You have decided that your ecommerce store needs a loyalty program. Excellent, a loyalty program increases your repeat purchase rate, and increases customer engagement. Basically you will have more repeat customers (who are more profitable) and they will be more likely to share and talk about your store. Who doesn’t want that? But, how do you do it?
Before I get into the specifics of how to create a loyalty program we should first go over the three keys of starting a loyalty program. These are important to things to keep in mind before you start, because they will influence how you approach ecommerce loyalty programs.
Three Components of Loyalty Program Success
1. Keep it Simple
I can’t emphasize this point enough! I have people ask me if it is possible to give 7% of a purchase back to a customer if they have purchased over $250 over the course of their lifetime and have spent at least $50 this month. Yes, this is possible, but it doesn’t mean you should do it.
Your customers are not going to take 15 minutes to read through how your program works. If it is too complicated they are either not going to join, or they will get frustrated and leave. A better program would be you give 1% back on every purchase for every customer with an account. Ahhh so simple.
Your program is meant to be for your customers, so don’t try to hijack it by making it only beneficial for you. If you do, your customers won’t join. A simple program is easy for your customers to understand and easy to implement for you. The faster you implement the faster you see benefits.
2. Be Creative
Look in your wallet or purse, seriously do it. I bet you have at least three loyalty cards of some kind in there. What makes these different from one another. I have no idea, most retail loyalty programs are exactly the same. If you want your new loyalty program to stand out you have to get a little creative.
There are a ton of ways to make a creative loyalty program, but for the purpose of this “beginners guide to ecommerce loyalty” I will stick to the basics.
The easiest and one of the most effective ways to make your program stand out is with an amazing name for your program and points. This name should reflect the emotion you are trying to get your customers to feel and match your brand image.
Take a look at Sephora's VIB program which stands for “very important beauty-insider.” That name makes members feel special and valued. Imagine if it was just called Sephora rewards Program… not the same effect.
Before you start your program think of a few ideas for how you will make your program stand out from the others. At the very least thing of a kick-ass name!
3. Know Your Metrics
This is not only a loyalty program tip, but an online marketing tip. When you are looking to start something new you should know where you currently stand so you can measure if what you are doing is having an impact.
Before you start your program take a look at your key ecommerce metrics, as well as a few new ones I call KRMs (key retention metrics). When you know these you will have a crystal clear picture of your new loyalty programs success.
Purchase Frequency – The number of times your average customer makes a purchase from you in a given time period, say a year.
Repeat Customer Rate – The percentage of your existing customer base that is coming back to make a second purchase from your store.
Customer Lifetime Value – The value a newly acquired customer has to your store over the entire course of their shopping life. The better you do at retaining (loyalty program) the more valuable they become.
If you know these metrics prior to starting your new loyalty program you will be able to see the amazing results a loyalty program provides.
3 Beginner Tips for New Loyalty Programs
1. Know What Your Points Are Worth
Seems obvious but a lot of people actually don’t know. They set so many rules and rewards that they totally lose track of what there points are actually worth in real money. Remember, points have a money value which is a liability for your store. You should know exactly what they are worth.
A great way to set point values for a new loyalty program is as follows.
- Give your shoppers 1 point for every dollar spent
- Make your points worth 1 cent
- Example (500pts = $5 discount)
- Read “what are my points worth” to determine what to reward for other actions
- These could include registration, social sharing, and referrals
2. Keep it Visible
If you decided to run a sale or a BOGO would you let your customers know about it? Of course you would! If you start a loyalty program you have to do the same thing. Yet, a lot of people try to bury and hide a program. This makes no sense to me.
If you are investing in a loyalty program you want as many people using it as possible. The more members you have the more potential repeat customers you will get, and a repeat customer is worth up to 7x more to your store.
The best way to let your shoppers know about your program is with a loyalty program explainer page. This is a page on your site or a tab in your program that allows you to show customers exactly how they will earn and spend points.
If you’re starting a program do not be afraid to tell the world. You will be glad you did!
3. Launch in Stages
My last loyalty tip for beginners is to launch a loyalty program in stages. When you start a program with all the bells and whistles it can sometimes be a little overwhelming to your shoppers. Kind of like putting them in a room full of people and asking them to remember everyone’s name. It is much easier to introduce those people one at a time. The same is true with a loyalty program.
You want to introduce ways to earn points in stages so it is easier for your shoppers to digest, so start simple. It also provides you with an opportunity to re-market your program every time you launch something new, and gain valuable customer feedback. Here is a video of why a staged approach is the right approach.
When you first launch a loyalty program I would start with these two rewards:
- Reward account registrations
- This gives you more valuable information on your customer.
- Reward for purchases
- You know why you reward for this!
Should You Even Start A Loyalty Program?
I am sure you have done a ton of research into starting a loyalty program, but may I suggest one more good read? Our “Is a Loyalty Program Right for You” assessment is a checklist designed to help you figure out if a loyalty program is right for your store’s individual circumstances.
Every store is different and loyalty will work differently for each. Take the 15 minute assessment, and I promise you will be glad you did.