How to Boost Ecommerce Revenue With Customer Loyalty Programs

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What's one of the main problems with selling on places like eBay, Amazon, and even Etsy?

Think about how you set up your Amazon store and the way you interact with your customers after a sale.

Well, for one thing, Amazon branding is all over the packages sent out, the email exchanges, and of course, the Amazon Prime loyalty program they have had so much success with.

The main problem is that selling on Amazon builds up loyalty for Amazon. Not your business.

Sure, you'll find customers who keep coming back, but nothing like you would get with your own VIP or loyalty program.

The key to the whole loyalty game is recurring income. You lock in your faithful customers for those monthly payments, then hope that they order additional items along the way.

The same goes for points systems, where the users see the points as a way to get discounts in the future. Not only do they like your company more, but it's a surefire way to get them coming back to your own website.

Today, we're going to talk about how you can boost your ecommerce store's revenue using effective customer loyalty programs.

We'll explore real-world loyalty strategies and look at how they are implemented by big companies. We'll even take an actionable peek into how you can implement these strategies for your own online stores.

Real-world Customer Loyalty Strategies

From point systems to a more interesting charity-based approach, these strategies are not only used in the world today, but they are proven to work.

1. The Classic Tier System

This one is so simple that pretty much any company could implement it.

It's based on the notion that the more customers buy, the more they should receive in return. It also adds an element of status to the equation, allowing for you to leverage exclusivity.

After all, even if it's an online badge, people like knowing that they've earned something and ended up in a group that not everyone is allowed into. A good example of this would be how airlines have certain levelsย of membership, and it's all about making those high-level customers feel good about themselves.

The travel and gaming industries are known to implement this model, but it has also been seen in other markets.

A good example we have is the EB Games EDGE program. It's a tiered loyalty program where the users can level up to certain colors like Red, Gold, Platinum, and Onyx.

Each tier has its own benefits to entice people to buy more.

For instance, the EDGE Red level only provides a BOGO 20% off birthday coupon, while the Onyx level has 50%. The great thing about a tiered loyalty program is that you can customize them however you want and add all sorts of benefits.

How to Implement This for Your Own Customer Loyalty Program

2. The Classic Points System

This is the most popular version of a loyalty program, and it all comes down to users accumulating points as they make more purchases.

This way, you can set up a certain amount of points they receive for each dollar spent. It's an easy point accumulation system to understand for both the customers and merchants, and you don't have to mess with a bunch of tiers or memberships.

An example of this would be giving away one point for every $1 spent, or maybe 1 point for every $5 spent. It's completely up to you.

The points system can be fairly transparent as long as you don't make the “exchange rate” too complicated.

Sometimes the points and memberships go hand-in-hand, but most of the time the main focus is how many points the customer has built up.

Since this is so common in the hotel and banking industries, we can look at, say, Marriot Rewards for a direct look into how points work. It's unfortunate that Marriott points can expire for the customers, but merchants like this setup for getting people to buy even more.

For Marriot, you can earn points on air travel, hotel stays, and when using a credit card. After that, you can use these points on room upgrades, booking hotels, and air travel.

How to Implement This for Your Own Customer Loyalty Program

3. A Paid Membership Program

Membership doesn't have to be free. In fact, one of the easiest ways to lock in your customers for a long time involves offering them paid memberships for your products.

This stimulates them to use your product or service more often. As most experienced online retailers know, if you can keep a paying customer, they're going to keep giving you that recurring income and potentially spend some extra along the way.

Amazon knows this all too well with the Prime membership, seeing as how Prime members spend far more per year than a non-Prime member.

The same goes for Dollar Shave Club. DSC is a subscription box company, but it does a wonderful job of convincing customers to pay on a monthly or bi-monthly basis. Since guys need to shave on a regular basis, it makes sense to turn them into members, as opposed to hoping they'll come back to the website every time.

In addition, right before a new box gets sent out, the customer gets an email asking if they'd like to add anything in addition to the regular razor.

How to Implement This for Your Own Customer Loyalty Program

4. A Gaming Loyalty Program

Entertainment goes a long way when it comes to keeping customers around your site for a longer period of time, while also giving out rewards, coupons, or points to be used at a later time.

MasterCard became known for its Scan, Spin, and Win game, which gamified the shopping process with a “Wheel of Fortune” type game.

One of the most notable gaming loyalty programs is from Chipotle. It could definitely be duplicated for an online store since the company utilizes both landing pages, emails, and SMS messaging.

Chipotle has sent out several games for customers to complete. After that, the user must type in their email address or phone number (effectively adding them to the loyalty program). If the person wins the game they get a coupon to download on their phone or computer.

How to Implement This for Your Own Customer Loyalty Program

  • Chances are you'll want to design a game that's branded for your company. Unfortunately, we're not aware of a specific app or plugin for turning your loyalty program into a game. However, you could always reach out to a custom developer. Games can be done as apps or websites.

5. The Charitable Route

It may sound weird to reward a customer by taking their money and giving the reward to someone else, but that's what charity is all about. The key is understanding what your customers care about in the first place.

For instance, if you run an online camping store, there's a good chance that the visitors to your website have a passion for the outdoors. In this case, you might find that they want to help fight wildfires or clean up the national parks.

Therefore, instead of sending them a reward for, say, $5 on every $50 purchase, you could take that money and send it to charity. Better yet, you offer them the opportunity to select the cause they want to donate the $5 to. This gives them full control and makes it feel more like a loyalty program.

Although I'm not sure who uses Bing these days, Microsoft launched an impressive loyalty program that gave out points whenever you completed a search through Bing, played games, or basically did anything through Bing.

When a Bing user builds up enough points, Microsoft asks for them to redeem the points. Sweepstakes and gift cards are part of the program, but you can also go in there and choose one of many non-profits to donate your rewards to.

For instance, you might send $5 to Teach For America or $20 to Boys and Girls Clubs of America. It's all in the customer's hands.

How to Implement This for Your Own Customer Loyalty Program

  • Connexions Loyalty is an option for setting up a charitable rewards program, but you also might have to get a custom developer for this.

Which Loyalty Program is Right for You?

Chances are your online store will be most comfortable with a tiered, membership, or points programs, but it's not a bad idea to venture outside of your comfort zone to see what customers like. Who knows? Maybe your visitors would like to play a game or contribute to a charity.

If you have any questions or great ideas on customer loyalty programs, let us know in the comments section below.

Feature image by Marco

Joe Warnimont

Joe Warnimont is a Chicago-based writer who focuses on eCommerce tools, WordPress, and social media. When not fishing or practicing yoga, he's collecting stamps at national parks (even though that's mainly for children). Check out Joe's portfolio to contact him and view past work.

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