How To Build A Successful Customer Loyalty Program In eCommerce Business?

Did you know that Customer satisfaction is key to having happy customers, but not all happy customers are your loyal customers? Not all happy clients will return to you. But, only loyal customers will!

As an eCommerce store owner or a marketer, you continuously aim to make your customers feel special and happy by introducing new customer loyalty programs or incorporating new customer rewards program. Henceforth, you consistently work hard to plan ways for the same. But is customer satisfaction enough to achieve your growth targets and loyal customers?

According to Jeffrey Gitomer, “Customer satisfaction is worthless. Customer loyalty is priceless”. Jeffrey doesn’t emphasize ignoring customer satisfaction, rather he emphasizes more on having loyal customers.

“Loyal customers, they don’t just come back, they don’t simply recommend you, they insist that their friends do business with you.” – Chip Bell

But how to build a loyal customer base is still a dilemma for most. This is where the concept of customer rewards program moves in.

**Please Note: Customer Loyalty Program or eCommerce Loyalty Programs is often used interchangeably**

What Are Customer Loyalty Programs?

A Customer Loyalty Program is a connection between a brand and a customer. When the company offers exclusive products, offers, discount coupons, promotions, or pricing; and in return, the customer agrees to “go consistent” with your brand through repeat purchases or engagement.

Customer loyalty is the outcome of a confident customer experience, consumer satisfaction, and the value of the product the customer receives when he transacts. 

Since it is just the mutual connection between the customer and merchant/brand, the connection can be achieved via other means too. So what is the whole deal of having and implementing the customer loyalty program?

That is so because the Customer Loyalty Program or the customer rewards program is a definite and elaborative marketing effort. This program is designed to provide incentives and rewards to customers showing loyal buying behavior. Successful loyalty programs are designed in order to motivate the targeted audience to return, shop, and trust the efforts of the marketer. The eCommerce loyalty program, therefore, holds importance for the merchants as well as the customers.

In a simple phrase, “Customer Loyalty for eCommerce businesses is like a potion of longevity”. But what is the need of implementing a customer loyalty program? Let’s find out!

Why Do We Need eCommerce Customer Loyalty Programs?

The Customer Loyalty Program reflects its importance and needs well through the current market statistics. But before jumping straight into statistical data, let’s other aspects of implementing a loyalty program. 

These data and the information demonstrate how difficult it is to get to hold on to existing customers while attracting new ones. Let’s check out the following statistics that remark on the need for eCommerce loyalty programs and customer rewards program.

• 82% of companies agree that retention is cheaper than acquisition.
• 75% of consumers prefer shopping from companies that offer rewards.
• 56% of customers stay loyal to brands that understand them
• 65% of a company’s business comes from existing customers.
• The probability of selling to an existing customer is 60-70%. (Altfeld)
• 58.7% of internet users believe earning rewards and loyalty points is one of the most valued aspects of the shopping experience. (eMarketer)
• 95% of loyalty program members want to engage with their brand’s program through new and emerging technologies. (Bond)
• 72% of US adults belong to at least one loyalty program. (Oracle)
• 93% of consumers are more likely to make repeat purchases at companies with excellent customer service. (HubSpot)

Well, the loyalty program holds a separate set of benefits that many would argue in favor of implementation, which makes it crucial for merchants to implement. 

The Benefits Of Customer Loyalty Programs,

1. Increase in revenue
2. Increases sales
3. Makes customers feel more valuable
4. Gathers user information and valuable data
5. A mode of interaction and communication between the business and customers
6. Measure customer loyalty through engagement
7. Improves customer retention while attracting new customers
8. Constant improvements result in constant growth

Since you must be aware of how beneficial it is to build a loyalty program for eCommerce, you must be looking out for where to start?

But before you plan to start, there is one thing that you must know.

Not every business can employ the same loyalty program!

Therefore, considering your own business requirements, consumer behavior, and industry practices, you may adopt any type of Customer Loyalty Program from the list below.

Types of Customer Loyalty Programs

Jump to your favorite tip using the index above.

1. The Points & Rewards Program

The easiest and yet involving customer rewards program. The Points and Rewards program is the most used program out of all customer loyalty programs. In this program, all you have to do is assign points to your customers for each action they perform on your site.

Now, awarding loyalty rewards to your customers on the basis of loyalty points they have earned from their earlier purchases will motivate them to engage and shop more.
The more you shop, the more you earn.

The Points & Rewards program runs on this simple mantra. And the good part here is, you can decide on how you wish to reward your customers. There are several plugins or extensions that you can use to implement this type of loyalty program. But Points and Rewards for WooCommerce is a best seller at WP Swings for a reason. Here is a brief overview of the plugin,

The plugin guarantees loyalty points to your customers and enables them to convert these into real money. Get access to features like daily login points, rewards on birthdays, points log reports, membership benefits, and more!

There are many different features that will help you craft the perfect loyalty program for your customers. But we also have a feature that will help you make your website engaging and interactive.

What is it?

Gamification Feature

Merchants can boost engagement in their online stores. This interactive feature introduces a “win-wheel” experience that captivates customers and drives participation, while rewards for engagement foster loyalty and repeat visits. Complete customization control, from wheel design to engagement frequency, ensures that the experience aligns seamlessly with your brand. By offering a unique, memorable, and tailored engagement, merchants can not only keep customers on their websites for longer but also benefit from word-of-mouth marketing as excited customers share their experiences, ultimately leading to increased sales opportunities and a stronger online presence.

In the following section, we will list out some of the other benefits of Points and Rewards for WooCommerce…

Benefits of Points and Rewards Plugin include,

1. Reward Programs build Brand Loyalty
2. Merchants can allow points to customers for various activities
3. Get word-of-mouth marketing free of cost
4. Customers can then convert the earned points into coupons 
5. Helps merchants motivate existing customers to drive repeat sales

But just implementing a customer loyalty program will not instantly boost your revenues. Remember this, 

Unhappy customers will take away your business along with your idea of having a loyalty program!

As well said, “A happy wife is a myth, but not a happy customer”. 

Social status is one of the most effective motivators for customer behavior, and can easily be incorporated into your loyalty strategy. Yes, considering the spending habits of each user and offering VIP perks to heavy shoppers will give you an edge over your competitors to retain them. Providing the best customer experience isn’t hard if the right actions are taken at the right time, for the right customers.

Any effort made in favor of improving the customer experience is better than just resolving their queries on customer-care support systems.

Coming back to the plugin, Our reward plugin helps merchants create a Point-based loyalty program to reward customers, which involves earning and redeeming store credits as points. 

2. The Coupon & Referral Program

Refer Your Friend and Earn a Super Deal…

Yeah! You might have come across such offers on various platforms and applications where you are asked to refer a friend or family member to use the product/service. And in return, you and the referred person get some offer coupon, this is another popular customer rewards program.

Referral Marketing works best in increasing your presence among consumers. Yet it is most difficult to achieve. Not because you don’t have a better customer satisfaction rate. Instead, it is observed that even the brands having an 80% customer satisfaction rate face only 29% of the referral rate. 

There are still several things that are most commonly tested to achieve instant results from the referral marketing perspective. Lucrative rewards to both the parties involved – the sender and the buyer.

Prompt multi-channel sharing options to your customers. Make slogans, referral messages, etc. that are compelling and depict brand vision.

Well! This program is very much efficient in building a strong customer base with your products/services. Also, this is an indirect form of marketing practice where your customer brings in your more diverse audience by referring them to your product/service.

Well! This program is very much efficient in building a strong customer base with your products/services. Also, this is an indirect form of marketing practice where your customer brings in your more diverse audience by referring them to your product/service. 

Having an extension by your side while you are figuring out the Coupon Referral Program, can be the cherry on the cake. Are you ready? Because we have the cherry and the cake!

3. The Charity Based Program

Ever shopped at Easy Day/Pantaloons or some top-notch store? If yes, you might have observed that while the billing process, the cashier often asks,

Would you like to donate a penny?

Many big business houses have tie-ups with NGOs and other such organizations and donate some percentage of their profits to these organizations. Not only this but there are also companies that run their own charitable trusts and try to expand their community by including their customers into it.

Earning the loyalty of your customers through a customer rewards program, and by impacting them empathetically is another way for customer retention.

4. The Partnership/Membership Program

With the increasing trends of loyalty or customer rewards programs in various industries, many variants were carved out to gain the benefits of the loyalty program differently from the other ventures.

The Partnership/Membership Program is a similar example. Although any business can incorporate this program, IT industries and/or Hospitality industries are especially looking out for such programs.

Building loyal customers demands high reward systems! In such cases, the two most important approach that you can follow is –

Firstly, build a strong customer base for your products. Make compelling products for your customer’s needs.

Secondly, initiate tie-ups from different other companies that may support your rewarding strategies.

The partnership approach provides you with an opportunity to expand your business limits and to partner with other business groups. The Membership approach helps you to streamline your customers with your beliefs resulting in better brand image building.

As it is well quoted by Howard Schultz,

“If people believe they share values with a company, they will stay loyal to the brand.”

5. The Tier-Level Program

This customer rewards program is a more fun-filled and engaging way to build loyal customers. What about influencing your customers to be on your loyal member list by bribing them with multiple badges or level options?

Sounds Funny! But it is intriguing.

Ever played Candy Crush or criminal case types of games, where you proceed to the next level only when you qualify your current level, and with each advancing level, rewards, and accessibility options increase?

A similar method is followed by marketers in Tier-Level Programs. They set up the program at different levels and award badges on reaching different levels leading to rewards after qualifying at some basic levels.

The good thing here is that the marketer or proprietor is completely free to decide how they want to mold the program for attaining the utmost benefits.

6. The Community Program

Ever heard of communities or forums like StackExchange, BlackHatWorld, Reddit, DigitalPoint, etc? WP Swings has a certain section for Forums, which helps us interact with our customers.

All these communities or forums were initiated by the industry experts or business holders to develop a direct interaction between their customer base and the industry experts.

Building your own community is definitely a long-time process and is not a direct member of the loyalty programs or customer rewards program. But, building your own community, establishing direct communication with your customers, and solving all their queries and doubts will increase their trust in your products/services. And when your customers trust your brand enough to take a stand in front of those who speak against you, you know your customer’s loyalty then.

7. The Subscription-Based Program

Are you subscribed to Netflix? Or Amazon Prime? Or maybe for HotStar? All these are popular subscription-based programs!

To help you with the fact that The Subscription Program is the only Customer Loyalty Program that offers no discounts or coupons rather the customers are made to pay for the particular service for a particular time duration, they require the service for.

Netflix and Amazon Prime are the most trending examples of Subscription programs. The subscribers need to pay for the subscription program they are opting for. You may think, “How is this Subscription Program included in the list of Loyalty Programs then?”

Dude! Loyalty Programs are not only the ones that offer discounts, rewards, or coupons. Having a strong and crazy enough customer base that is willing to join you for 6-months or a year shows the brand loyalty of customers.

8. The Reward Card Program

The easiest way to build loyalty eCommerce programs and maintain it is by having a customer Rewards program. Marketers also refer to this program as a Spend program. The simple work behind this concept is offering reward cards to customers for their easy and beneficial shopping experiences.

For example, TimesRewardPoints company collaborates with various banks like HDFC to run loyalty eCommerce programs. HDFC customers who prefer Debit/Credit card transactions are always flooded with offers and coupons if they transact using the registered reward card. Similarly, Gift cards are also preferred by marketers as a substitute for reward cards under their special program requirements.

9. The Game & Fun Based Program

An interesting and fun game evening attracts the eyes of the masses!

There can be no doubts about how games can attract traffic. But, here we are talking about loyalty programs, and customer rewards program to retain customers rather than only focusing on customer acquisition. Games based loyalty program is a fun-filled alternative to keep your customers’ adrenaline rush high ultimately benefiting you.

For example, having an online store, you can organize game events through periodic intervals or a series with level-up targets. Such games are hard to plan at first. However, they keep the motivation level high among competitive customers. After all, who wouldn’t wish to have extra rewards for the products and services they use by playing games?

10. The Hybrid Program

Well, as the name says, this loyalty program is the compilation of two or more customer rewards program types into one.

For instance, the most common approach to having a hybrid loyalty program is the compilation of points and rewards programs with a tier-based program. Google’s Local Guide Program is one such influential example to be considered.

Well, it’s clearly about the innovative approach to having a successful loyalty program. And I’m sure that now you must be willing to build a loyalty program for your business too. But, the process to implement the loyalty program is equally important as well. Therefore, the next section will take you a step ahead in learning how you can build a customer loyalty program for your business.

Steps to Start Building Ecommerce Loyalty Programs

Step 1. Know Your Customers

• Decide Target Audience
  

Your eCommerce business may have high visibility and you’re getting traffic from all parts of the world. But this traffic is irrelevant for you because they don’t serve the purpose you aim them to. Hence, you must analyze your traffic sources and target only your potential audience. The more segmented audience you’ll have the better the rate of conversions and engagement.

• Analyze Your Consumer’s Behavior

It’s not as simple as it seems to have a successfully running business. You constantly need to observe your consumer’s behavior. Behavior analysis plays a very important role in understanding the perspective of your consumer and what they want from your business.

• Store Your Consumer’s Data

You must be thinking of what is the purpose of storing the data from your customer. Well, Customer eCommerce loyalty programs are all about having a personal connection with each of your customers and also making them feel that they are valuable to you. Saving the personal details of your customers like their birthdays or important occasions and anniversaries will help you in reminding them along with the greetings that you expect their presence soon.

Step 2. Plan Your Purpose to Create a Loyalty Program

• Set Your Goals

What is your reason or need to create a loyalty program?

Since you’re mid-way to implementing the loyalty program for your eCommerce store. It is highly recommended that you first gauge the outcomes you wish to achieve and the probable duration.

For example, you wish to create a community of your loyal customers and so you have planned a membership program for the same and wish to have 20% of your existing customers be a part of your membership program within 6 months of launch. Setting such goals and initiating your loyalty program in recognition of the same will help you complete the next step too, i.e., measuring your efforts and your customer’s response.

• Decide on the Metrics to Measure Your Efforts in the Loyalty Program

When we talk about our customers and measure their behavior in terms of numbers, we often make the common mistake of calculating it as a conversion or revenue. Rather, metrics that provide a fruitful result for customer analytics are-

1. Customer Lifetime Value(CLV)
2. Net Promoter Score (NPS)
3. Customer Loyalty Index (CLI)

We shall discuss each of these metrics in the next section of the blog in detail.

• Set a Budget

Budget…

The most crucial segment for any business. No proper analysis of the budget for any project can drain the business accounts. Therefore, it is equivalent to deciding upon the budget too when you’re planning to create a loyalty program.

Having a loyalty program doesn’t imply that you have to reward your customers at the cost of your business. And, if you think it to be this way, then it’s the most drastic approach. Proper budget analysis considering each phase is important.

Step 3. Prepare Your Customer eCommerce Loyalty Programs

• Choose the Type of Customer Loyalty Program

A customer loyalty program is not just one traditional way to reward your customers. Instead, the more creative and unique you go, the better the outcome. There are 10 types of loyalty programs that are most common and based on unique ideas. You must choose the loyalty program type that is best suited for your business type and your targeted audience. Although the loyalty program types are standard, there are top market trendsetters whose innovative loyalty program ideas are the compilation of two or more standard loyalty program types.

• Plan How and When to Reward Your Customers

This step takes you toward the execution phase of all your planning efforts. You know your target audience, your goals, the metrics you require to make an analysis, and the most-suited loyalty program type. The last phase of your planning journey is the plan to reward your customers.

For example, if you choose to implement the “Points and Rewards Program”, then on which activities of your customers, you’ll allow them points, and how these earned points can be redeemed? Or if you choose to implement a “Subscription-based Program”, then how you’ll reward the customers with monthly subscriptions or the ones with yearly subscriptions? Pre-hand analysis of how and when to reward will help you in crafting clear guidelines while you create your loyalty programs.

Step 4. Make Your Loyalty Program Easier to Manage

You are open to the number of software that can help you in automating your loyalty program processes for your eCommerce stores. These loyalty program-based plugins are discussed in detail in the next section to provide a clear understanding of selecting the tool for implementing your type of loyalty program.

Tools/Software to Implement Loyalty Program

S.No.	Loyalty Software Name	Specialty
1.	Points And Rewards For WooCommerce	The plugin is full of features and represents the Hybrid Loyalty program by offering the Points and Rewards functionality along with the functionalities of the Membership Program. You can even create levels to reward your customers like in Tier-level Program.
2.	Coupon Referral Program	It helps you implement a referral reward system for your business. Your customers can easily share their referral links with their friends and families and can earn rewards in return as you may prefer to offer.
3.	Gift Cards for WooCommerce	This tool is beneficial if you wish to have a reward card program. With this plugin, your customers have the option to customize the gift card and messages before sharing them with their loved ones or for their personal use even.
4.	RMA Return Refund & Exchange For WooCommerce	Not specifically a loyalty tool, but you can enjoy an easy refund, exchange, and cancel request interface for the purchased product to Customer/guest users that offers smart return ship labels integrated with ShipEngine and ShipStation.

 

The next section takes you to another very crucial step after deciding on the loyalty tool. This step follows at every stage. It is to analyze your efforts and measure the outcomes of the loyalty program you started (the metrics that help you measure your efforts in terms of your customer’s loyalty as discussed earlier).

And, here follows the next section – How To Measure Customer Loyalty?

How to Measure Customer Loyalty?

If you are not tracking your customers that can be the reason for letting your customers go. Measuring the customers’ loyalty isn’t an option, It’s a requirement. Track the relationship with your customers with these metrics:

1. Customer Lifetime Value(CLV)

Customer Lifetime Value (CLV) is a simple calculation but one that surprisingly few businesses are able to calculate. It is calculated as:

(Average Transaction Value * the average number of times a customer transacts before lapsing) – your cost per acquisition (CPA)

There are a number of alternatives, for example, applying your gross margin rather than your CPA.

2. Net Promoter Score (NPS)

How much does a customer like you? This metric indicates the likeliness of your customers referring you to their friends. It is quite a simple way, the consumer just has to answer this simple question with a value between 1 – 10.

This is a powerful metric because of the fact that when you recommend a product, you put your own credibility on the line. NPS divides your customers into 3 categories:

Detractors	Passives	Promoters
A score of 6 or lower is segmented as “Detractors”	A Score of 7 or 8 is segmented as “Passives”	A Score of 9 or 10 falls into the “Promoters”
They won’t recommend you to anyone, and will most likely not purchase from you once more. It May even hurt you through negative informality.	They are quite satisfied, but not blissful enough to recommend you. But, they won’t hurt you either.	They’re your promoters, your equivalent of the people camping in front of the Apple store. They’re likely to recommend you and buy from you again.

 

Calculate your total Net Promoter Score by subtracting your “Detractors” percentage from your “Promoters” percentage.

3. Customer Loyalty Index (CLI)

A standardized tool to track customer loyalty over time, and it also integrates the values of NPS, repurchasing, and upselling. It calculates all three values with an NPS-like questionnaire on a 6-point scale. 1 stand for “Definitely Yes”, and 6 stands for “Definitely No”.

How likely are you…

…recommend us to your friends or contacts?

…to buy from us again in the future?

…to try out other of our products/services?

Your total CLI is the average score of the 3 responses.

Answer scores:

1 = 100

2 = 80

3 = 60

4 = 40

5 = 20

6 = 0

In this way, CLI is calculated, which determines customer loyalty.

As the glitter and busyness of designing, creating, and implementing a reward program settle, it is now time to conduct a re-check for your loyalty reward program. Because in the end, this is going to help you build a sustainable loyal members’ community for the years ahead. Therefore, the next section helps you with the best practices preferred over time by the top marketers to implement loyalty programs.

Ready to Start a Loyalty Program?

Loyalty programs are an enormous help for an eCommerce business. They increase customer retention and experience while cutting your expenses. Also, starting a loyalty program and maintaining it for the long run will benefit you in holding your existing customers intact. As long as you go, your customers are along with you.

And what could be a better joy for a business owner than having the customers who joined their journey at the start walk along their paths of successes and failures in full support?

Although I really hope that you are clear in the approach to how to build a loyalty program. But, in case you have any doubts or concerns, then you can have a look over the top market brands and trendsetters’ innovative approaches to building a loyalty program for your store. If you have any further concerns, feel free to share your queries in the comments section, and we’ll try our best to resolve them.