There’s no denying the fact that customer acquisition is the most indispensable exercise for building a thriving and sustainable e-commerce business!
But you must also know that retaining your valuable customers is also a crucial task, if not as important as acquiring them! And one of the neatest ways to keep your customers coming back for more to your eStore is through some well-made and compelling customer loyalty programs.
It is by far the most straightforward way to tell your customers that you value them and care for them. A loyalty program can also give a bespoke shopping experience to your customers by letting them take part in one. As a result, it can dramatically grow your customer lifetime value (CLV).
A renowned business intelligence firm L2 Gartner points out that properly-implemented loyalty programs can help grow consumer engagement, make data collection easier, help customize on-site experiences, and also identify your most loyal customers.
However, you must understand the fact that a loyalty program should not be restricted to just ladling out reward points to your customers upon a purchase, or merely hand out a superfluous and monotonous freebie every time a customer signs-up to your newsletter.
Instead, an insightful loyalty program must be comprehensive. It must be designed to offer a personalized and smooth shopping experience to your customers the moment they land on your site. And it must also meet their demands and expectations throughout their journey as a customer with your brand.
So without much rambling, let’s cut-to-the-chase and see how we can build such rockin’ and alluring loyalty programs that can indeed preserve your customers for a very long time as well as broaden your customer base.
To cover a lot of ground, I have come up with these 27 useful tips! Let’s check them out one-by-one.
1. Reward your customers through good browsing experience!
You must not wait for a sale to happen to reward your customers. It must commence as soon as they land on your eStore! Maybe not in the form of reward points or freebies, but by offering the best user-experience on your site. There’s nothing rewarding to your customer than giving him a smooth and robust shopping experience on your site.
Customers love to return to an e-store that’s user-friendly and easy to browse! And above all, it will be a lot easier to get them to sign-up to your ACTUAL loyalty program if they had an effortless browsing experience on your site. Put simply, the major part of your loyalty program must be geared to offering an impeccable user-experience for your customers.
You can streamline the user-experience in the following ways,
- By providing easy navigation and check-out on your e-store.com is well-known for providing an effortless shopping experience.
- By offering real-time browsing assistance in the form of a live web chat (see the image below)
- By making your social proofs and testimonials easily visible. This will not only bolster the trust in your brand but also nudge them one step closer to a purchase (or conversion) (see example below).
- By implementing a mechanism to thank your customer while they are in the conversion channel but haven’t yet purchased anything. Displaying a simple ‘Thank You’ is generally more than sufficient. But you can take it a step further and offer reward credits for adding products to the cart or just for researching your products or leaving a feedback. Your imagination is the limit!
- By offering loyalty rewards for every non-transactional action taken by your customer. Like giving out a freebie for signing up to your email list or providing reward points for sharing your product on social media and so on. Studies by Colloquy reveal that such rewards greatly increase customer retention.
2. Listen and fine-tune
To get the best results out of your loyalty programs, it must be regularly upgraded and fine-tuned. To accomplish that you must know what your customer really wants. Conduct surveys to know if they are getting what they want from the loyalty programs, if not, ask them how you can serve them better.
By the way, conducting customer surveys is considered a powerful tool in any product and marketing research campaign. In fact, it can be seen as the pillar of marketing.
Hence, listen to your customers constantly and enhance your loyalty programs accordingly to show that you care for them!
To get started, you can include questions similar to these in your research to learn customer expectations and create a program based on what they think are the most important ones!
3. Make your customers feel exclusive
Giving away freebies are great rewards for signups to newsletters or completing surveys, but only those may not work well for loyalty programs. Loyalty programs become a hit when you make your customers feel special.
Humans are psychologically inclined to cherish something that is hard to come by or acquire. This is the psyche that must be leveraged to the fullest while crafting loyalty programs for your customers.
There are several ways to do this, here are a few,
- Providing exclusive access to VIP events
- Giving access to exclusive products/services
- Allowing them to take part in sweepstakes
- Providing access to limited products/services
The beauty of these programs is that they are all free-of-cost but will still be perceived as valuable by your customers, which makes them feel exceptional by giving them access to such exclusive programs. Again, to come up with the best exclusive programs, you must conduct customer surveys.
4. Customize your loyalty program rewards
Loyalty incentives must not be given away freely just for the sake of it. It must be tailor-made and specific for every customer type based on their interests, demographics, past purchase history and a variety of other factors. However, the reward must have a genuine value to the customer.
To customize every reward, you must categorize your customers into different segments. To help you do that make use of any good web analytics tool like Google Analytics. Once you decode the types of customer segments, you can create specific programs for each segment.
You will get an idea what I’m talking about by looking at this customer segments infographics. By analyzing each segment you will realize that each one requires a tailor-made loyalty program.
Although it is a fantastic idea to let every customer choose their rewards according to their needs, it is still crucial to tailor your rewards as per the buyer personas and audience category!
5. Keep the reward point conversion mechanism Simple!
The most common method to build a loyalty program is through reward points. It’s a simple concept. The reward points get accrued when customers carry out certain actions and do purchases, which can then be redeemed to buy more products. These reward points can also be converted into other incentives like a good free gift or a discount on purchases and so on.
But this mechanism must be kept simple to your audience. Never sabotage your own loyalty program by making it unnecessarily complex. Keep it a hassle-free process that will motivate your customer to take an action even when they are least motivated. The conversion of the reward points into an incentive must be a painless process. Use simple language that tells your customer how to convert their points without overwhelming them.
Here’s how Marriott Hotel pulls this out well by rewarding their guests with points for booking every stay with them.
One smart way to convert your customer’s reward points is during the check-out process. Just display the reward points earned by the customer and the percentage of discount (or the money he/she will save) on that purchase. Then ask him if he wishes to go ahead and redeem the points and avail the discount in the current purchase or let it accumulate until the next purchase. These are great motivators that can help keep your customers faithful to your brand to a great extent.
6. Implement tiered loyalty programs
A tiered loyalty program (if crafted well) is a fantastic way to convert an occasional spender into a more frequent customer. It can allure a completely new prospect with rewards and eventually convert them into a permanent customer. A tiered loyalty program can also motivate your customers to spend more, and more frequently, by offering bigger incentives as their spending increases.
Check out how Sephora (renowned French cosmetics stores chain) does this with their tiered loyalty program,
Unlike a traditional point-based reward system, the tiered loyalty program instantly offers an incentive for your customer’s loyalty. The system then does the rest by scaling up the rewards as your customer spends more, thereby strengthening the bond and increasing the duration they wish to stick around with your brand.
7. Reward a variety of actions – not just purchases!
It’s agreed that the ultimate goal of launching a loyalty program is to encourage customers to purchase more on your e-store. But you must also reward other non-transactional actions of your customer to get the biggest bang for your buck from your loyalty programs.
Why not offer an incentive to your visitor for just interacting with your brand? Isn’t it another cool way of saying a sincere ‘Thank you’ to your prospect? How about rewarding them for engaging on your store in the form of reward points?
The interaction could be anything, say,
- Signing up and completing the customer account profile
- Signing-up to your newsletter
- Adding a product to their wish-list
- Writing a product review
- Tweeting a product
- Liking your social media page, and so on
But it’s paramount that the actions and its associated reward points are conveyed clearly and succinctly to your visitor. See how ‘Cairns’ (a community for outdoor enthusiasts) does this on their reward sign-up page.
8. Tie-up with other brands
You can take your loyalty programs to the next level and make it more attractive by partnering with other brands. This way you can provide additional value from your e-store by letting them try out products/services of other brands.
This technique can make your loyalty programs even more valuable to your customers by helping them earn reward points from other brands that they adore. Partnering with other brands in your rewards program is a spectacular way to please your customers and improve customer retention. Such partnerships also give a strong reason for your customers to return to your e-store and make more purchases as they are likely to get benefited from other brands as well by doing so.
Plenti is a perfect example for this type of point-based reward system that lets users earn reward points by spending on various brands spanning across multiple industries.
9. Keep the rules unrestrictive, short and favorable to the customer
Yes, you definitely need rules for your loyalty programs. But don’t make it obstructive and complicated that your customers would never want to return to your site again!
The more the stringent the rules are, the less loyal will be your customers to your brand. For example, reward points with a short expiry period.
Also, don’t make them extensive. Like this one! That’s only required if you are a massive brand like Best Buy or WalMart!
You only need a few rules to keep your program running smoothly without being abused. At the same time, keep the requirements of your customers in mind while devising them; the simpler the rules, the better. Here is a perfect example of that.
10. Implement a referral program and grow acquisitions efficiently
A well-designed loyalty referral program has several benefits: it can increase customer retention, bring in new leads, and most importantly, it can drastically bring down the costs of acquiring new customers.
When your customers invite their friends and family to your store, the word about your brand or e-store is automatically spread. This is far more cost-effective than relying on conventional ads to get exposure. Moreover, people are more likely to buy from a brand referred to by their friends or loved ones.
A loyalty referral program works this way: when a referral customer makes a purchase or signs up to the loyalty program on your store, the referring customer is rewarded.
Here’s a good example of a loyalty referral program used by the American beauty store – Ulta Beauty. It clearly states the rewards for the referrer and the referral and the rules of the program making it incredibly easy for their customers to refer their friends to the brand! The form also lets the customers share the loyalty program on social media.
Referral programs (rewarded usually with a discount) can increase repeat sales from your existing customers as well as bring in new sales from the referral customers.
And when it comes to rewarding customers for referring new leads, you can get more creative than just offering discounts on their next purchase. Instead, offer free shipping or express delivery when their referral-lead purchases from your site or let your customer choose a good freebie as a reward for bringing in a new customer on-board.
11. If you are giving away freebies, make it highly compelling!
Just giving away freebies mindlessly won’t do any good to your loyalty program! It must be so attractive that your customer can’t deny what’s being offered.
One great way to implement freebies is by issuing a physical loyalty card that makes them feel special.
Boloco, an American Burrito chain has implemented the idea of physical cards perfectly in their loyalty program.
If that’s not feasible, even a virtual card is also a neat option. It is not just cost-effective than physical cards, but from a customer’s perspective, it is easy-to-manage and there’s no hassle of losing it.
You can implement the virtual card concept easily through a loyalty program app like the Stampme app. By the way, there are several other loyalty apps these days that you can check out.
Ok, once you have the virtual card up and running, you can tie your discounts, special offers, freebies, and contests to it for your customers to avail. The same goes for physical cards.
12. Publicize your loyalty rewards program
You must publicize your loyalty program frequently on various mediums for getting maximum exposure. You must get the word out there about your loyalty program to your customers; else it won’t yield the intended result. Let your customers know that you have a rewards program on your site.
There are several ways to advertise your program,
- If you have an email list, send a broadcast email to your list telling them about the loyalty program.
- Post about it occasionally on your social media pages.
- Mention about it on the payment acknowledgment emails and on the ‘Thank you’ page after customers make a purchase on your store.
- Include a link to it in your email signature, blog, YouTube videos etc.
- If you have a generous ad budget, try running a pay-per-click ad campaign.
If you can let your creative juices flowing, you can come up with several more avenues (both offline and online) where you can advertise your loyalty program.
13. Set milestone pay-offs
Milestones are powerful tools to increase your loyalty program conversions!
Your loyalty program can be more effective if you can introduce milestone payoff in it. Buyers will be always eager to attain a payoff milestone and grab a reward or redeem their reward points. This is a great way to increase repeat business.
Milestones can be in the form of reward points, wherein you can offer a monetary reward or a freebie after the reward points reach a particular level.
Or, you can also use the number of sales as milestones. Like offering a 20% discount on every 10th purchase on your store or allowing your customer to pick a freebie of their choice (within a set price range) after every 5 purchases and so on. But at the same time, keep your milestones attainable. An unachievable milestone can only turn your customers away and end up being counter-productive to your loyalty program.
14. Start rewarding early
Customers would love to shop at an e-commerce store and shop there more often if it rewards them for every tangible action. The customer retention can dramatically improve by starting to reward your customers early on.
For example, encourage them to sign-up to your loyalty program and grab a freebie or a discount on their first purchase if they have successfully completed a user survey or liked your social media page.
15. Keep the points threshold low
The higher the threshold of converting the rewards points, the lower will be the interest of customers to participate in your loyalty programs. In other words, if you keep a significantly high spending limit to earn loyalty points, your loyalty program will never get popular.
Unattainable milestones in loyalty programs will also discourage purchases, which will eventually affect your sales volume. Thoughtless design of loyalty programs not only makes it a failure but also makes it counterproductive in your efforts to increase traffic and sales.
16. Introduce bonus points
Offer bonus points as incentives apart from providing discounts (when the points reach a particular threshold this has several advantages. Bonus points increase brand allegiance, forges a long-term relationship with your customer, improves customer retention rates, and also help increase customer acquisition rates. Special offers and limited-time deals also work just as well as bonus points as your customers pile-up reward points on your e-store.
17. Offer time-based reward points
The best time to roll out a time-based reward point mechanism on your loyalty program is during a festival or a special occasion like Thanksgiving or Black Friday or Christmas. This is a great way to drive new sales as well as repeat business on your e-store. In order to make the most of this technique, award more reward points than usual during this period to keep it appealing.
18. Give more out of less
This technique is somewhat similar to the previous tip. In this approach, you double or triple the existing loyalty points earned by your customers, but for a specific time period. You can choose when you want to do that. It can be during a festive season or during some random periods of the year. You must notify about this offer in advance to your customers through an email broadcast or through your social media page before unveiling it.
Usually, when the existing points are doubled or tripled, customers get excited to redeem it through a purchase to avail a well-deserved discount or a freebie that’s waiting to be grabbed on your e-store. This can definitely drive in repeat sales! Also, the news about such compelling offers spread quickly through word-of-mouth or even go viral on social media, bringing in a new set of leads and customers to your e-store in the process.
19. Come up with a striking name that evokes curiosity
Before you launch your loyalty program, you must brainstorm a name that’s attractive and something catches the attention of your e-store visitors. At the same time, the name must also reveal that it is still a loyalty program. E.g. Inner Circle, VIP Club, or The Elite. The whole point is to make your visitors feel special that they would really want to be a part of it. Take care that the name elicits an emotion that aligns with your brand.
20. Never be too ‘Salesy’ with your loyalty program
Granted, you are launching a loyalty program to increase sales, but don’t make that too obvious to your customers. Remember, people love to shop, but they hate to be sold. Keeping this fact in mind, you must make your loyalty program as valuable and as less salesy as possible. The best way to show that you cherish your customer is by rewarding every tangible positive action that they take on your site. Don’t just incentivize purchases but also non-transactional actions like signing up to a newsletter, completing surveys, leaving a review, or liking a social media page and so on.
21. Make your reward points look really priceless!
To make your loyalty program stand out from the rest, you must get a bit creative with naming the various constituents of your program, especially the reward point. Calling a reward point a ‘reward point’ doesn’t necessarily make it sound valuable or worthy. There’s nothing novel about it! Hence, it is recommended to come up with a jargon that makes it sound treasured and precious, something like Diamonds, Stars, or Thank You Points, Buddy Bucks, Sweet Points or something that goes with the type of business you are doing.
22. Think beyond just offering the ‘ubiquitous’ discounts
Think out of the box and come up with more engaging rewards for your loyal customers.
Experiential rewards like entry to VIP events, offering concert tickets, or a personal shopper are great alternatives to the mundane discounts.
Charitable rewards are another noble way to put the loyalty reward points to good use than just offering discounts. Your customers may want to contribute to worthy causes or charitable institutions, so why not give them a chance to donate to a few of them using their reward points accumulated in your store without losing a dime?
Allowing entry to a contest (winning a prize) is another cool way to keep your customers engaged with your brand! And it’s certainly more powerful than offering a discount! How about running a feedback contest, or a selfie contest or even a sweepstakes contest where the customer gets to take part in a lucky draw and win a prize?
23. Make sure you earn a healthy profit from the loyalty program
Loyalty programs must be a win-win deal for you and your customer. So in order to earn a decent profit from each sale, it’s crucial to decide how much percentage of your margin you wish to give away as cash back to your customers. Cash back amount is what you offer as a discount to your customers during the check-out process. You must design your cash back percentage in such a way that it doesn’t hurt your profit margin too much.
For instance, if your average margin is 10%, it won’t hurt to give a 4% of that margin as a discount, and you still earn a reasonable profit. This percentage must be earmarked while you design your loyalty program.
24. Make loyalty program and rewards easy-to-find
Keep it above-the-fold. Create a separate menu item on your e-store for your loyalty program. Make sure that the program isn’t buried deep inside a menu or consigned to the bottom of your site.
Also, clearly display the number of rewards that your customer will earn for every product on the product page, something similar to the product page shown below.
25. Notify customer when points are redeemed successfully
The customer must be notified when the reward points are successfully redeemed. This generally occurs during the check-out process.
This is an elegant way to notify your customer that their reward points are successfully redeemed.
Also, it is a good practice to notify your customers when they earn reward points for a non-purchase activity. The most reliable way to do that is through emails. Many loyalty program apps also allow you to notify your customers of an earned reward point via push notifications on mobile phones also.
A mobile push notification will look something akin to this,
26. Make points-spending interactive
It’s always a good idea to offer some level of flexibility to your customers on how much reward points they wish to utilize during a purchase. This is a terrific way to show how much you value your customer, and also an intuitive way to keep your customers coming back to your store for more! This may be a small tweak, but it goes a long way in retaining your customers in your store for long.
Take a look at this product page, where the customer is given the freedom to choose how many rewards he can spend while purchasing this product, facilitated by a slide-bar.
27. Last but not the least (and most importantly) – only sell good-quality products
You may have launched the flashiest loyalty program in town for your e-store, but if the product quality is bad, all your efforts will go down the drain!
It’s a no-brainer that you will lose your hard-earned customers, but more than that, you run the risk of tarnishing your brand’s image and reputation when the customers post poor reviews or talk badly about your store to others. So never skimp on product/service quality, it will cost you heavily.
Conversely, if your products are of top-notch quality, you will build an ever-growing tribe of loyal customers who would be excited to shop and shop more often at your store.
Let me conclude…
Probably, by now you are convinced that it takes a lot to make your loyalty program a resounding success! But don’t be overwhelmed, you can launch one with the basic features initially and then work your way up by adding more features as you get more comfortable with it.
However, I would highly recommend you to keep exploring new ways to fine-tune your program and add exciting features to it. You also need to test the new features that you add and tweak it regularly to keep your customers engaged and loyal to your brand for a long time!
Now if you have already launched a loyalty program for your e-store and seeing no tangible results just yet, relax, it takes some time, patience, and effort for the results to trickle in. So keep at it!
Permit me to ask this.
What has been your experience with loyalty programs on e-stores? Have you used any of these tips before? Or do you have any go-to tips that you would like to add? Please do let us know through a comment below!