- Loyalty programs are vital for ecommerce businesses to help build that deeper connection with shoppers.
- It is wise to run tests in different audience segments and channels by using different perks and offers outside of just discounts.
- Brands can still be cost-effective with their loyalty programs by offering customers points in exchange for referrals, newsletter signups, or product reviews.
Discounting in ecommerce has become popular because it is easy to offer and implement. Keeping customers after they make holiday purchases is on the mind of all brands and retailers, but it is becoming clearer that one-off orders focused on discount redemption does not always help to build brand loyalty.
Loyalty Programs are Vital to Ecommerce Survival
Ecommerce is a very difficult place to build a business since it is purely transactional and devoid of human contact, so it can be a struggle to build an emotional connection and easy for consumers to switch between brands guilt-free. Loyalty programs are vital for ecommerce businesses to help build that deeper connection with shoppers. According to research from LoyalyLion:
- When a new customer joins a loyalty program, the chance of them purchasing a second time is 47% higher.
- Loyalty program members have a 40% higher average annual spend than non-members.
“Especially in the lens of today’s economic downturn, consumers are increasingly open to switching to other businesses because of the low prices, so these are signals that those brands have not built an emotional connection since shoppers are treating them purely as a transactional business,” Charlie Casey, CEO at LoyaltyLion, said.
Loyalty Programs Are No Longer Just About Discounts
In order to learn what customers want from a brand loyalty program, it is wise to run tests in different audience segments and channels by using different perks and offers outside of just discounts. Incentives can still be offered, but sometimes the best idea is to only offer them to the most loyal customers as part of a membership program.
“Let us take it from two perspectives: the merchants and the shoppers. From the merchant’s perspective, discounts are expensive and they eat straight into your margin, so they are not ideal to take on their own,” Casey said. “From the customer’s perspective, if a customer only signs up for your program because of a discount, you do not want shoppers who only expect discounts. You want to build an emotional connection.”
If you think about anything you are loyal too, such as a partner or a pet, the foundation of loyalty is to build that emotional connection. So instead of just throwing discounts at shoppers, to help build that emotional connection, offer something special like a gift or exclusive access to make customers feel like they are a part of a club.
The Top 3 Categories for Loyalty Programs
According to statistics from LoyaltyLion, these three categories are the most important when offering a top tier customer loyalty program:
- Collecting First Party Data.
This is super helpful with all loyalty programs so this way you can offer your customers birthday rewards, points for completing profiles (e.g. skin or pet profiles), and points for completing surveys.
- Emotionally Connect with Shoppers.
Brands can make an emotional connection with their customers through loyalty programs by giving them points for actions such as recycling packaging or certain used items, offering rewards in the form of charitable donations, and offering exclusive access to events, product tutorials, or a one-on-one meeting with the founder of the company.
- Be as Cost-Effective as Possible.
Brands can still be cost-effective with their loyalty programs by offering customers points in exchange for referrals, newsletter signups, or product reviews.
Examples of Top Performing Loyalty Programs:
Sephora’s Beauty Insider program is a highly popular loyalty program, with over 25 million members. One of the key reasons for its continued growth is because of how much it focuses on personalization and customer experience, not just discounts, and is built all around the customers being a part of a club and being able to climb to higher club tiers. Members get discounts and free products for their birthday, get exclusive access to events, and get purchasing priority when new products are dropped, just to name a few of the benefits associated with this loyalty program.
Another brand called Zorali takes a different approach to their loyalty program — instead of giving away points, they plant trees whenever customers complete different tasks. For example, when someone signs up for a membership, Zorali plants two trees. Similar to Sephora, this program has different membership tiers, but they are based on how many trees the customer has planted. This is a great alternative incentive that goes above and beyond discounts.
With holiday shopping at its peak, right now is the best time for retailers to introduce new loyalty programs or perks to customers to ensure they keep coming back well after the holidays. Use some of these tips to guide you in your membership strategies and build lasting relationships with shoppers.