5 Loyalty Program Options to Implement For Your E-commerce Store
Getting customers to return to your online store to buy again should be one of the most important marketing objectives for your team. It can save your company the effort and cost in acquiring new customers, and returning customers tend to spend up to 67% more than new customers.
A great loyalty program helps brands strengthen their relationships with their customers by rewarding them for purchasing from you and keeps them returning to your store.
There are many ways that brands can choose to do this. We’ll introduce some customer loyalty programs, and provide examples on how other brands have implemented it.
1. Points system
The points system is one of the most commonly used reward programs. It is essentially awarding your customers with points for every purchase. The number of points awarded shouldn’t be too complicated, as customers should be able to easily calculate how many points they’ll be awarded for their purchase.
For example, $1 could be translated to 1 point, and every 100 points can then be used to redeem a gift, or offset their next purchase for a fixed dollar amount or percentage discount.
Nine West, a fashion retailer has a simple system that awards 1 point for every $1 spent, and gives a $10 discount for every 150 points earned. That’s essentially a 6% rebate, which many brands would find more than reasonable for retaining customers.
2. Earned-membership system
The earned-membership system allows customers that spend a certain amount on your store to become a VIP member. VIPs are then entitled to discounts on all future purchases, or special discounts such as birthday-month specials.
Our client Bodynits uses this system to allow members who spend above $120 in a single receipt to apply to be a member. When users apply for membership, the system automatically checks their past transactions to see if they’ve spent at least $120 in a single order. Alternatively the user is allowed to upload an image of a receipt if he made a purchase in the physical store. The system also automatically extends memberships of users who’ve spent $80 in a single receipt for the preceding year.
Bods awards 10% of all purchases, and gives a further 20% discount on the users’ birthday month. This encourages their customers to spend more on their initial purchase, and allows Bods to limit their rewards to higher paying customers.
3. Paid system
Paid programs are basically loyalty programs that allow customers to purchase membership status and enjoy the perks that come with it. The payments are usually recurring on a subscription basis (monthly or yearly).
Our client Executive Coaching International (ECI) allows users to purchase courses that are tied to online memberships. These members get access to a members’ area within the site that offers restricted content, videos and material that the general public do not have access to.
4. Tiered Membership System
Customer tiers allows brands to reward their customers differently according to the value that they bring to the company, and how loyal they are over time.
Our client Mr Farmer uses a simple tiered membership system with two tiers. The criteria for the silver tier is “By invitation or total spend of $500”, while the criteria for gold is “By invitation or minimum spend of $500 for 3 consecutive months” This encourages visitors to keep coming back regularly to maintain their Gold status.
According to a report by Colloquy, 50% of e-commerce customers indicated that they increase their spending or purchasing behaviour to attain a higher tier status in a loyalty program.
5. Hybrid loyalty program
You may choose to use a combination of the above systems in your customer loyalty program for your site. For instance, you could use a tiered loyalty program, together with a points system to further reward customers based on the amount spent on your store.
Many of us are familiar with SIA’s KrisFlyer program. Singapore Airlines has one of the best hybrid loyalty programs, that combines points, tiers and earned membership systems. Members of KrisFlyer are awarded points and move up in tiers based on how much they spend on the ground and in the air. These points can be redeemed for flight miles, upgrades on flights and exclusive KrisFlyer promotions. With constant engagement of members, and the feeling of exclusivity of being in the higher-end tiers, they’ve created one of the strongest brands in terms of customer loyalty in Singapore.
If you’re going for a hybrid system, one important point to note however, is not to complicate your membership and rewards system too much such that it confuses users and inhibits them from signing up.
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If you would like to build an E-commerce store and implement a great loyalty system for your customers, contact us and we’ll be glad to help.