We all like to feel special, to feel like we are in on something that is private and exclusive to us only. This emotion follows us with every aspect of our lives. The best e-commerce sites are in on this. They know this human tendency for special attention is strong and are using it to their own advantage. How? In the form of a loyalty program.
Remarkety has created a three-part series that will teach you how to create a kickass loyalty program that focuses upon personal engagement. Are you ready to learn more? Then read on….
What is a loyalty program?
A loyalty program is a discount or rewards program created to boost repeat business and build brand loyalty. It’s like the VIP section in a club. In this club only the coolest chaps are invited; they get the best drinks, have the best seat, and, well, you get the idea. We all want to be a part of the VIP experience.
It costs significantly less to keep an existing customer than to acquire new ones. Reducing churn and keeping customers happy is critical to the success of an eCommerce business. And one of the coolest ways to lower attrition is with a loyalty program.
Why create a loyalty program?
There are a number of reasons why you should consider adding a loyalty program to your business strategy. These include:
- To increase sales – according to Loyalty 360 customer value for each customer goes up to $1803, if the company has a loyalty program. Another great statistic is that 75% of brands see a return on investment to the customer loyalty program that they create. According to KISSmetrics it costs $245 to acquire a new customer, so it’s often more affordable to keep the customers that a business has rather than to acquire new ones
- Affordable to set up – loyalty programs are very easy to set up. You can create a simple customer rewards program or use something like a Shopify app
- Build brand loyalty – millennials are brand loyalists, they are more likely to buy from a business that they like and support rather than a business whose brand they don’t connect to. If you have a loyalty program you will see more sales from millennials.
- Lower ad spend – according to Leading on the Edge of Chaos, retaining 2% of your customer base is the same as decreasing your business costs by almost 10%.
- Learn more about your customer – a loyalty program is a great way to learn the interests and preferences of your customer base. It can help you know which products your audience will be more interested in buying and in which new features to develop.
Who needs a loyalty program?
Although we strongly recommend all eCommerce companies set up a loyalty program, they may not be suited for all businesses. Here are three scenarios to test your needs.
- Online retailers that get at least ten or more orders per month from new customers need a loyalty program. Grab hold of those new customers.
- Niche businesses whose customers are price sensitive, need to fight the competition.
- E-commerce business that have several competitors can use a loyalty program to make their brand stand out and be more lovable to their users.
What goes into creating a loyalty program?
Good loyalty programs have two important factors in common: They are easy to join and easy to understand.
If the customer knows how to join and knows how to play then consider your job done. If you make the customer jump through too many hoops or make the rules too complicated then you will probably need to rethink some things.
Here is a simple process that you can follow to make a smashing loyalty program:
- Find out the top customers by amount spent by making a monthly or quarterly report
- Send a reward of your choice (as low as 10% off) to that list of your top customers
- Rinse and repeat each month and track the results
Follow our blog to learn more about loyalty programs. Part two coming soon