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E-commerce loyalty programs are essential for any online business looking to increase customer satisfaction and retention and boost profits. With the right program in place, companies can reward their customers for purchases and loyalty and gain valuable insights into their behavior.
To fully capitalize on loyalty programs, however, you need to provide users with an experience they enjoy and let them use tools they are familiar with.
Customer loyalty software, such as PassKit, enables you to design loyalty programs and allows customers to earn loyalty points when they use their trusted payment services like Apple and Google Wallet. People can accumulate these points on loyalty customer cards and spend them on various goods and rewards.
You can easily integrate PassKit with other processes and IT infrastructure, such as a CRM or POS system – it doesn’t require coding skills or custom app building. The setup is also straightforward; you can run your program in minutes.
Need more information about the effective use of e-commerce loyalty programs? No worries – this guide will give you an in-depth look at this subject.
The definition of eCommerce loyalty programs
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An eCommerce loyalty program is a points reward system used by online retailers to encourage shoppers to buy more products by giving them points or rewards when they purchase items.
The main goal is to create a sense of loyalty among customers, so they keep returning to the eCommerce store. Depending on the system, people can exchange these points for discounts, free shipping, or other perks.
In other words, a customer loyalty system, or a rewards program, is a tool that helps companies retain customers, which is incredibly important for any e-commerce business.
The importance of customer retention for eCommerce businesses
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Customer retention is essential for eCommerce businesses for several reasons:
- Keeping existing customers costs less than trying to acquire new ones.
- Loyal customers are more likely to make continued purchases, so keeping them is a great way to increase revenue. Customer retention also helps make the stream of income more stable and reliable.
- When companies focus on customer retention, they build relationships with their clients. People like a particular brand make repeat purchases and recommend the product or service to their family and friends.
- While improving customer retention, businesses also learn more about their clients and their behavior. Tracking customer purchases and interactions helps companies better understand the products and services their customers are looking for. They can improve their offer, marketing and customer service.
The importance of customer retention and eCommerce loyalty programs is visible in statistics – let’s look at some of them.
Three critical stats about eCommerce loyalty programs
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Here are some exciting statistics highlighting the importance of eCommerce loyalty programs:
- Integrating a loyalty program with your e-commerce platform can increase average order quantity by 319%. (Incentive Solutions)
- 44% of brands are more focused on ensuring their loyalty programs provide a digital experience to customers. And shoppers are more likely to go for a brand if there is a feasibility of accessing the loyalty program across multiple channels without trouble. (ReadyCloud)
- 81% of traditional loyalty program members would join a premium loyalty program at their favorite retailer as long as the benefits were valuable. (Access Development)
As you can see, loyalty is a powerful thing in business. Most of us consider it in our buying habits. It’s also relatively easy to build, and it often works long-term.
Of course, loyalty programs can also help you fulfill other goals. Let’s discuss what benefits they can bring.
The benefits of implementing a customer loyalty program
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Here are the most critical benefits of implementing a customer loyalty program for your e-commerce business.
Improved customer relationships
You can use customer loyalty programs to build trust between your business and customers, creating a sense of loyalty and connection to the brand.
Your company can also improve existing customer relationships by providing personalized rewards and discounts that help make people feel appreciated.
Increased customer retention and repeat business
Customer loyalty programs can lead to increased customer retention since people are more likely to remain loyal to a business that rewards them for this loyalty.
Businesses can use such programs to encourage customers to return, leading to more repeat sales.
Increased customer lifetime value
Improved brand loyalty leads to increased Customer Lifetime Value (CLV). This metric helps businesses measure the value of a customer over their entire relationship with the company. Increasing customer lifetime value can dramatically affect a business’s bottom line.
Opportunities for upselling and cross-selling
A customer loyalty program can help you create opportunities for upselling and cross-selling. For example, you can incentivize your customers to buy higher-grade products by offering an extended warranty or improved customer service. You can also provide attractive discounts when people buy several products together.
Increased sales and revenue
Improved customer relationships, increased brand loyalty and customer retention, and additional upselling/cross-selling opportunities lead to more sales and higher revenue.
Of course, to fully capitalize on the benefits of customer loyalty programs, you must be aware of the possible challenges they can bring.
Three common challenges with customer loyalty programs
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Here are three common problems you may encounter when creating and running a customer loyalty program for your eCommerce business.
Low enrollment or participation
One of the main challenges of customer loyalty programs is ensuring that customers participate and feel adequately engaged.
Customers need to feel that the program provides tangible rewards to ensure good enrollment and participation. They also need to understand the rules behind it.
Difficulty measuring success
You also need to be able to measure the success or failure of your customer loyalty program. Otherwise, you might waste money and effort on something that simply doesn’t help you achieve the established goals.
Difficulty choosing rewards and incentives
Finally, selecting the right rewards and incentives for your program can be challenging.
You need to find items that offer real value to your customers, but you also need to ensure you’re not wasting money and give people so much that they stop being interested in buying your other products.
Choosing the correct loyalty program type for your goals is crucial to help you succeed. Let’s share some ideas.
Five types of eCommerce loyalty programs
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Here are five common types of loyalty programs used by eCommerce businesses.
Points-based customer loyalty program
A points-based system is one of the most popular rewards programs for small businesses. The basic idea is to offer customers points for making purchases, which they can later redeem for rewards.
Tier-based eCommerce loyalty program
In tier-based eCommerce loyalty programs, customers who make purchases continuously climb a “loyalty ladder.” Each bought product moves them closer to attaining a higher tier, with each tier offering more attractive prizes.
Hybrid customer loyalty program
A hybrid customer loyalty program combines points-based and non-point-based components to reward customers for their loyalty, creating a deeper, more personalized connection with customers and a higher engagement level.
For example, people earn points for purchases, but you can also reward them with discounts or early access to sales for reaching certain milestones.
Community-based eCommerce loyalty program
A community-based loyalty program aims to connect like-minded people and allow them to complete various tasks together to unlock attractive rewards.
Subscription-based customer loyalty program
Subscription-based loyalty programs are slightly different because they require the customers to invest in something other than your product.
The idea is to create a subscription service that allows people to get more out of the things they buy from a given brand – for example, extended warranty, 24/7 customer service, and more.
Now that you know what types of loyalty programs you can create, let’s share some tips to help you to design them effectively.
How to design effective eCommerce loyalty programs
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You should remember a couple of things when creating your customer loyalty program.
Setting program goals and objectives
Knowing what you want to achieve through your eCommerce loyalty program is essential. Be sure to set clear and measurable goals before you do anything else.
Identifying target audience
You must also specify the people you want to reach with this loyalty program. Different programs can work for different groups, and a mismatch may affect effectiveness negatively.
Choosing rewards and incentives
One critically important step is selecting the correct rewards and incentives. They need to be attractive enough to provoke engagement, and it’s probably a good idea to choose benefits that will nudge people toward making purchases.
Selecting the right platform for your eCommerce business
Selecting the right eCommerce platform for your business is essential, as different tools offer different possibilities regarding features, Mailchimp integrations, and more.
What are the best platforms for starting an eCommerce loyalty program
Here are several well-known eCommerce platforms on which you can start your eCommerce loyalty program.
Image source: G2
Shopify helps you build and manage your online store. You can create a website, add products, accept payments, and manage orders. The platform also offers a range of themes and plugins to customize the store’s look and feel, access to different payment gateways, as well as various marketing and SEO tools to help you promote products and services.
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WooCommerce is an open-source plugin based on WordPress that provides an eCommerce solution for small to large-sized businesses. Setting up and maintaining an online store is very easy. You can quickly create and manage your website, accept payments, manage inventory, and more.
Ecwid by Lightspeed
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Ecwid is an all-in-one eCommerce platform for small businesses that allows you to create a store and start selling your products in minutes. It offers a comprehensive feature set, and it’s fully hosted – you don’t need to worry about hosting and maintenance of your store.
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Memberful is an eCommerce platform allowing businesses to set up subscription-based revenue streams conveniently. It’s an excellent tool for entrepreneurs and small businesses looking to monetize their content or services. You can easily set up recurring payments and manage customer payments and subscriptions.
What is PassKit?
PassKit is a loyalty program app you can integrate with the abovementioned platforms to offer loyalty program cards to your clients, which they can save and utilize through their digital wallets without downloading a separate application.
It’s a contactless and paperless way of facilitating eCommerce loyalty programs. You don’t have to design or print anything so you can start almost instantly.
How does PassKit work?
If you have a ready-made list of customers, you can upload their emails to our system, and they’ll receive digital loyalty cards they can use on your online store.
To see how PassKit works, start your 45-day free trial.
How PassKit enhances eCommerce platforms through Zapier
Here’s how you can use Zapier integration to enhance the features of your eCommerce platforms.
Automatically enroll PassKit members as new customers on the platforms
You can automatically enroll PassKit members as new customers, which means you can quickly build your customer group.
Distribute digital loyalty cards via email or SMS
You can send loyalty business cards to your customers directly via email or SMS, so reaching people and promoting the program is easy.
Update point balance for each new order
After each new purchase, PassKit will automatically update the customer’s point balance, allowing them to reach new rewards and tiers.
Burn points for each new order
When users decide to acquire specific rewards that interest them, PassKit will automatically burn their points after each new order.
Change members’ tiers based on their engagement
When your members reach specific engagement levels – based on their purchases or other factors – you can change their tier to offer them more rewards and incentives.
Delete members from your eCommerce loyalty program
You can also remove users from your eCommerce loyalty program when they’re inactive or don’t want to participate anymore.
Five tips for promoting your eCommerce loyalty program
A well-designed eCommerce loyalty program won’t amount to much if you don’t promote it effectively. Here are some tips that should help you.
Utilize email marketing to reach out to current and potential customers
Email marketing is a powerful tool you can utilize to reach out to customers – both existing and potential. It is a cost-effective way to introduce people to your brand, create and maintain client relationships, improve customer loyalty program engagement, and generate sales.
Offer exclusive deals and promotions to loyalty program members
To make the most of loyalty programs, you should offer exclusive deals and promotions to members. The incentive to join and stay with the program will be stronger if you provide items people can’t get otherwise.
It can be in the form of attractive discounts on products, freebies, or special access to exclusive events. The rewards should also encourage customers to keep returning and spending more money.
Use social media to promote and engage with program members
Social media has become a potent tool that helps businesses engage with customers.
For example, you can use social media platforms to announce new promotions, inform members of exclusive discounts and rewards, post updates about upcoming events, and share helpful tips. You can also contact members directly to listen to their feedback.
Of course, to achieve good results, you need a strong presence on social media platforms. Post regularly, use visuals to draw attention and create a hashtag for the loyalty program so that people can find posts related to it quickly.
Also, be sure to respond to customer inquiries and feedback – and do it quickly.
Create a referral program to encourage current members to bring in new members
A referral program is an effective loyalty program that encourages current members to bring in new members. It is a great way to increase your customer base and build relationships with existing customers. By rewarding current customers for referring new members, you can create a positive feedback loop that helps to grow your business.
Offer bonuses and rewards for reaching certain milestones within the loyalty program
When designing the loyalty program, it is essential to consider the types of rewards offered and milestones for achieving specific goals. You must carefully select the latter to ensure that customers are motivated to reach them.
It’s essential to consider the customer’s engagement level and the effort required to achieve the milestones. For example, you can base them on the amount of money spent, the number of visits to your online store, or the number of referrals made – depending on the goals set for your loyalty program.
Aside from promotion, there are also some general tips and practices you should adhere to to make your customer loyalty program successful. Let’s discuss some of them.
Four best practices for a successful loyalty program
Here are some things you can do to improve the effectiveness of your eCommerce loyalty program.
Providing excellent customer service
It’s important to understand that people remember their experience with a given brand and shape their future purchasing decisions using that knowledge. Because of this, one of the best things you can do for your customer loyalty program is to provide excellent customer service.
Personalizing rewards and incentives
Let’s face it – we all like it when someone gives us a unique gift. It shows commitment and makes us feel special, which is always nice.
Think about this and consider the personalized customer experience approach when designing the rewards for your customer loyalty programs.
Analyzing and adjusting your customer loyalty program
Nothing is set in stone regarding loyalty programs. You can and should change your strategy and readjust the system if you can do something better.
Regularly communicating with loyalty program members
It’s essential to always keep in touch with your customers – especially those who like your brand enough to become a loyalty program member. Talk to them, listen to their feedback, and use this knowledge to inform future changes.
Real-life examples of eCommerce businesses with successful loyalty programs
The eCommerce industry has grown exponentially recently, and companies have had to step up their game to remain competitive. Implementing loyalty programs remains one of the most successful strategies to stay ahead of the competition.
There are many real-life examples of eCommerce businesses that have implemented successful loyalty programs and seen great results. Let’s share some examples.
Image source: SunKissed Blush
Sephora started the Beauty Insider loyalty program in 2007. It gives customers points for every dollar they spend since $1 equals 1 point. People can redeem points for free product samples. Accumulating these points also allows customers to achieve new loyalty tiers – Insider, Vig and Rouge – with each offering more attractive benefits.
Image source: Marketing Week
The online fashion retailer ASOS has been using a loyalty program, ASOS A-List, since 2013. It rewards customers with points whenever they purchase something or refer a friend. They can then redeem these points for discounts, exclusive offers, and more.
ASOS encourages customers to participate in the loyalty program by offering exclusive access to new products, early sales, and other benefits.
E-commerce loyalty programs: The key takeaways
Marketing and sales specialists estimate that the average sales cycle for a customer is between five and seven purchases, which makes user retention a critical metric. Considering this, it’s not surprising that businesses are investing heavily in customer loyalty programs.
To create an effective program that customers want to use repeatedly, you must ensure it’s easily accessible. Offering it via their trusted wallets, such as Apple Wallet or Google Pay, is a great way to achieve this.
PassKit is a powerful customer loyalty software solution you can integrate with your eCommerce platform through Zapier. It offers easy access to digital, contactless, paperless, eco-friendly business loyalty cards.
PassKit is effortless to set up and use and doesn’t require lengthy design and printing of pamphlets and cards for the customers.
Want to check our features out? Sign up and start a 45-day free trial!