E-commerce loyalty programs help online businesses increase customer happiness, retention, and revenue. A well-designed loyalty program with features like gamification, tier systems, and personalized rewards helps you effectively engage your customers and encourage repeat business.
A successful loyalty program rewards customers for their purchases and provides practical behavioral insights. Using customer data allows for personalized communication, tailored product recommendations, and improved customer experience. Increased customer engagement through these loyalty initiatives leads to more interactions and nurtures lasting relationships.
To get the most out of e-commerce loyalty programs, you need to give users an experience they love and let them use tools they are used to.
Customer loyalty software like PassKit lets you design loyalty programs and let customers earn loyalty points when they use their favorite payment methods like Apple and Google Wallet. Customers can collect these points on loyalty customer cards and spend them on various goods and rewards.
You can integrate PassKit with a CRM or POS system – no coding or custom app building is required. Setup is also super fast – you can have your program up and running in minutes.
With PassKit being one of the top customer loyalty apps available, you can start a 45-day free trial to explore its features.
If you’re seeking more information on ecommerce loyalty programs, this guide will cover everything you need to know.
What are ecommerce loyalty programs?
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Online stores use ecommerce loyalty programs to retain customers. Online retailers get customers to buy more by giving them points or rewards for each purchase, increasing their loyalty and improving their experience.
Depending on the points reward system, people can redeem these incentives for discounts, free shipping, exclusive benefits or other perks.
Three key facts about ecommerce loyalty programs
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Here are some interesting stats that emphasize the importance of ecommerce customer loyalty programs:
- More than 90% of loyalty program owners report positive ROI, with an average return of about 4.8 times their investment, demonstrating the financial benefits of these initiatives. (Queue It)
- Customers with an emotional relationship with a brand exhibit a 306% higher lifetime value, emphasizing the importance of building strong brand connections through loyalty initiatives. (Coniq)
- Loyalty programs can lead to a 15-25% increase in sales annually for top-performing programs. Members of these programs tend to spend 20% more than non-members. (BusinessDasher)
As you can see, loyalty is a big deal for ecommerce businesses. The most loyal customers are more likely to make repeat purchases, recommend the brand to others, and engage with promotional offers, contributing to sustained revenue growth and brand recognition.
How to create ecommerce loyalty programs
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You need to consider the following actions when creating your value-based loyalty programs.
Set program goals and objectives
Knowing what you want to achieve with your ecommerce loyalty program is key. Make sure you set clear and measurable goals before you do anything else.
Identify target audience
Define who you want to target with this loyalty program. Different customer segments have unique preferences, behaviors, and motivations. If the program’s incentives misalign with the interests of your target group, this mismatch can negatively impact its effectiveness.
Choose rewards and incentives
One of the most important parts of successful ecommerce loyalty programs is to choose the right rewards and incentives to boost customer satisfaction. They must be appealing enough to trigger engagement and encourage repeat buying behavior.
Pick the right platform for your ecommerce business
Choose the right ecommerce platform for your business to maximize customer engagement. Each platform offers diverse tools and features, which can greatly impact how you interact with your customers.
When choosing a platform, consider ease of use, customization options, payment processing, and customer support.
Define basic rules
Overwhelming customers with too many rules and requirements will confuse and frustrate them and discourage them from joining your program. Instead, keep it simple and easy to understand.
When customers know how to earn and redeem rewards, they will participate actively in the program and make purchases, knowing what they need to do to benefit.
Simple rules also make it easier for you to manage the program and provide a smooth customer experience.
Make it a part of the ecommerce experience
Align the customer loyalty program with the overall user experience of your ecommerce website. It should have the same look, feel, visual elements, and descriptions for a smooth user experience.
Six types of loyalty programs for ecommerce stores
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Here’s a look at six different ecommerce loyalty programs that show the diverse approaches retailers can take to improve customer engagement and drive repeat business.
Points-based loyalty programs
A points-based system is one of the most common reward programs for small businesses. The idea is to give customers points for purchasing, which they can later redeem for rewards.
Tiered loyalty programs
In tiered loyalty programs, customers get rewards based on their level of engagement and spending. They climb a “loyalty ladder” with each product they buy, and each step up unlocks more attractive prizes.
Hybrid loyalty programs
A hybrid loyalty program combines points-based and non-point-based components to reward customers for their loyalty.
For example, people earn points for buying, but you can also reward them with discounts or early access to sales for reaching certain milestones.
Community-based loyalty programs
A community-based loyalty program connects like-minded people and allows them to complete tasks together to unlock rewards.
Subscription-based loyalty program
Subscription-based loyalty programs differ slightly because customers must pay a recurring fee for additional benefits. Ensure that the advantages justify the subscription cost.
Customers should feel they are getting more than what they are spending.
Coalition loyalty programs
Coalition loyalty programs include two or more brands that allow customers to earn and redeem rewards across all participating businesses.
Instead of having separate loyalty programs for each brand, customers can benefit from a unified system that offers diverse incentives.
Where to start an ecommerce loyalty program
Here are a few popular ecommerce platforms to start your online rewards program.
Shopify
Shopify lets you build a website, add products, accept payments and manage orders. The platform also has themes and plugins to customize the store’s look and feel, multiple payment gateways and diverse marketing and SEO tools to promote products and services.
WooCommerce
WooCommerce is an open-source plugin for WordPress that provides an ecommerce solution for small to large businesses. Setting up and managing an online store is very easy. You can create and manage your website, accept payments, manage inventory and more.
Ecwid
Ecwid is an all-in-one ecommerce platform for small businesses that lets you create a store and start selling in minutes. It has a full feature set and is fully hosted – you don’t need to worry about your store’s hosting and maintenance.
Memberful
Memberful is an e-commerce platform that helps you set up subscription-based revenue streams. It’s a great tool for entrepreneurs and small businesses to monetize their content or services.
You can set up recurring payments and manage customer payments and subscriptions.
However, you need to integrate these platforms with an advanced loyalty platform provider like PassKit, which will help you execute all your customer loyalty program ideas.
What is PassKit?
PassKit is a loyalty program app you can integrate with ecommerce platforms through Zapier and Make to create ecommerce loyalty programs. It ensures you can easily manage loyalty programs alongside your existing sales and customer management systems.
PassKit allows businesses to create customizable, branded loyalty reward cards via Pass Designer that customers can easily add to their mobile wallets. You can use these cards to track and redeem loyalty points, offer rewards, and improve customer engagement.
Customers can easily sign up for the loyalty program via a website or app. After signing up, they can receive their loyalty program card and use it to make purchases or interact with your business.
Each time a customer purchases, the system automatically tracks their activity and awards loyalty points. Customers can accumulate these points over time based on the value of purchases or other criteria.
PassKit integrates with ecommerce platforms to send real-time notifications about reward milestones, new offers, or important updates. You can personalize these notifications based on the customer’s activity, encouraging repeat purchases and engagement.
PassKit also provides detailed analytics on customer engagement, redemption rates, and overall loyalty program performance. This data helps eCommerce businesses understand which promotions work best, identify trends, and optimize loyalty strategies.
Start a 45-day free trial to experience the platform.
Integrating PassKit with Zapier and Make
Automatically sync PassKit members with your ecommerce platform to create new customer profiles. This integration allows you to:
- Build your customer base quickly without manual entry.
- Segment customers into groups for personalized promotions and communications.
Send loyalty cards via email or SMS
Deliver digital loyalty cards directly to your customers via email or SMS, ensuring easy access and greater adoption. This feature helps you:
- Promote your loyalty program effectively.
- Reach customers on their preferred communication channels.
Update point balances for each new order
When customers make a purchase, PassKit can automatically update their loyalty point balances. It ensures:
- Accurate tracking of points earned.
- Motivation for customers to reach higher reward tiers.
Burn points for redeemed rewards
When customers redeem points for rewards, the system can deduct (or “burn”) the required points from their balance. It encourages:
- Continued participation in the program.
- Increased customer engagement by showcasing available rewards.
Change tiers based on engagement
Automatically adjust customers’ loyalty tiers based on their engagement levels, such as purchase frequency or total spending. Tier changes can unlock:
- Exclusive rewards and discounts for top customers.
- Incentives for less active members to aim for higher tiers.
Remove members from the loyalty program
The system can automatically remove inactive or opted-out users from your program. It ensures:
- A streamlined database of engaged participants.
- Focus on active customers while respecting those who no longer wish to participate.
Why use Zapier and Make with PassKit?
- Automation: Reduce manual tasks and free up time for your team.
- Scalability: Handle growing customer bases with ease.
- Seamless integration: Connect PassKit with popular ecommerce platforms like Shopify, WooCommerce, or Magento.
Start a 45-day free trial to discover how PassKit’s powerful integrations can drive loyalty and digital transformation in your ecommerce business.
Key benefits of ecommerce loyalty programs
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Here are just some of the reasons for implementing an ecommerce loyalty program this year.
Build customer relationships
Loyalty programs build stronger links between your business and customers. By recognizing and rewarding loyalty consistently, you show you care, which builds trust and emotional connection.
Personalizing rewards to customer preferences makes them feel valued and more connected to your brand.
You can collect customer feedback through your program, address their needs, improve the overall customer experience, and deepen the relationship.
Retain customers and get repeat business
Retention is a key benefit of loyalty programs. When customers know you will reward them for their purchases, they’ll come back and buy again.
Loyalty programs encourage repeat business by giving customers tangible reasons to stay engaged with your brand.
Focusing on retention also reduces the need for expensive customer acquisition strategies, making it a cost-effective way to grow your business while strengthening your existing customer base.
Increase customer lifetime value (CLV)
Customer Lifetime Value (CLV) is the total value a customer brings to your business over their entire relationship. Loyalty programs are a way to increase CLV by getting customers to buy more and stay longer.
When customers feel rewarded for their loyalty, they’ll stick with your brand, spend more, refer others, and drive more revenue.
Create upsell and cross-sell opportunities
Loyalty programs give you valuable customer data to upsell and cross-sell. Knowing your customers’ preferences helps you offer them targeted incentives to spend more.
For example, upselling premium products with extended warranties or exclusive perks will drive higher-value purchases.
Bundle complementary products with discounts, and customers will buy more, increasing their average order value and engagement with your offerings.
Get more sales and revenue
Combining better customer relationships, retention, and strategic upselling or cross-selling will directly impact your sales and revenue.
Loyalty programs create a cycle of repeat purchases and higher spending and deliver consistent growth. Engaging with your loyal customers can maximize revenue and reduce the risk of customer churn and competitive pressure.
Reduce customer acquisition costs (CAC)
Customer acquisition costs (CAC) have skyrocketed in recent years, making it more expensive to get new customers. Loyalty programs offer a solution by focusing on retaining existing customers, which is much more cost-effective.
Loyal customers will continue to buy from your brand, reducing the need for costly acquisition campaigns. This steady stream of repeat revenue will improve your profit margins and create a more sustainable business model.
Level out seasonal sales
For many ecommerce businesses, sales peak during specific seasons and then slow down during quieter periods. Loyalty programs can help level out these fluctuations by getting customers to buy consistently year-round.
Offer double points, exclusive discounts or limited-time promotions during off-peak months, and loyalty members will shop during those quieter times. Even during slow seasons, it will give you a more stable and predictable revenue stream.
With an ecommerce loyalty program, your business will benefit from stronger customer relationships, more revenue and long-term sustainability. It’s a smart investment that will increase customer engagement and address the challenges of rising acquisition costs and seasonal variability.
Four common problems with customer loyalty programs
Here are four common challenges you may face when creating and managing a loyalty program for your ecommerce business.
Low participation
One of the biggest hurdles is encouraging customers to join and stay engaged in your program. Customers need to see clear, tangible benefits and easily understand how the program works to feel motivated to participate.
Measuring success
Tracking the impact of your loyalty program on customer retention and revenue can be hard. Without clear metrics, you risk investing time and money into a program that may not meet your business goals.
Choosing rewards and incentives
Finding the right rewards is key. Rewarding customers without decreasing your profit margins or reducing interest in your other products. Balancing customer satisfaction with cost-effectiveness is imperative.
Building emotional loyalty
Emotional loyalty goes beyond transactions and taps into a deeper connection with your brand. By matching rewards and actions with your brand’s values—such as recycling initiatives or charitable donations—you can create stronger bonds with customers who share similar beliefs, turning them into promoters.
Choosing a loyalty program that aligns with your business goals and values is important for overcoming these challenges and promoting long-term customer engagement.
Five ways to promote your ecommerce loyalty program
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You can’t have a successful loyalty program if you don’t promote it. PassKit helps you provide a connected customer experience by unifying online and offline channels for program promotion. It means you can reach your customers wherever they are.
Here are some ideas to get you started with multichannel distribution.
Engage current and potential customers with email
Email marketing can help you increase buyer engagement and reach out to existing and potential customers.
It’s a cost-effective way to introduce people to your brand, create and maintain customer relationships, increase loyalty program participation and drive sales.
Offer exclusive perks for loyalty members
To get the most out of loyalty programs, you should offer exclusive offers to members. The incentive to join and stay with the program will be bigger if you offer something they can’t get elsewhere.
It can be discounts on products, freebies or special access to exclusive events. The rewards should also make customers come back and spend more.
Promote to program members on social media
You can use social media to announce new promotions, tell members about exclusive offers and rewards, post about upcoming events and share tips. You can also message members directly to ask for feedback.
Post regularly, use visuals to grab attention and create a hashtag for the loyalty program so people can find posts related to it quickly.
Introduce a referral program to expand membership
Encourage members to refer friends by rewarding them for their efforts. It creates a positive growth cycle, strengthening your customer base while building loyalty with existing members.
Reward milestones to boost engagement
Think about the customer’s engagement level and the effort required to reach the milestones. For example, you can base them on the amount spent, the number of visits to your online store or the number of referrals made – depending on the goals of your loyalty program.
Besides promotion, you should follow some general tips and practices to make your customer loyalty program work. Let’s get into it.
Four ways to make your ecommerce loyalty programs work
Here are some things you can do to improve the effectiveness of your ecommerce loyalty program.
Provide excellent customer service
Customer satisfaction is key as people remember their experience with a brand and shape their future buying decisions based on that memory. Training your team to provide helpful, efficient, and friendly service can help build strong customer relationships.
Personalize rewards and incentives
We all love it when someone gives us a unique gift. It shows we matter and makes us feel special, which is always nice. Think about that and consider the personalized customer experience approach when designing your loyalty program rewards.
Analyze and tweak your loyalty program
With loyalty programs, nothing is set in stone. Regularly analyzing customer data and feedback allows you to identify what’s working and what isn’t.
Using customer insights, you can and should change your strategy and adjust the program to perform better. It ensures your loyalty program remains relevant and effective in meeting customer needs.
Talk to loyalty program members
It’s important to stay in touch with your customers, especially those who like your brand enough to join your loyalty program. Talk to them, listen to their feedback and use these insights to inform future changes.
How to measure your loyalty program
Customer loyalty analytics is key to tuning it into a customer retention machine. Tracking these metrics gives you valuable insights into how your loyalty program is performing and where to improve.
Key Performance Indicators (KPIs)
Below are the Key Performance Indicators (KPIs) to track the success of your ecommerce loyalty program and ensure it delivers optimal value to your business.
- Enrollment Rate: This is the percentage of customers who join the program vs the total customer base. A high enrollment rate equals a strong value proposition.
- Engagement Rate: This indicates the number of members actively engaging in the program, calculated by dividing active members by total members.
- Churn Rate: This KPI shows the percentage of customers who stop engaging with the program over a period of time. Monitoring churn helps you identify issues in the program or customer experience.
- Redemption Rate: It shows how many points are redeemed vs points issued, reflecting customer satisfaction and the attractiveness of rewards.
- Average Spend Per Member: This metric reveals how much each loyalty member spends on average, showing the loyalty program’s impact on total sales.
- Customer Lifetime Value (CLV): CLV is the total revenue a business can expect from customers over their lifetime with the brand.
- Participation Rate: It shows how many enrolled members actively use the program.
- Retention Rate: It indicates how many members are still using the program over time.
Using PassKit to track KPIs
PassKit provides a simple dashboard to help you track loyalty program data:
- Dashboard features: The dashboard shows enrollment numbers, active participation rates, redemption stats and deleted members in an easy-to-read format. You can view data over different time frames (daily, monthly, yearly or custom) to make informed decisions about program optimization.
- Automated data collection: PassKit automatically tracks customer actions, such as saving or removing digital loyalty cards from mobile wallets like Apple and Google Wallet. It reduces manual data entry errors and saves time for other important tasks. You can also see customers’ preferred mobile wallets and the best acquisition channels bringing in new program members.
- Visual analytics: The platform shows data in a visual format so you can see trends and performance metrics at a glance. It helps you identify areas to improve or adjust your strategy.
- Customer insights: By analyzing customer behavior and preferences through PassKit’s analytics you can improve marketing campaigns and personalize experiences for loyalty members to drive engagement and retention.
Tracking loyalty program performance with PassKit means focusing on the key KPIs that matter to customer engagement and satisfaction.
Use PassKit’s simple dashboard and automated features to track, measure and optimize your loyalty program.
Monitor and analyze regularly to ensure your loyalty initiatives align with business goals and customer experience.
Start a 45-day free trial now.
Real-life examples of ecommerce loyalty programs
The ecommerce industry has grown so much in the last few years that businesses had to rethink their strategies to remain competitive. Implementing loyalty programs is one of the best approaches to stand out.
Many real-life examples demonstrate how ecommerce businesses have successfully implemented loyalty programs and reaped the benefits. Let’s share some of them.
Sephora
Sephora launched its Beauty Insider loyalty program in 2007. Customers earn 1 point for every dollar spent, which they can redeem for free product samples and exclusive rewards.
The program features three tiers: Insider, VIB (Very Important Beauty Insider), and Rouge. Each tier offers increasing benefits, such as birthday gifts, exclusive event access, and additional purchase points.
As of 2024, the program continues to thrive with over 10 million members, reflecting its success in boosting customer engagement and loyalty through personalized experiences and rewards.
Zara
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Zara has a robust loyalty program that lets customers get points on every purchase and redeem them for discounts, early access to sales, and personalized offers.
Customers earn 1 point for every €1 spent, and once they reach 100 points, they receive a €5 discount on their next purchase.
The program also encourages referrals; when customers invite friends to join, both parties receive exclusive offers and discounts.
Ecommerce loyalty programs: The bottom line
Marketers and salespeople estimate that the average customer purchases 5-7 times before churning. So, it’s no surprise that businesses are investing in customer loyalty programs.
To make a program that customers will use repeatedly, you must make it easily accessible. Offering entry through their trusted wallets like Apple or Google Wallet is a great way to do this.
PassKit is loyalty software you can integrate with your eCommerce platform through Zapier and Make. It’s a digital, contactless, paperless, eco-friendly way to start an ecommerce loyalty program without coding or design skills.
It’s easy to set up and use, eliminating custom app building or lengthy development. You can launch your program in minutes.
Want to check our features out? Sign up and start a 45-day free trial!
FAQs about ecommerce loyalty programs
Let’s answer the most common questions about customer loyalty programs.
What are ecommerce loyalty programs?
Ecommerce loyalty programs reward customers for repeat purchases and ongoing engagement with your online store. They help increase customer retention by offering points, discounts, freebies or exclusive perks.
By getting customers to come back and shop more often, loyalty programs help build long-term relationships and brand loyalty.
How do I create an ecommerce loyalty program?
Creating an ecommerce loyalty program starts with defining your goals and understanding your target audience. Then, decide on a reward structure, points for purchases, tiered benefits or exclusive discounts.
Choose a platform or software to manage the program so it’s easy for customers to participate. Offer valuable and achievable rewards and promote the program through email campaigns, social media and your website to drive awareness and engagement.
What is e-loyalty in ecommerce?
E-loyalty is a customer’s continued preference and commitment to a specific online store. It’s built through good shopping experiences, seamless customer service and personalization. Rewarding customer loyalty with exclusive perks or tailored incentives further cements e-loyalty so customers come back for future purchases.
What are the best loyalty programs?
Some of the best loyalty programs are:
- Amazon Prime, which offers free shipping, exclusive deals and access to streaming services
- Starbucks Rewards, where members earn points redeemable for free drinks and food
- Sephora Beauty Insider, which offers tiered rewards, discounts and exclusive product access
- Nike Membership, which offers exclusive content, early product access and free shipping.
These programs work because they offer real value that aligns with customer needs.
