How Implementing Loyalty Programs Can Grow Your eCommerce Business
To grow and excel in the eCommerce business, merchants have to take measures to retain their current customers and enhance customer loyalty. Customer loyalty can be won by launching an effective and attractive consumer-centric loyalty program to show customers how much you truly value them.
As we move through 2022, the competition in the eCommerce business is reaching new heights. Direct to consumer eCommerce brands have to level up their marketing tactics and customer retention game to out beat thier competitors. COVID-19 has highlighted the importance of customer retention in every eCommerce business. With more and more customers turning towards digital shopping, more merchants are turning towards digital selling, saturating the market and increasing competition like never before. To grow and excel in the eCommerce space, merchants have to innovate in order to retain their current customers and enhance customer loyalty. Customer loyalty can be won by launching an effective and attractive consumer-centric loyalty program to show your customers just how much you truly value them.
What is an eCommerce Loyalty Program?
eCommerce loyalty programs are quite straightforward. They consist of programs that are aimed at increasing the loyalty of customers by offering them incentives so that they keep on buying from your brand instead of considering any of your competitors. It involves offering your customers rewards and benefits that lure them, as well as net new customers, to your brand for repetitive purchases while ignoring any other offer from competitor brands.
A loyalty program is aimed at offering unique incentives and rewards to the customer that triggers their emotional response whereby they develop a feeling of trust and dependency for your brand.
Why Are Loyalty Programs Carried Out?
You must be wondering why merchants focus on enhancing customer loyalty instead of doing fierce marketing to attract new potential customers. Well, it is because it is easier, more cost-effective, and more beneficial for a brand to retain current customers than to acquire new potential customers. In 2022, brands have to spend a lot on marketing to reach new customers, which is not only costly, but requires creative marketing ideas and tactics to lure customers, which can be cumbersome. The goal of any loyalty program is to retain current customers and turn them into loyal ones. This should be a no brainer strategy for every eCommerce business in 2022.
Loyal customers are the most valuable asset of any brand. These are the people who not only buy from your brand while ignoring competitors’ offers, but also get indulged in positive word-of-mouth advertisement, which fetches even more customers to your brand without additional effort. The positive views and reviews that loyal customers share lure many new visitors to your store who were previously unaware of your product offering, and turn those new visitors into new customers, further building a strong brand.
Loyalty Programs for Growing eCommerce Businesses
Brands offer incentives, compelling rewards, discounts, alluring deals, and personalized offers to attract customers into their loyalty programs. A loyalty program can be seen as an alternative channel to cater to brand growth by facilitating loyal customers and taking advantage of their repurchases, free advocacy, suggesting your brands to others, and positive word-of-mouth advertisement. Many loyalty program ideas can be put to work to attract customers that can be beneficial for the brand.
Let's look at some of the ways in which loyalty programs and their benefits are implemented by brands:
Elevate customer engagement with compelling rewards:
Many brands offer an interactive feature to customers whereby they can win valuable rewards. For example, brands offer to give you a free coupon if you share their post on social media, tag your friends in their posts, play a game or participate in countless other interactive activities. This helps brands to elevate customer engagement, helps customers feel closer to the brand, all while winning a reward to keep fuelling brand growth and customer satisfaction.
Points and rewards programs to elevate repurchase rate:
A point and reward system is a loyalty program whereby a customer wins points that can be redeemed when they reach a certain specified limit to get a certain reward for free. These rewards often come in the form of a branded item, free shipping, or a discount. For every transaction with the brand, the customer will win more points. This kind of point system seems extremely valuable to the customer and they feel that the brand looks out for them and rewards them for being a regular shopper. It also significantly increases repurchase rates among loyal customers.
The referral loyalty program:
A referral program is an amazing way to attract new customers while enhancing the engagement of loyal ones. This program works when one of your customers (usually the most loyal ones) refers your brand to others. Upon purchase by a new customer both the referred customer and the referee get the reward. This kind of program works wonders because people are more prone to listen to their peers, friends, and family members to buy a product based on their experience of your brand.
Increase Average Order Value:
The best loyalty program ideas serve to increase the average order value of your customers. The higher the average order value, the higher the brands’ profit. One way brands incorporate this idea is by offering free shipping or a gift above a specified order threshold, say $50. So, even if a customer needs to buy an item worth $30, he/she will be pushed to increase the order by $20 to save the money spent on delivery costs. These type incentives drive customers to buy more from your brand.
Use customer-specific data to develop a bond/connection:
As an eCommerce brand, you probably already have a lot of data from previous customer purchases. You can analyze this data to understand customer buying patterns, preferences, likes, and dislikes, and a plethora of other buyer behaviours and characteristics. Brands can use this customer-sensitive information to make compelling offerings that the customers can't ignore. Such specialized and personalized offerings build a kind of connection between customer and brand which is beneficial for both in long run.
The best, most profound, and most suited loyalty programs work by consolidating customer-specific information from purchase history within your eCommerce platform. They use this customer-specific information to offer tailored marketing campaigns, rewards, and incentives for both online and in-store purchases. Personalized shopping experiences and customer specific rewards entice your customers to become loyal ones and repeat purchasers for a long long time.