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Shopify the revolutionary e-commerce platform is quickly becoming the go-to choice for millions of businesses worldwide. In today’s e-commerce environment, they are heralded as one of the most reliable and scalable platforms. With the addition of thousands of third-party apps that amplify their platform, Shopify provides a complete solution from A to Z.
In e-commerce, there are a few common challenges that almost all businesses face. They are the tools we use, how we extract maximum value from our customers, and how we handle direct competitors. Growth in e-commerce is an incremental process, where we slowly scale our platform. In this process, customer interactions are the primary commodity, and growth is limited without them.
Loyalty programs in e-commerce are widely considered some of the most effective tools to counter those fundamental issues. With loyalty programs, you benefit from a set of versatile tools that naturally drive engagement and retain high-value shoppers. What makes loyalty programs especially attractive is their ability to drive targeted interactions and create a personalized experience.
What are Loyalty Programs?
Loyalty programs are incentive-based tools designed to persuade loyalty in a competitive environment. They are primarily retention tools intended to expand and improve communication with your core customer base. Their strength relies on finding your dedicated customer base and understanding their motivations to craft attractive rewards.
Loyalty programs generally improve user experience and create an element of personalization. Unlike ordinary discounts, loyalty points are storable and permanent features. They leverage after-purchase “loyalty points” to encourage repeat purchases, focusing primarily on improving key metrics like customer lifetime value.
“Loyalty programs encourage repeat purchases and increase customer lifetime value. Their success relies on improvements to user experience, personalization, and persistent rewards. Loyalty programs utilize incentivizes for customer retention in a competitive environment.”
Measuring the effectiveness of a loyalty program:
- Points Generated: The number of points that your loyalty program generates can be used to determine its effectiveness. We can compare how those points are generated to identify trends in customer behavior.
- Redemption Rate: This metric determines what proportion of points issued are subsequently redeemed for rewards. This can give us general look at how successful our loyalty rewards are. How these points are redeemed is another important element.
- Most Redeemed Rewards: Understanding which rewards are most often utilized by customers can reveal patterns in customer behavior. This can impact how we construct our rewards and their values.
- Turnover Speed: The rate of how quickly points are earned and spent is an important metric to monitor. This metric examines customer intent to shop at your store and their perception of your rewards.
- Induction Rate: This metric measures the proportion of customers who join your loyalty program. When customers are inducted they express their interest in your brand and also submit their contact details for engagement.
- Email Conversion Rate: Responsiveness to automated emails can reveal the persuasiveness of re-engagement campaigns. Keeping in touch with customers is essential for motivating loyalty.
01. In-store points are dominating standard discounts
Growave learned from 2,000+ Shopify merchants, that reward points were a crucial tool for encouraging strategic behavior and generating repeat purchases. We found that in-store points were effective at creating value by incentivizing constructive actions in scaling an e-commerce store. By rewarding actions like reviews, you award points that motivate their next purchase. This improves conversions and user input simultaneously.
Discounts on the other hand were historically focused on product turnover; a sales strategy focused on price point manipulation. These discounts are focused mostly on the short-term which has its limitations. The core difference is that points are storable and permanent. They can be used to motivate important e-commerce actions like; reviews, social shares, and referrals.
Loyalty points also improve the user’s experience which is especially important in e-commerce. Loyalty apps like Growave, create a personalized experience, which gives each new customer personal access to your rewards. Your shoppers have the freedom to choose how they’ll earn rewards and spend points. Personalization is understood to be a challenging topic in e-commerce, and loyalty programs are one of the most engaging ways to create such an experience.
Loyalty programs being both versatile and strategic, enhance your control while keeping customers interested. They can help you scale your e-commerce store by controlling rewards and earning methods. You are also able to balance values to help you highlight particular actions. So if you happen to need to gather social media followers or reviews, you can nudge customers towards those specific actions. While all this is happening, you’re also retaining shoppers and generating repeat purchases.
02. Combination apps create synergetic value
Growave merchants took special note of the benefits they saw when using multiple apps in one platform, describing how the synergy between apps enables versatile goals. Since Growave is a multi-app platform, our merchants found the ability to integrate wishlists, social media, and reviews into their loyalty rewards a unique advantage. With the additive bonus of advanced analytics, they found key insights sourced directly from custom behavior when using combination apps.
“Loyalty programs generate refined information about your core demographic. One of the most common challenges in e-commerce is identifying and retaining your most critical customer base. With a loyalty program, each new member is a potential long-term relationship.”
Growave users noted:
- That analyzing data between apps drew unique insights
- That their functionality and options were broader and more versatile
- Synergy from using one platform produces greater brand consistency
- Loyalty incentives were able to strategically scale their e-commerce platform
- Merchants were able to adapt their programs to focus on their main goals
From data gathered from active Shopify stores of different sizes and niches. We noticed a clear trend of how Growave was capable of executing a variety of different strategies at all levels. We noticed these trends by comparing smaller businesses to larger ones, primarily how these merchants used Growave differently.
The main findings included the utilization of loyalty rewards as a central component, assisting in the interactions with individual features. Larger businesses were found to treat loyalty rewards more as an investment, dedicating a proportion of their earnings towards customer retention and social proofing. Larger businesses were primarily concerned with maintaining market position and solidifying their position.
Smaller businesses that were still in the growth process generally experienced greater volatility and relied on Growave for generating new leads as a promotional tool. We noticed how smaller businesses showed greater reliance on Growave rewards to attract shoppers and drive conversions. Smaller businesses seemed to show performance improvements after installation by using reviews, referrals, and social sharing in conjunction with rewards. These integrated features were necessary in the growth process and were uniquely advantageous for smaller stores.
03. Social proof is critical when scaling an e-commerce store
By studying merchant behavior, we noticed the importance of social proof and customer advocacy in the e-commerce growth process. We also noticed from our study, that larger businesses demonstrated a greater review adoption rate than smaller businesses. This would suggest that authenticity and user feedback were especially important goals for businesses with established market presence to assure and retain customers.
While it's true that adoption rates of review request emails were greater for larger businesses, social proof remained a relevant factor across all stages of the e-commerce growth process. The main issue concerning newer businesses is their ability to create a review profile that would demonstrate authenticity, often being unable to collect enough high-quality reviews. Through engaging review features and incentivization, smaller businesses were able to accumulate reviews to provide necessary assurance for customers.
Social proof is a critical factor in the scaling process of an e-commerce business as it contributes to factors like discoverability and customer trust. Growave’s presentation, ability to incentivize customer reviews, create automated email reviews, and generate insightful feedback becomes a differentiating factor. Likewise, Growave’s ability to gather user-generated content like photos and video reviews, creates the highest form of authenticity.
“As many as 90% of online shoppers consult reviews for information about products and to verify a brand's authenticity. Vice versa, businesses often use customer reviews for insights into customer behavior.”
04. Merchants prioritize user experience
When choosing e-commerce apps, Shopify merchants prioritize user experience. User experience is crucial for a successful e-commerce store and apps are capable of creating a major impact. Besides the app's main features, analytics can also lead to better catalog choices and targeted promotions.
Apps that can deliver a dynamic experience have shown better customer engagement which is most notable over the long term. In the Shopify eco-system, apps like Growave deliver crucial improvements to the standard store with enhancements to essential e-commerce features.
Below we can see a collapsable, and dynamic side tab. One of the many Growave features that can improve usability and customer engagement. This is an example that you do not see many e-commerce stores use. These reviews can be combined with rewards and offer UGC capabilities for additional value.
05. Using rewards to scale your e-commerce store
Loyalty points have the unique ability to incentivize important customer interactions. These interactions are essential for scaling your e-commerce platform. Through loyalty rewards for specific actions, we can accelerate the collection of important features like reviews, social media followers, and referrals. This makes loyalty points strategic tools that can be adapted to your unique needs.
Ways to use loyalty points:
- Gathering user-generated content
- Building your review profile
- Accumulating social media followers
- Encouraging customer registrations
- Increasing customer referrals
- Motivating repeat purchases
- Increasing average order value
- Encouraging re-engagement
- Rewarding first-time purchases
- Increasing turnover on specific products and bundles
- And more…
We’ve seen countless examples of e-commerce brands prioritizing reviews, which is thought to be a major competitive advantage. These brands have an undeniable market presence and these reviews are often more than sufficient to persuade shoppers even in a competitive environment. Some brands have managed to collect hundreds if not thousands of reviews with Growave, as a mixture of images, questions, and reviews.
User-generated content is in large proportion the most effective form of trust building, particularly as images. UGC can only be described as real customers sharing their personal experiences with your brand, which has immeasurable value for creating trust and product descriptions. Being able to incentivize these crucial interactions is essential for e-commerce businesses in their early stages.
06. Make each shopping session a personalized experience
E-commerce shoppers aren’t looking for arbitrary product recommendations or an ordinary shopping experience. Our responsibility as e-commerce managers is to make the right recommendations at the right time. While building customer profiles and studying purchase patterns is a great start to a successful strategy, the freedom to choose how to utilize points on an individual level is a more practical solution. When using platforms like Growave, you have an element of control over their “freedom”, where you choose the ways they earn points and redeemable rewards.
“Personalization is still lacking in e-commerce, where brands struggle to implement individual shopping experiences.”
Loyalty programs differ since each customer has a personal account, where they can freely choose their rewards and monitor tier progress. One of the primary advantages we have seen Growave merchants identify is the improvements to the customer shopping experience and its engaging nature. Their storable nature also assures shoppers that they can always return to claim their rewards.
Below you can see Growave’s loyalty tab, which neatly appears on screen as a collapsable popup. This allows customers to access their rewards from anywhere in your e-commerce store. From your admin panel, you can customize its design, features, and position. These rewards have consistently produced improved repeat purchases and average order value. In addition to these loyalty rewards, Growave comes coupled with analytics that in detail, track each customer's history and behavior.
07. Maintaining communication with loyalty members
“Of the 1.75 million reviews generated through Growave, 44.9% were collected through automated email requests.”
Of the 1.75 million reviews generated with Growave, 44.9% were gathered from automated email requests. Incentivizes were in large proportion responsible for these reviews. A friendly reminder with a highly personalized message can be a prominent feature of your e-commerce strategy. Staying relevant is the agenda and the right tools can make the difference.
Loyalty programs are intended to foster relationships with customers, and active communication is essential for re-engagement and maximizing value from loyal customers. Because loyalty members have an expressed interest in your brand, communication is easier and their willingness to shop at your store is higher. For this reason, identifying concrete interest in your brand is more valuable, understanding customers can deliver a refined re-engagement campaign.
Luckily, with Growave it’s possible to fully customize your outreach to make shoppers feel like they are understood and to align with their interests. Email marketing is another opportunity to incorporate personalization.
Customer loyalty is widely considered a crucial aspect of e-commerce. The goals we set for scaling our e-commerce business can be limited with out crucial customer interactions and methods to increase the long-term value of customers. Growave has studied Shopify merchant behavior for more than 2,000 stores and identified the 7 key trends used in today's competitive environment. By leveraging these trends it is possible to reach new peeks in e-commerce. These 7 trends represent modern loyalty programs and how to best utilize them to meet your e-commerce goals.