Ecommerce loyalty programs: how you can use loyalty to build community

Many D2C businesses (and their agencies) focus heavily on the first C, but to run a successful ecommerce business today, the commerce element alone is not enough.

Of course, having an epic product discovery journey and fully optimised browsing and buying flows are vital (we will cover these in part three) but in this article, we are taking a look at how you can build a community (instilling advocacy and keeping people coming back for more) via loyalty.

Loyalty customers not only increase your repeat purchase rate but also help you organically grow your audience. And get this - the acquisition cost is far far lower! Less cost, more customers, more sales, more profit! Win, win, win, win!

Sounds too good to be true? Read on to find out more about the benefits of launching an ecommerce loyalty program and how you go about starting one yourself.

An ecommerce loyalty program rewards individuals for engaging with your business/brand on an ongoing basis. Customers receive a designated number of ‘points’ for each engagement, which can then be redeemed against their own future interactions with your brand.

The most cost-effective and efficient way to increase both conversion rate and average order value is by concentrating on your existing customers - people who have already bought. They already know the brand, like your products and trust your business, so there are fewer barriers to overcome. Increasing the lifetime value of each customer (keeping them coming back for more) will add directly to your bottom line.

Everyone loves earning something for nothing, whilst feeling valued and appreciated at the same time. A loyalty program does this in spades - rewarding your best customers on an increasing scale, based on how much/how often they engage with your brand.

Study after study shows that people trust personal recommendations above all other sources of information in the buying process. Real opinions from like-minded people beat traditional advertising, influencer marketing and brand-generated content, every time. Why? Because they trust them more! A loyalty program can be used to incentivise advocacy and build an incredibly engaged and loyal community who rave about your brand and share information about your product, 100% organically.

A feature-rich account area where customers can easily manage their engagement with your brand and manage their rewards all in one place, increases the chances of repeat visits and therefore repeat purchase and repeat engagement. Make it easy, fun and enjoyable and they will come back again and again.

The good news is, increasing customer loyalty via an ecommerce loyalty program doesn’t take rocket science - just a bit of consideration; how do your customers want to be rewarded and for what?

1. Choose your rewards

The rewards you offer will be unique to your business and will be totally dependent on your product type, product value and customer longevity.

Think about the rewards that will incentivise customers to remain loyal to your brand. Yes, discounts and freebies are always good, but rewards don’t all have to be monetary. Other great rewards can include early access to new product launches, exclusive added value bundles, unlocking specialised content, free shipping, private promotions and other tempting perks that make loyal customers feel special.

2. Determine your reward system

Loyalty programs require a reward ‘system’. A ‘point’ and ‘tier-based’ system that lets customers earn credits/points based on engagement and rewards them based on their rank in the system.

For example, Starbucks Rewards lets customers earn stars (points), based on spending - 3 stars for every £1 spent. As well as a free drink for every 150 stars earnt, when a customer gets to 450 stars they achieve ‘Gold’ status, entitling them to free extra espresso shots, syrups and whipped cream, with every purchase.

Ecommerce engagement isn’t just limited to sales, it can run much much deeper. For example with Girlfriend Collective, in addition to making a purchase in the online shop, engagements include signing up for an account, leaving a product review, mentioning the brand on social media, referring a friend, even just for being in the program on their birthday! The options for rewarding engagement/loyalty are limitless.

To ensure you’ll break even, you need to identify the cost of your reward(s) and ensure that the value the engagement brings to the business makes the reward a profitable marketing cost when delivered en masse. This is where tiers come into their own as the more loyal the customer and the higher the tier they achieve, the higher the value of the rewards can be.

3. Automate the process

There is a range of businesses that sell or license loyalty rewards software to ecommerce businesses - an add on which can be bolted on to your ecommerce platform to automate the loyalty reward process.

At Abstrakt, rather than use a third-party system we can build this process directly into the Craft CMS + Craft Commerce platform, meaning that we can develop it to your exacting needs, rather than using an off-the-shelf solution that may not work for your business, your products or your customers.

4. Tell your customers

Once your system is ready to go, it’s time to spread the word; starting with your customers. Promotion in your customer account area is a great place to communicate the program to your existing customers (as well as keeping them up to speed with their rewards in real-time once they have made a start). Email marketing (to subscribed individuals) and social media advertising (using Facebook’s Pixel) are also great ways to reach previous customers who do not often access their account (or who bought as a guest).

Like riding a bike down a hill, once a loyalty program gets going it turns the wheels itself, picking up pace exponentially, so make sure all of the logistics are in place before you start marketing!