Before we start, let us share 3 important facts with you:
- It is calculated that it’s between 5 and 10 times more expensive to get a new client than to foster the loyalty of an existing one.
- On average, a loyal client spends 67% more than a new one.
- According to the consulting group Carlson Marketing Group Research, a 5% increase in loyalty can increase profits between 25% and 85%.
That’s pretty interesting, isn’t it?
We’ve already talked about the importance of fostering clients’ loyalty and we’ve explained several strategies for you to gain your consumers’ loyalty.
However, today we want to go a step further and talk about a very powerful strategy that is still not very common in the online shops niche: loyalty programs.
Do you think you’ve already done everything you cab to gain your clients’ loyalty?
We’ll find it out in just a minute.
What are e-commerce loyalty programs?
Watch out—it is easy to confuse this term. Launching sales promotions every now and then or giving discounts away is not the same as a loyalty program.
A loyalty program is an organized scheme through which we reward some of the clients’ actions.
Later we’ll talk about the different types, but let’s just stick with the main idea for now.
However, as we said in this post, gaining the client’s loyalty is not as easy as it used to be years ago. In order to attract the millennials, just offering discounts is not enough. The customer experience with the brand has to be richer and more comprehensive.
Advantages of establishing a loyalty program
As with any other strategy, implementing a loyalty program has a cost. So, is it really worth the investment?
In order to answer that question, let’s list out some of the advantages that come along with a program like this.
- Better online reputation: more loyal clients means happier clients who talk positively about your brand.
- More feedback: about what they like and don’t like. This is always useful when it comes to improving your customer service, editorial line, and email marketing strategy.
- A better brand image: and strong branding always means better positioning in the marketplace.
- More sales: being loyal to a brand means more recurring sales and, normally, an increase to the average checkout price.
- Better ROI: you’ve already seen this—the new client acquisition cost (if you don’t know this metric, click here) is way higher than the loyalty cost. And this means a lower investment per sale.
As you can see, there are quite a few advantages. And what’s even more important is that some of them are directly related to the income of your business. ;)
How to establish a loyalty program for your online shop
Though you may not think so right now, the best loyalty programs for your audience are not those that offer bigger discounts, but rather those that offer a more comprehensive customer experience.
Let’s take a look at how you can plan your strategy.
1. What is your clients’ loyalty based on?
This is directly related to the value proposal of your online shop.
Have you ever analyzed why clients choose you instead of your competitors?
Here are a few possible reasons:
- Price: you are the cheapest option. Be careful, this is not real loyalty. As soon as someone comes along with a cheaper price, say goodbye to your clients.
- Quality: your products are better. It may be the materials, the design, or that they are easier to use. With this you do have real loyalty, but if you don’t reinforce it, you may suffer as soon as a similar brands begin to appear.
- Brand image: there are some people who only buy from a single brand their whole life. Normally, families transfer this kind of loyalty. This is strong loyalty and the brand is a part of the client’s life.
- There are no competitors: you are a pioneer in your niche. It is the same situation as price or quality—as soon as a new competitor appears, you will lose clients.
This analysis leads us to the following issue:
2. Goals according to type of client
You have to set different goals for every type of client. For example:
- Occasional clients (they buy because of the price): in this case, your goal will be working on the relationship with them so that they start noticing how you offer them added value.
- Regular clients: in this case, the loyalty program can be useful to reward their first purchases and generate more. It is very useful to combine prices with cross-selling.
- Very loyal clients: for this type of user, you can create campaigns to get new clients (since they are already ‘brand preachers’, it would be easier for them to promote your brand, especially if you reward them).
You mustn’t skip over this point. The success of your loyalty program depends on the creation of a personalized experience in accordance with the relationship that your clients have with your brand.
3. Types of loyalty programs
Let’s now see some different strategies that you can use. The ideal situation (as we have just mentioned) would be to complement them with each other.
- Rewards program: these are typical discounts that the brand offers after completing certain actions. They are quite common in order to have users subscribe to our blog and capture their email addresses.
- VIP treatment: it is like belonging to a VIP club where you are offered exclusive content or access to certain products before anyone else (for example, it is very useful for a new season products).
- Points: users buy and we give them points that they can exchange for gifts.
- Events creation: in this case, we work building the community and we try to create a stronger bond with the brand.
Bear in mind what we said before—within your loyalty program, you can (and should) have different types of campaigns according to the type of client.
How can you know if your loyalty program is working?
In addition to analyze the results of each specific action, it is important for you to carry out a Customer Lifetime Value follow-up (the total value of the customer).
This information refers to the total amount of sales per user or those sales that we got through them (through loyalty campaigns to get new clients in exchange for rewards).
However, always remember that fostering loyalty is a long-term job. A strong brand always seeks strong relationships.
Examples of loyalty programs for online shops
Let’s take a look at some examples of how some shops are using loyalty programs.
1. Tienda Animal
One of our clients has a points-based loyalty program.
As you can see in the image, for every purchase, clients can get points that they can exchange for prizes later. But also check out these two bits:
- Gamification: a very useful strategy is to establish some rewards for users who “level up”. These steps can be achieved when buying more, sharing content on social networks, or commenting on the blog. This makes users keep participating.
- Spread happiness: instead of exchanging your points for prizes, you can help a good social cause. This way, in addition to rewarding the client, you can reinforce your brand’s values. This is also part of social marketing.
It is not all about discounts. ;)
Another client of ours uses one of the strategies that we mentioned before: rewards for bringing new clients.
And when those new clients arrive, we will use the same strategy again with them.
But watch out, don’t forget about the Customer Lifetime Value to see if those clients are really becoming loyal to the brand or not.
This clothing shop has used their loyalty strategy from the beginning. You can’t just enter their e-commerce shop in the normal way, but rather you have to register on their website (with your email address or Facebook account).
Huckberry works with a very powerful email strategy and they carefully calculate every single detail of the newsletters they send.
In it, besides their products and discounts, they add interesting content for their buyer persona and they try to increase their involvement.
With this pre-registration, the feeling of belonging to an exclusive club is emphasized, which increases the brand’s value in the eyes of the client.
5 tricks to creating a successful loyalty program
Did you think that was everything?
Not at all!
After reading everything we have explained up to this point, you have the basic knowledge to start creating your program. So now it’s time to become a loyalty pro.
- Easy to understand: if earning the rewards is too difficult of if the system is too complicated to understand, users will get bored and leave quickly.
- Original rewards: discounts are not the only option. When talking about Tienda Animal, we mentioned that you could exchange your points for good causes. Another option is to offer personalized merchandise, such as mugs, t-shirts, or pens (try to make them take a picture with it and upload it to social media).
- Progress over time: remember gamification. In order for loyalty to develop, the person must interact with the program over time. If they only interact to get a one-time discount, we achieve nothing. Change the rewards regularly and look for new challenges.
- Guaranteed gifts: from time to time, and if your profit margin allows for it, give them a present. Even if it is something symbolic, clients will appreciate it. Another strategy used by some brands is offering welcome packs. As is commonly said, the first impression is the one that counts.
- Feeling of permanence: we want our audience to feel special for belonging to our program. A useful idea is to seek the tribe feeling and to come up with a unique name for the brand’s followers.
Be creative and think of activities or actions that will favor interaction with your brand.
Are you ready to launch your loyalty program?
Winning your audience’s hearts is a difficult and long-term strategy. It is all about consistency and never missing a chance to interact with your clients.
However, as you have seen, the effort is worth it in the end. ;-)