Nothing beats the thrill of winning new customers from your online store.
Isn't it exciting to see them sign up for your email list?
Or when you receive their order for the first time.
You'd get giddy when they take the time to leave feedback.
But here's the catch... These customers are just a fraction of your total website visitors. Most of them visit only once, do not purchase, and do not want to return.
And you don't want that!
You want them to keep coming back for more. Why? It's because...
- Acquiring new customers costs five times higher than maintaining an existing customer base.
- Existing customers are 50% more likely to buy a new product from you.
- They are also 31% more likely to spend more than your new customers.
As important as it is to have new customers, it is also crucial to keep your existing customers.
And when you nurture your relationship with existing customers, you build customer loyalty which can help you boost your profit margins.
What Is Customer Loyalty?
Customer loyalty refers to a customer's interest in returning to your business. It is often due to the positive experiences with your brand.
This means they enjoy doing business with you.
Customer loyalty helps your business grow faster. That is why all companies should optimize their customer loyalty campaigns.
It should be in your best interest to keep customers for as long as possible. Because they are the ones who patronize your products. And when they do, it drives your revenue.
As a result, customer loyalty programs are crucial to the ecommerce business.
In this blog post, I will explain how and why customer loyalty programs work.
So. let me begin...
What Is A Customer Loyalty Program?
A customer loyalty program is a form of reward system. It makes customers want to return to your business.
The purpose of this strategy is to motivate customers to stay with you.
And to motivate them to keep choosing your brand over your competitors.
Loyalty programs go beyond simply providing discounts to customers. Here, they receive timely and relevant offers.
So, how do you make sure your offer is relevant to them? You can use the purchase history and other information they provide.
Use customer data to personalize your program... It will no doubt improve your customer's overall experience.
Now, why is this important? Read on...
The Importance of Customer Loyalty Programs
Cost-Effective
When you focus on customer retention, your marketing efforts will cost you a lot less... and increase your profits at the same time.
Did you know that when you increase your customer retention by 5%, you increase your profit margins by 25-95%?
And all you need is an effective customer loyalty program!
Creates a More Engaging Customer Experience
Customer Experience Trends Report 2021 says... 75% of customers base their purchase decisions on their experiences.
The best loyalty programs reward your repeat customers based on their preferences.
That's why you should plan your customer loyalty program around this and get your customers engaged.
As a result, your loyalty program will provide customers with an experience they will remember.
Increased Revenue
According to Harvard Business Review, businesses with loyalty programs grow 2.5 times faster in revenue. And they grow even faster than their competitors. Also, they can generate 100-400% higher shareholder returns.
This is a no-brainer. Your customer rewards program can influence members to choose you over your competitors.
People who are a part of your rewards program are more likely to patronize your business. Because they have already formed a connection with you.
You will have customers who regularly purchase from you. They are most likely to spend their money with you.
Come to think of it... why would they spend their money on a business they don't have a connection to?
It makes sense, right?
Boosted Word-of-Mouth Advertising
Currently, word-of-mouth advertising is one of the best forms of advertising. It is one of the cheapest and most effective options you have to engage customers.
Customers who are satisfied with their loyalty program online are likely to tell their friends about it.
There is no doubt that people trust recommendations from friends. And the best thing? It is absolutely free advertising!
And 79% of consumers are more likely to recommend a business with a good loyalty program.
So a well-crafted loyalty program will surely increase your customers.
Another benefit you can gain is...
Good Reviews
Don't forget to create a customer loyalty program that encourages them to leave reviews.
Have your satisfied customers publish reviews and testimonials on your online store. And don't forget your social media accounts get some love from them.
A successful loyalty program creates true ambassadors for your brand.
It also encourages...
Brand Loyalty
Your loyal members are valuable commodities. And a good customer loyalty program will help you build it.
How so?
When you nurture your customer relationships through loyalty program offers... Your customers will value you more than your competitors.
And that makes them loyal to your brand. They can also get you in front of new customers. Doesn't that sound awesome?
So, let's now dive in on...
How Do Customer Loyalty Programs Work?
Customer loyalty programs generally have these 3 goals:
- To keep customers.
- To show customer appreciation.
- To boost customer lifetime value (CLV).
Also, loyalty programs may work in a variety of ways.
For example...
For rewards points programs, customers can redeem points for discounts or free products. On the other hand, a subscription program rewards customers for signing up.
The goal of a loyalty program is to motivate repeat purchases and build customer trust.
To learn more about how these programs work, let's get to...
8 Customer Loyalty Program That Works (And How to Make One)
Point System
Customer loyalty programs of this type are among the most popular. Customers can easily earn and redeem rewards.
This is so far the traditional type of customer loyalty program. A customer can earn points for credit, discounts, or giveaways.
Tracking points programs are possible with loyalty cards, online accounts, and mobile apps.
Most coffee shops do this. For example, buying nine cups of coffee will entitle you to get a tenth cup free.
Starbucks is one of the most popular companies that use this type of loyalty program. It has a popular customer loyalty rewards program called Starbucks Rewards.
With this, a customer earns a free drink or an item for a certain number of stars (points).
Next, we have...
Subscription Program
Loyalty programs based on subscriptions are designed to keep existing members active. And encourage them to buy more.
Since membership numbers are lower, it's easier to track loyal fans. And it's easy to find out customer preferences.
Naked Wine does a subscription program.
Naked Wine is a wine retailer based in the UK. They offer club membership and call their members "angels". And when they sign up, they can claim discounts, a gift bottle, and free delivery.
They also get to become a member of their own wine community.
Speaking of community...
Community Program
This aims to create the best possible customer engagement through community bonds.
Now, the most innovative loyalty program may not be a loyalty program at all. Take for example Apple. Apple has built loyal customers without providing rewards and incentives.
Instead, they built a community called Apple Support Communities. Apple users can start discussions, ask questions, and share tips and insights.
This encourages you to engage with your business and promotes loyalty.
Refer a Friend
This is a reward system that rewards customers for referring friends and family.
It uses software to track referrals made by satisfied customers. It uses a referral code, a rewards card, or a referral link.
For instance, have you heard of Airbnb's refer-a-friend program?
Airbnb lets its members earn travel credits... Up to $5,000! And their friends and family? They also receive credit in the form of coupons.
(source)
The result? Their rewards program got them 300% more bookings and signups.
Want more options? How about...
Tier-Based Program
This is a loyalty program that rewards customers differently based on their tiers.
I'm sure you are familiar with this.
This makes use of a hierarchy system. And with each tier, they also progress.
As a result, it creates stronger connections. And it also promotes exclusivity among members. This makes customers feel more valued.
And Lancome makes its target customers feel pretty valued. With tiered programs, their customer's purchases earn them 10 points. The points they earn depend on their purchases and shares.
They have three different tiers based on their points... Rose Gold, Gold, and Platinum. Customers can earn rewards based on their tier.
The next type is popular...
Cashback Program
Customers can earn cashback or money to spend at your ecommerce store. This is a smart move for any ecommerce store owner.
A loyalty program of this type is popular among financial companies. However, Gap also offers Gap Cash. Customers can use it online or in stores for more savings.
(source)
Spend-Based
In a spend-based reward program, customers collect loyalty points. Or it could be in the form of stamps based on how much they spend with the business.
For instance, 1 loyalty point might equal 1 dollar. And rewards will start at 500 points and rise from there.
You will be able to recognize high-spending customers with spend-based rewards programs.
This loyalty program is easy to understand and easy to create. It's also easy to maintain for business owners.
Airlines are now adapting to this type of experiential reward. For example, American Airlines customers earn 5 miles per USD spent.
And the last rewards program you can do is...
Paid Membership
Paid loyalty programs require customers to pay a fee for loyalty benefits.
But does it work? Programs that charge customers for loyalty can work. Only when the benefits far outweigh the costs.
Obviously, this model won't work for every type of business. But for Amazon Prime, it got them great results.
A year of Amazon Prime subscription costs $119 (or $12.99 per month). But members enjoy lots of freebies.
And that's it for the types of Loyalty Programs!
All of these are designed to create trust. Because nowadays, every business competes for customer trust.
The most effective way to build trust is by showing your gratitude. And by providing customers with a unique experience.
Instead of looking for new customers...
You can grow your relationship with current customers with a loyalty program. Here are some important tips...
Tips On How To Create A Customer Loyalty Program
1. Know Your Current Customers
You can have a loyalty program that reflects what your customers want. It is important in implementing a successful customer loyalty program.
You must take the time to truly understand your customers. Figure out what keeps them coming back to your business.
Research is the key. Gather insights into who your customers are. You can do this by creating satisfaction survey and customer interviews.
Or you can gather important customer service data, and learn.
Next tip...
2. Motivate Customers
You can do this by giving them something to aim for.
An example is by giving them a tier-based program. This will give your customers something to strive for.
Tiered programs make customers feel special while engaging them. Making it to the top tier is a great feeling of accomplishment.
Moving on...
3. Give an Incentive
A loyalty program incentive encourages customers to take advantage of the deals. You can offer a one-time welcome discount to encourage customers to sign up.
Who doesn't want discounts?
Let's get to the next point...
4. Personalize It
A company can look at customer behavior by gathering information and data.
And based on that data... customers could be encouraged to shop in categories to suit their interests and needs.
In the case of a customer who always shops for clothes, you might consider offering discounts on accessories. This can get them to explore other sections of your ecommerce store.
So you can introduce other products.
In a world where so many brands offer loyalty programs... make yours personal. This will definitely help you stand out.
And customers are sure to appreciate it.
Next, let's talk about...
5. Take Advantage of Technology
Using technology smartly helps create effortless experiences for customers.
Brands are now incorporating SMS into their loyalty programs.
Through this, customers can receive gifts straight to their phones. It puts rewards in the hands of your customers.
Other channels, such as email, require customers to sign in and click around to find their offers.
But with SMS, you can send offers directly to customers' phones.
You need to also...
6. Adapt to Changes
In the wake of the pandemic, businesses had to be flexible. They had to make quick changes to their loyalty programs. An important lesson is to move fast and adapt.
The next tip is important...
7. Be Data-Driven
A customer loyalty program's success is measured by data. Take a look at your sales.
Essentially, it shows how many sales you have generated through promo coupons. Then you compare that to how it would have turned out without the coupon.
Customers' lifetime value is another key metric to keep in mind.
In other words, did the coupon encourage customers to remain loyal? Or is it something they use once and never return to? These are the questions you need to ask yourself when running loyalty programs.
You can also...
8. Put An Emotional Spin On It
Shopping behavior is heavily influenced by emotions.
So you have to think of new ways to create an emotional connection with your customers. This way, customers feel the warm feeling of being connected to your brand.
It is not just about discounts. It goes beyond that.
This means you can keep your program interesting and engaging. So your customers will have good thoughts, feelings, and memories of your brand.
Overall, the most effective loyalty programs are customer-centric.
Listening to your loyal customers is important not only to improve your loyalty program. But also to improve overall customer experience and build a loyal following.
There you have it...
These are the things you should consider and...
Create a Memorable Customer Loyalty Program!
There is no one-size-fits-all when it comes to loyalty programs. You just have to test the waters and learn which one will work for your business.
One important step is to optimize your ecommerce site with Debutify.
Your ecommerce site will be at its best with Debutify. It's highly customizable, has over 50+ Add-Ons, Debutify Reviews, And even goes beyond your website's look and feel. And what's more? Debutify can help boost your AOV and maximize your profit.
So what are you waiting for? Make sure to...
Take Care of Your Loyal Customers by Optimizing Your Ecommerce Site with Debutify!
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Ricky Hayes
