Here’s Why Your eCommerce Company Needs a Loyalty Program

There are a few things more valuable to a business than a loyal customer.

While the best brands are always on the hunt for new clients with Facebook ad campaigns and SEO, it’s worth noting that your existing customers will always be your best source of income. Remember, customers who have already bought from you once are 27% more likely to purchase again.

It’s also up to 6 times more expensive to gain a new customer than it is to maintain your existing relationships simply.

So, how do you cultivate customer loyalty?

There are plenty of ways to start, from offering sensational service experiences to sending email marketing campaigns. However, the best thing you can do is the simplest. Start building a customer referral and loyalty program.

What’s a Customer Loyalty Program?

Loyalty programs are one of the best ways to increase revenue and encourage additional purchases from existing clients. According to studies, up to 84% of consumers are more likely to stick with a brand that offers a loyalty scheme. Another 66% of customers say that the ability to earn rewards convinces them to spend more.

A rewards program can come in a range of different styles. Some companies allow their clients to rack up points with every purchase. Users can then trade these points in for discounts and deals at a later stage. Look at the Starbucks rewards app, for instance, where you can earn points every time you spend.

Other companies use tiers to encourage their customers to work their way towards exclusive perks. Whatever path you take with your loyalty program, it should always:

  • Offer something valuable to your customer in exchange for their loyalty, such as discounts, exclusive vouchers, or gifts.
  • Make your customers feel special by allowing them to unlock things that standard customers can’t get.
  • Be easy to participate in, so your clients don’t have to jump through hoops to start earning their rewards.

What Does a Loyalty Program Do?

Loyalty programs aren’t a concept. They’re all about strengthening your relationships with your customers, so they’re more likely to come back and buy more from you later. With a loyalty program, you make your customers feel special by giving them something they want. It might be a free refill on their next coffee or a discount on shipping.

Whatever the bonus is, customers feel like they’re getting something out of choosing your brand over and over again, rather than going to your competitors. There’s a snowball effect to most loyalty programs. Once someone starts earning points, they become more invested in sticking with your brand so that they can get more rewards.

Depending on what you want to accomplish with your loyalty program, you could also give your customers extra rewards when they refer people to sign up for the scheme. For instance, FreeAgent gives both the original customer, and the referred friend a 10% discount when joining the service.

Used correctly, a loyalty program encourages customer commitment, improves experiences for your target audience, and develops long-term relationships for your brand. It also encourages customers to keep engaging with your brand in new and valuable ways.

Tips for a Good Loyalty Program

So, how do you make a loyalty program that connects with your target audience?

Start with these top tips.

1. Get to Know Your Audience

At the heart of any good loyalty program is a great reward. Unfortunately, it isn’t easy to know what kind of bonuses your customers will respond best to if you don’t have the right user personas in place. Just like you need to research your clients to increase order value, you also need to know what matters to your customer if you want to convince them to be loyal to your business.

The TOMS company broke the mould with its loyalty program, by focusing on benefits that would make people feel good about themselves. For instance, whenever you buy a pair of shoes from TOMS, the company donates a pair of shoes to people in need.

This unique reward scheme appeals to TOMS’ audience of socially conscious and environmentally friendly millennial and Gen Z customers.

Do some research to figure out what gifts and freebies your clients would respond to best. You might find that free entry to prize draws are more effective at gaining subscribers than the promise of free next-day shipping, for instance.

2. Use Rewards to Incentivize the Right Behavior

Loyalty programs aren’t just a great way to encourage your customers to spend more with your business. Offer the right rewards, and you can motivate your audience to do anything. For instance, you might want them to share your social media ads with a certain number of people every month, or comment on a certain number of blog posts.

A great example of this comes from Tarte, the cosmetics and skincare company. The brand decided to incentivize user-generated content and social media activity with its loyalty program. Each customer can earn rewards for activities like posting selfies with their products, writing reviews, and viewing online video tutorials.

Remember that the rewards you share with your audience don’t have to be exclusively for purchases. You can incentivize virtually any activity you can think of and use your loyalty program to generate engagement in a host of different ways.

3. Make it Simple

While customers love any opportunity to access discounts, freebies, and other benefits from their favorite brands, they’re also pretty lazy. Today’s consumers want every shopping interaction to be as seamless and straightforward as possible. That’s why we’re all spending more time shopping on our phones and buying items directly from our social feeds.

Asking your customers to jump through countless hoops to sign up for and manage your loyalty program means that you’re more likely to lose their interest. If you want to avoid this problem, start by making your loyalty schemes as simple as possible.

The Designer Shoe Warehouse company runs a convenient VIP program that its customers love. This scheme is successful because it runs automatically. There are no punch-cards or codes to remember, and the online system automatically tracks each member’s points for them.

To help ensure that customers make the most out of the loyalty program, DSW also uses automated email campaigns to let clients know what kind of deals they’re currently eligible for, or how much they need to spend to unlock something new.

4. Let Customers Choose Their Rewards

Not sure what kind of rewards would motivate your audience? If you’re just getting started with a loyalty program for the first time, why not do some research? Rather than giving your customers a specific free gift or discount, let them choose what they want to spend their points on.

Sephora’s Beauty Insider program is an excellent example of how effective it is to let clients choose their own gifts. More than 17 million people use the scheme today, and Sephora says that the program accounts for up to 80% of its annual sales.

The program works like any traditional rewards strategy, with customers earning points every time they buy something from the company. The fun part is that once clients have earned enough points, they can choose exactly how they want to spend them.

Giving customers the flexibility to do what they like with their earnings means they’re much more likely to keep going with your rewards program.

5. Track and Learn from the Program

Finally, just like any strategy for customer engagement and conversion, a rewards program needs to constantly and grow with your brand. The only way to make sure that you’re getting the most out of your strategy is to measure the outcomes and track your success.

Keep an eye on the number of customers that sign up for your rewards program and see whether the presence of a loyalty scheme increases your repeat purchase ROI. If you’re offering different kinds of gift for customers to choose from, pay attention to the items that get the most attention. For instance, are your audience more motivated by a free gift or free shipping?

The more you watch your rewards strategy, the more you’ll learn about your customers and what they want most from your brand. Your insights will make it easier to invest in significant updates to your loyalty schemes later.

Get Ready to Grab some Loyalty

The right loyalty program is an excellent way to convert first-time customers into long-term brand advocates. Used correctly, these tools strengthen your relationship with your target audience and make it easier for you to attract new leads too.

Although a loyalty program does mean giving things away for free and spending money in a few areas, these strategies often pay for themselves. The value of dedicated repeat clients isn’t something that any business should underestimate.

If you want to find out how you can upgrade your brand image with a loyalty program, reach out to the Graygency today!

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