By rewarding frequent customers and encouraging one-time buyers to come back to your store or ecommerce website, loyalty programs are another omnichannel sales promotion you may wish to add to your arsenal.
Rewards for loyal shoppers often include free merchandise based on points accrued, various coupons or discounts, as well as exclusive early access to new products you may be launching.
Using ecommerce loyalty programs on your website
Using ecommerce loyalty programs on your website allows you to get creative using digital technology, mobile apps and email. Acting as an enabler within your loyalty program designs, technology allows you to both create your own rewards and use pre-defined rewards.
As an initial starting point, capturing contact information is a prerequisite to any successful loyalty program irrespective of the channels the customer came to you from. So you should ensure that your ecommerce loyalty program is capturing this information successfully before using the following best practices:
1. Define your program goal and target audience.
When launching any type of sales promotion, your goals and target audience should always be defined and understood perfectly. Do you want your loyalty program to increase average order values, improve repeat custom or decrease customer churn rates? Knowing things like this will help you to establish which ecommerce loyalty program is best for you and your customers.
2. Set and measure Return on Investment objectives.
Loyalty programs should not only motivate your target audience to spend more with you, they should also ensure you receive a positive Return on Investment (ROI). One calculation to start with when measuring ROI is to subtract your incremental revenue from your incremental costs. Incremental revenue (i.e. additional revenue and benefits from increased sales) can include membership fees, sales of premium products, higher referral rates, lower customer churn rates and increased purchase frequencies and/or order totals. Whereas incremental costs (i.e. those additional costs that occur from selling more products) can include perks, member events, IT investment, marketing costs, business overheads and actual rewards redemption totals.
3. Promote your program on the right channels.
Social media, email marketing and mobile marketing are all good starting points for promoting your ecommerce loyalty program, but target audiences will differ in which channels they use, how they use them and when they use them. Thus, your promotional efforts of your program should find the right balance for your ideal customer profile. As an example, 88% of Facebook users are aged 18-29, while 84% of adults who use Facebook make less than $30,000 per year. If your brand is recognized as a youthful, good value brand then Facebook could be a good platform for you to utilize. If, however, you have a luxury brand that targets the over sixties, in-person marketing may be better suited instead.
With these best practices in place, you should now be in a good starting position to create an ecommerce loyalty program that incorporates the demands of today’s digitally savvy customers.
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Using retail loyalty programs in your brick and mortar store
Retail loyalty programs have evolved far beyond stamp cards. With stiff competition both online and offline, retailers need to think outside of the box in order to offer the best of the best. This includes how retail loyalty programs should be created, launched and developed.
First things first, what motivates shoppers to join loyalty programs?
As can be expected, motivations differ among varying target audiences. Some are cost-conscious, so are looking for discounts on purchases they wouldn’t ordinarily make. Whilst others are already loyal customers, excited to receive discounts for purchases they already make.
For your retail loyalty programs to be truly successful in this highly competitive industry, your program needs to be more than just a standalone advertising or marketing program. It needs to help you build a relationship with customers far beyond what your competitors are doing.
Consider these best practices for your own retail loyalty programs:
1. Reward successful customer referrals.
Whether your goal is to gain a new customer or tap into a highly qualified potential lead, rewarding your existing customers for an introduction can be a great way to do this. You will gain new customers, whilst your existing customers will be more likely to spread the word about your brand, knowing they will be rewarded for it.
2. Remember to promote your loyalty program.
You may be surprised to find that there are a vast number of companies out there who are not advertising their loyalty programs as much as expected. Whether you craft short and snappy social media posts, personalized marketing emails or spread the word in store, you should always be willing to promote your program.
3. Aim for uniqueness.
With so many different types of retail loyalty programs out there (from retailers of all sizes), you should try to stand out from the crowd with a unique offering. This includes the program itself and how you choose to reward customers. Loyalty programs are rarely one-size-fits-all so your unique selling point should always be based on extensive persona profiling and market research. Find out what your customers really want, and work with them to find something to suit both their needs and the intended growth of your business.
4. Digitize your retail loyalty program.
In a truly omnichannel world, it’s crucial to ensure you are where your customers are as many shoppers will choose to engage with your brand in a variety of ways (both online and offline). Thus, you need to ensure your customers can participate in your loyalty program when in store and when buying from your ecommerce website. Consider mobile apps, discount codes and emails to allow your loyalty programs to enter the realm of omnichannel.
5. Mix things up.
If you find your reward redemptions drying up a little, consider mixing things up a bit. Have customers grown tired of discount codes? Why not offer a free gift with a qualifying purchase instead? Have those free gifts lost their sparkle? Consider launching a competition to allow customers to win exclusive and exciting new products.
6. Measure the success of your retail loyalty program.
Depending on your own goals, target audience and business, there are a number of different metrics to consider when evaluating the success of your retail loyalty program. Try some of these on for size:
What is your Average Order Value (AOV) before and after creating the loyalty program?
How does your AOV compare between loyalty members versus non-loyalty customers?
What is your repeat purchase rate of non-members versus members?
How often do your loyalty members redeem points, offers or discounts?
What are the engagement rates on offers, competitions and prizes that you’re offering?
Which segments of customers are the most engaged? Should you focus your efforts on them more than others?
With these best practices at the forefront of your mind when creating retail loyalty programs, you should be well on your way to creating loyal customers, attracting new ones and growing your retail business.
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Best retail loyalty programs
When expanding into new business ventures, it always pays to know what your competition are doing.
Here’s our list of the best retail loyalty programs that you can gain some inspiration from:
1. The Starbucks App