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Best Loyalty Programs for eCommerce Websites Types and Benefits Posted: September 8, 2020 @ 10:56 am

Loyalty programs are in existence from decades to entice customers. The recent coronavirus pandemic has tipped the scale in favour of online shopping. But as the traditional business is going online with little or no experience, they are finding it hard to head the online ecommerce competition. They must adopt many different strategies to be discovered by customers such as search engine optimization, social media marketing, offers & discounts, interactive user experience, and loyalty programs. In the current scenario, gaining customer loyalty is more important than ever. It implies that you should not be limited to provide great products at good prices, but also offer a convenient buying process and many engagement points for the customers, so they keep coming back and become regular patrons. In this article, we are going to discuss different loyalty programs, with their benefits and examples.

What is a customer loyalty program?

A customer loyalty program in an ecommerce store is a customer retention tool which is focused to keep and engage your customers. This will result in more shopping from your store by customers, regular shopping, and frequent interaction with your brand. An effective customer loyalty program should be easy-to-understand, with a clear path to rewards, and provides a fun experience. An ecommerce store is identified by its purchase frequency and high churn rates. Most of the companies believe that there is no need for customer loyalty programs and instead offer only big discounts to attract customers. But big discounts can’t retain the customers for a longer time, and keep providing discounts may result in loss. There are many different ways by which you can be standalone in your brand loyalty programs.

Provide seamless online shopping experience
Incentivized customer profiling, for getting more data from customers and boosts other marketing activities
VIP benefits and experiential rewards, for a better customer lifetime value
Groups and clubs to build communities
Social media campaigns, for mouth publicity

Stats of Loyalty Programs in eCommerce

As per a study of Accenture, nearly 77% of the customer participate in retail loyalty programs. 82% of companies agree that retention is cheaper than acquisition. More than half of the internet user believe that earning rewards and loyalty points comes among the most valued aspects of the shopping experience. 37. 48% of people expect specialized treatment for being a good customer.

Challenges faced by eCommerce stores for customer retention

Try to serve, not to sell

The recent coronavirus pandemic has changed the marketing philosophy of many different companies. The ecommerce mobile app and store owners should aim to serve their customers in this tough time instead of just focusing on sales & profits. If you are having a non-essential business, then you can also gain the computer’s trust by supporting them. You can give them useful content, and can also share tips on how to spend their time learning new things, cooking, reading, etc. ecommerce stores can also extend their support by offering free shipping to the customers, providing essential items with fewer profits, or participate in humanitarian actions.

Fear of Amazon

In most of the countries, including Amazon, people use Amazon for more than half of their online purchases. And to match the service line of Amazon would be detrimental to your bottom line. But you must know that there is one thing that Amazon is missing; ability to go beyond rewarding transactions. You can be better than Amazon regarding that. And Amazon isn’t an only magnum opus, there are many other similar stores.

Easy & Convenient buying process

The reason for Amazon become such a big & popular it is that it understands customers. Amazon knew that customers are looking for an easy & convenient buying process. They provided similar product recommendations, upsell and cross-sell products, one-click checkout, fast delivery, etc.

Discounts aren’t the only option

As mentioned above, discounts may help in getting more customers on your platform but not for a longer period. After the discount period ends people will stop using your platform, and forget it. So instead of only focusing on offers & discounts, try to provide them with a better experience, and multiple engaging points on your site.

Types of Loyalty Programs

There are 5 major types of loyalty programs that you can use on your ecommerce store to gain a customer’s trust.

1. Point-based Loyalty Programs

This is one of the most used and old loyalty program types. In this type, the strategy from the customer end is earned & burn. It implies to earn rewards and spending them. The customers can earn rewards for many different interactions apart from buying products, such as sharing products on social media platforms, completing their profile, referrals, subscribing to a newsletter, etc. Point-based loyalty programs are easy to manage and quick to implement, so if you are looking for a program for quick launch, then you may this program.

2. Tiered Loyalty Programs

This is the most trending loyalty program type among online customers. The customers can make progress through the program, earning better benefits while spending more money on the platform. Higher tiers give them access to exclusive deals of brands which most of the customer wants to achieve. As tiers give them special status within the brand, many customers don’t want to lose that status, and they are ready to do more shopping for that.

3. Perk based Loyalty programs

In the perk-based loyalty programs, every customer can earn points and benefits unconditionally. It is a great approach if you are providing an out-of-box service or want to increase goodwill among your customers. That’s why this program is ideal for companies who want to provide a more enjoyable shopping experience and raise brand awareness.

4. Hybrid programs

As the name suggests, in hybrid programs, a combination of loyalty programs is used. Many ecommerce businesses use this program for maximum efficiency and driving specific KPIs. This helps them to gain customer trust and loyalty by every different means.

5. Subscription-based loyalty programs

Loyalty programs are highly attracting to the customers as they are free to use. They are getting coupons and gifts for free, even the customers need to do purchasing on the ecommerce store. However, if you are a well-established brand like Amazon, then you can ask your customers for subscription-based loyalty programs such as Amazon Prime.

Different Loyalty Programs Approaches

You can follow many different approaches mentioned here to gain your customers’ trust.

Engage Customer outside the shopping journey

Rewarding the customers when they make a purchase on your ecommerce store is enticing for customers. But if the customers don’t want to buy a product then it can impact customer loyalty. And if there is no reason for the customer to check their profile they will forget your ecommerce store. So, you must provide an engaging experience outside the shopping journey.

Omnichannel

Omnichannel is a great option if you also own a physical retail store. It can bridge the gap between offline and online shopping. A loyalty program can increase footfall in many different ways. In the omnichannel commerce approach, the aim is to provide a holistic and integrated customer experience. As Omnichannel aims to provide better customer experience, it brought another difference i.e. consistency. Omnichannel makes ensure that the customer receives the same level of personalized customer experience every time through every channel.

Membership page

You will always require a loyalty HUB in your ecommerce loyalty program. It is a custom web page which is seamlessly integrated into your e=commerce store. The customer can learn the program rules, browse & redeem rewards, check progress, open new badges, etc.

Multi-lingual and Multi-currency

If you have a global audience and are selling products to different countries then it is necessary to serve the content to them in multi-languages and transactions in multi-currencies. It will increase the trust and participation of the customers if the loyalty HUB is available in many different languages.

Gamification

On Amazon, you may observe that there are various quiz games, and lucky draw on the website to engage customers. Such games are very engaging to the customers and also companies can use the small quizzes to advertise their products by asking questions about the product specifications. It is a valuable program to incentivize repeated customer behaviour.

Managing Offers

If you can’t afford to give deep discounts in your loyalty programs, then opt for limited period offers. These offers can be for festival holidays, promoting the latest collection, or create a fuzz about your products.

Social Media Contests

If you want a make a good relationship with your customers, you need to make a presence on those channels where your customers are available. In terms of loyalty programs, it implies that you must host social media contests on platforms like Instagram, Facebook or Twitter. The contests can be like posting a photo, hashtag contest, etc.

Benefits of Customer Loyalty Programs

After discussing the strategies, let’s know how these customer loyalty programs would be beneficial for developing your ecommerce store.

1. Revenue Increment

Customer loyalty programs can help in increasing the customer retention rate. As they now trust in your brand they must be ready to spend more. Do you know that increasing the customer retention rate by 5% through loyalty programs can increase your revenue by 25 to 30%?

2. Saves customer acquisition cost

You must know that acquiring new customers is 25% more expensive than the retention of existing customers. Loyal program is like an investment that you do for retention of existing customers.

3. Generates data

In today’s time data is the new oil. The customer now expects a personalized experience on your ecommerce store which is possible by knowing their preferences or choices. Customer loyalty programs help customers to fill out profiles which you can use for personalized customer experience as well as targeted market campaigns.

4. Customers feel appreciated

A personalized customer loyalty program emotionally connects the customer with your ecommerce store and brand. Customer trust is highly useful especially in the case of any chaos.

5. Better Communication

You can directly communicate with your customer through customer loyalty programs. This is useful in the case of an emergency. By matching purchase dates, you can email relevant customers about a recalled product instead of sending out a generalized email which will be ignored.

6. Attract new customers

A good customer loyalty program is not limited to just retention of the existing customer but can also attract new customers. If the loyalty program is on a social media platform then the new customer will come to know about discounts and offers which will lead them to check out your ecommerce store.

7. Improve reputation

Business is all about ethics and reputation. Money can come and go, but you can’t compromise with your reputation. Customer loyalty programs can serve a double capacity: guarantee that current clients feel esteemed, and boost new clients to keep patronizing your business.

Top Examples of Customer Loyalty Programs

Here are some of the best examples of customer loyalty programs from which you can learn to implement in your ecommerce store.

1. Starbucks Rewards

Customers were able to earn Starbucks loyalty stars with the Starbucks Rewards program. They just need to order or pay using a special app.

2. Virgin Atlantic Flying Club

Almost every airline use the strategy of earning miles and using them for future flights as a customer loyalty program. But some companies are not limited to this only. Such is a case of Virgin Atlantic. They introduced a Flying Club in which the members can earn tier points. There are 3 different tiers - Club Red, Club Silver, and Club Gold. Each tier has different rewards for the customers.

3. Amazon Prime

Amazon is one of the world’s biggest ecommerce marketplace and comes with its widely popular membership Amazon Prime. The membership is priced at Rs. 999 per year in India. Well, it is not essentially a customer loyalty program as it is paid but it can be the best epitome of providing enough value to regular buyers.

4. Uber Rewards

The Uber Rewards customer loyalty program enables the Uber users to earn the points on every order and ride. They can use these rewards on meals to miles. It’s a program carefully designed to provide Uber customers with benefits that allow them extra time, flexibility, and control.

5. IKEA Family

IKEA is one of the largest furniture company based in Sweden. IKEA provides different perks such as surprise & delight offers that are sent out as emails. The members have free access to their workshops and events, etc.

Wrapping Up

In this article, we tried to cover each and everything on customer loyalty programs. Hope you understood the worth of the customer loyalty programs for your ecommerce store. Hiring the best ecommerce development company, that specializes in developing ecommerce stores from scratch is a good idea. So, get in touch with ecommerce developers to implement new features and functionalities, and other services.

Author:

Alex J Sam

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