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What are the Benefits of Customer Loyalty in Ecommerce?

Jan 24, 2023

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Create and Optimize your Loyalty Program in 16 Steps

Setting up your loyalty program can be a challenge, here is some guidance on loyalty programs and how to set them up.

Create and Optimize your Loyalty Program in 16 Steps

Day One of your eCommerce journey, the burden is on you “the merchant” to convert and to retain shoppers. There is ample evidence that all points to the same conclusion:

“The cost of acquisition in eCommerce is climbing.”

We see this clearly in new businesses, who often have issues with cost management and maintaining margins. This does not necessarily imply that the merits of eCommerce are not worthwhile, the industry is set to continue climbing by as much as $3 trillion in the next few years. Instead this reveals misaligned priorities in our marketing strategy.

What can we do?

As a highly impactful option, we recommend Loyalty Programs which are gaining prominence as a direct solution to the fundamental issues highlighted above. These programs are both conversion and retention tools.

The last few years have seen major advancements to loyalty programs, it is now easier than ever to start one for your own ecommerce business. This makes it possible for anyone, ordinary to enterprise level merchants to access these powerful features with minimal cost.

These loyalty programs can not guarantee success but certainly improve your chances. The burden falls on eCommerce managers to optimize their programs. Below are 16 steps to build and optimize a complete Loyalty Program.

Building your Loyalty Program:

1. Test Viability of Each Reward:

Not every business is the same and often each program has to have rewards that shoppers will enjoy. We will discuss the viability of loyalty programs according to your product in a later section.

2. Set Clear Goals:

Do you have a clear idea of what you want to accomplish with your loyalty program? A great starting point is clarifying how you are planning to accomplish your goals and making sure that your goals are not stretched too thin. Taking things step by step is a sound approach and we highly endorse an adaptive strategy that changes over time based on indicators like Average Order Value, Loyalty Members and Conversion Rates.

3. Clarify the Financial Value of your Rewards:

A key component to a strong loyalty strategy is the value of your rewards and striking the perfect balance between benefit and financial cost. Remember that each point you award your shoppers is a cost and its expected to help you convert visitors, but more importantly increase their lifetime value.

4. Show Appreciation with Tiers:

Status and Goals. Tiers are all about giving shoppers a sense of status and while also giving them goals to pursue. When customers feel appreciated with VIP status they are more inclined to pursue greater tiers. We’ve seen businesses work magic with tiers, sometimes choosing to send handwritten letters of appreciation or even exclusive gifts. Versatility is important for tiers, we do not want to be limited with how we design our tiers.

5. More Options means Freedom of Choice:

Options, options and more options. One dimensional loyalty programs limit the shopping experience. Instead give your customers a breadth of options and the freedom to explore your stores with many rewards.

6. Make Registration Quick and Rewarding:

The first hurdle we need to cross with new members is registration. Pain points are something that causes us a needless headache. Modern methods allow for one click registration through social media or email.

7. Leverage Double Reward Referrals:

A very popular method of lead generation includes referrals. Referrals can be beneficial for both the sender and receiver. We encourage double referral rewards, a way of cultivating new leads in a simple and attractive way.

8. Reward Social Media Followers:

If social media is part of your greater strategy, rewarding followers can help you scale your reach. Its possible to reward comments, likes, photos and follows with in-store points. This improves the likelihood of repeat purchase while also improving your follower count. As you maintain this practice; your reach continues to grow and could become a source of free-stable leads.

9. Promote User Generated Content and Reviews:

Word of Mouth is detrimental in eCommerce. Independent reviews cultivate trust and work for you. Sometimes all it takes is knowing that you're getting what you signed up for. Headlining reviews is a very common strategy in eCommerce and has no real downside. Ordinary mid-sized businesses can accumulate hundreds if not thousands of positive reviews. Imagine how that could influence shoppers.

10. Lean on Design and Branding:

Branding your Loyalty Program is an obvious step we all take to implement successfully. We have an article that provides a few examples of great loyalty programs.

11. Combine your Loyalty Rewards with CPC:

Cost Per Click marketing is a great way of generating leads, and rewards work best for conversion. If your budget permits CPC, combining them with loyalty rewards can prove worthwhile. Rewards are known to improve the conversion of Traffic.

12. Optimize your Customer Service in Preparation:

In times of high traffic volume like “Black Friday” customer service tickets are at all time highs. Ensuring a smooth experience and clear information is part of converting a potentially critical sale. Questions like “Will this fit me?” or “Do you ship to my location?” are clearly priorities.

13. Test Larger Rewards for Short Periods:

Measuring the drawing power of your rewards is important. Gauging your influence is important for planning your long-term strategy while also enabling you to take action when action is required.

14. Use Emails to Cultivate the Shopping Experience:

Emails are known throughout all eCommerce as being a great communication tool. Leveraging automated email campaigns helps you stay “in your customers feed”, while introducing your loyalty rewards. There is so much versatility to emails and they are very affordable to operate. Emails are a win-win strategy and are highly encouraged. They are said to have the highest conversion % out of all acquisition channels, even higher than direct search.

15. Identify Shopping Patterns and Refine your Catalog:

There is so much to learn about customers through their interaction with your loyalty program. Use the abundant information available to improve the customers experience and deliver a more refined shopping experience.

16. Optimize for Mobile:

Mobile is a major part of eCommerce, figures indicate that somewhere between 70-80% of all traffic originates from mobile. Making your loyalty program mobile friendly is a staple requirement nowadays. Test your loyalty program and ensure that your customers' pain points are resolved.

Are Loyalty Programs Compatiable to my eCommerce Business?

How do we know if a loyalty program is a right fit for our business? There are so many niches in eCommerce that it can be confusing sometimes to see their benefits. No matter what you sell, there is some value for loyalty programs. But here are some dimensions to consider when making your choice.

Products that Benefit Most from Loyalty Apps:

  1. Quick Consumption Items: Products that have short consumption cycles like supplements, subscriptions, cosmetics, food goods
  2. Large Catalogs: Large stores with extensive inventories see a lot of benefit from loyalty programs
  3. Large Customer Base: If you are already operating with healthy traffic, you can benefit  a lot from a loyalty program
  4. High Demand Items: Gross markets with large demand like clothing, jewelry, electronics have an unbiased customer base.
  5. Niche Items: Pet Stores, Children’s Clothes, High Quality Goods where it's difficult to find locally.
  6. Luxury: Where status is central to the catalog, we see an opportunity to leverage vip tiers and bonuses.
  7. Novel Products: New technologies or popular products tend to see a lot of retention

Conclusion

While Loyalty Programs do not manifest “loyalty”, they are a way of managing and encouraging it. They have a lot of potential as extensions to a greater business strategy; aiding in actualizing your goals. Consider how you may seem disconnected from customers or unable to actively encourage them to continue shopping. With a marketing platform such as Growave there are endless options for any type of business to engage their visitors.

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