce a brand's social goals. If you prioritize a particular cause like sustainability, you can align your loyalty program to match those values and strengthen your brand’s identity. Mango, as an example, offers a reward for donations of old garments, which fits into their goals of building a social conscious brand. This sort of reward encourages loyalty members to take positive action while also supplementing their brand. The same comparison could be made for fitness brands that use exclusive group exercise classes to support their goals.

Collaborations with influencers and partnerships

Loyalty programs are great opportunities for collaboration with influencers and partners. We’ve seen brands offer special rewards to influencers for promoting their products, and partners offering free cinema tickets or music through mutual cooperation. The key is finding those collabarations that pair well with your brand to take full advantage of the retention potential of your loyalty programs. 

Overall, loyalty programs are valuable tools for boosting brand reputation and awareness. They can help you socially align your brand, and improve the retention of your alternative acquisition channels like influencers and partners. How you craft your loyalty program is open to your creativity, with potential to strengthen brand identity and drive engagement.

Conclusion

Loyalty programs offer a variety of benefits and they are successful because they benefit both customers and brands mutually. They create reasons for customers to remain committed and help brands meet their strategic goals. They also serve as an opportunity to express brand values. These programs are popular in apparel for their ability to drive engagement with their rewards. If you are thinking about starting your own, consider Growave that offers several apps in one platform and a loyalty program for Shopify stores.

Suggested Reading: Complete Guide to Loyalty Programs

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