In today’s fiercely competitive world of online shopping, standing out from the crowd is crucial. With countless businesses vying for the attention of your valuable customers, simply hoping they will choose you over and over again is not enough. The key to ensuring long-term success lies in providing compelling reasons for customers to return time and again.
This is where customer loyalty programs come in.
By providing special rewards, unique advantages, and personalized experiences, loyalty programs help create a strong connection between customers and your brand. This motivates consumers to return and remain loyal to your brand for a long time.
Keep reading to explore the importance of customer loyalty, understand the factors that customers seek in loyalty programs, and gain insights from successful brands that have mastered the art of building customer loyalty.
What is a customer loyalty program?
A customer loyalty program is a marketing strategy that helps you enhance the bond between your brand and customers. Well-thought customer loyalty programs entice your customers to purchase from you rather than your competitors.
To implement customer loyalty, you can choose a loyalty program that aligns with your brand. You can start by defining your goals for loyalty programs. Identify your target audience’s preferences, behaviors, and needs. This will provide a roadmap to create a structure of a program. Will it be a point system, a tier system, or something else? Keep things easy and simple.
Identify communication channels to inform your customers about loyalty programs. You can outline how customers can earn rewards. This can include referral programs, social media engagement, or participating in events. Lastly, gather feedback from participants regularly to better understand their experiences and preferences. You can further use this information to optimize your loyalty program.
Why are customer loyalty programs important for online stores?
For a number of reasons, customer loyalty programs are crucial for online stores. These loyalty programs are created to reward and retain loyal consumers, motivating them to keep shopping at the store. Here are some key reasons why customer loyalty programs are valuable for online stores:
Customers who take part in loyalty programs are more inclined to buy products again to earn rewards or gain access to additional benefits. This makes your customers feel appreciated and rewarded, which enhances their emotional bond with your brand and increases the possibility of repeat purchases. Thus, this creates a win-win situation for both the customers and the store.
It is often more cost-effective to retain existing customers than to acquire new ones. The ongoing positive experience and engagement with the loyalty program create a loyal customer base, resulting in increased customer retention, higher customer lifetime value, and positive word-of-mouth referrals.
Brand loyalty and trust
Loyalty and trust are fostered by a successful loyalty program. The loyalty program demonstrates that the brand values its customers by providing rewards, personalized benefits, and exclusive experiences. This creates a sense of respect and trust, making customers feel valued. Further, it enhances brand loyalty and contributes to the long-term success of the business by increasing customer retention, promotion, and positive word-of-mouth.
Online stores can obtain useful insights into customer behavior, preferences, and purchase history from the data collected through the loyalty program. This information can be used to develop personalized, targeted marketing efforts that will boost customer engagement and conversion rates.
Increased customer engagement
Loyalty programs keep customers engaged with the brand as they actively participate in earning rewards, checking their points, and utilizing discounts. This engagement can lead to a stronger emotional connection to the brand. As a result, loyalty programs play a crucial role in building a loyal customer base and contributing to the long-term success of the brand.
12 Best customer loyalty programs that works for online stores
For businesses, attracting and retaining customers is their primary goal. Gaining customers is a major goal of marketing, but retaining them can be a whole different challenge. Customers are encouraged to keep doing business with you through loyalty programs. The incentives might take many different forms, but they must provide a compelling value to entice people to return.
Here are the 12 best customer loyalty programs that work for online stores. Let’s dive in.
#1 Points-Based reward programs
Customer loyalty programs with a point-based system are undoubtedly one of the frequently used methods of rewarding and retaining customers for online stores. These programs work on the simple principle that customers collect points based on the amount of money they spend for a product or services and these points can later be redeemed for various benefits. For instance, a customer might receive 1 point for every 100 rupees spent.
Points-based loyalty programs drive ongoing customer engagement. Customers are encouraged to come back to the brand’s platform to check the current points, look through rewards, and make new purchases. Although a points system is the most popular kind of loyalty program, it may not be appropriate for all kinds of businesses. Businesses that promote frequent, short-term purchases will benefit the most from it.
One of the most popular examples of point-based reward programs is offered by My Glamm, a leading online beauty and cosmetics brand. Customers who make purchases through the MyGlamm website or mobile app earn points, which can be redeemed to get a discount on their next purchase. Additionally, My Glamm customers can earn points on the basis of profile sign up, app install, product reviews etc.
#2 Tiered Loyalty Programs
“Tier programs are like video games”
For online stores, tiered loyalty programs can be used to boost repeat purchases and enhance customer engagement. How?
Customers move up in tiers based on their expenses or engagement levels, unlocking more premium benefits.
Every tier offers attractive benefits, encouraging customers to increase their spending to advance to higher tiers and giving them a sense of accomplishment.
This will encourage your lower-tier customers to work hard to increase their expenses. As a result, customers are constantly motivated to achieve bigger awards, creating a positive feedback loop. Also, your higher-tier customers are more likely to remain loyal to the brand.
Here’s an example from Myntra Insider that has multiple levels, such as Elite, Icon, and Divine. Each tier has its own set of rewards and benefits. As customers make purchases and engage with the brand, they earn points that contribute to their tier status. Higher tiers grant access to benefits like customer assistance, early sales access, and exclusive previews.
#3 VIP/Membership Programs
Online stores that provide VIP or membership programs reward loyal consumers with a range of premium benefits and privileges in exchange for a membership fee. The most committed and valuable customers who are willing to invest in a better shopping experience are the target audience for these programs. Exclusive rewards, such as early access to sales, specialized offers, and dedicated customer service, are offered to these customers.
Let’s say an online electronic store has a VIP or membership program named “Tech Elite.” Customers can join Tech Elite by paying an INR 1,000 annual fee. As Tech Elite members, they gain access to 24/7 dedicated tech support, early access to new tech releases, product recommendations, etc. Thus, VIP and membership programs help to build customer loyalty, encourage retention, and elevate the overall brand experience.
Example of VIP/Membership Program offered by Shoppers Stop. Here, members earn reward points on purchases, enjoy exclusive discounts, and receive special birthday rewards.
#4 Referral Programs
Online stores can leverage referral programs as a powerful marketing tool to acquire new customers, increase sales, and foster customer loyalty. Customers are encouraged to refer friends and family by offering rewards like discounts or store credit for successful recommendations.
For instance, an online clothing store can offer its customers a referral program where they receive a 25% discount on their next purchase for every successful referral. In addition, the referred friends also get a 15% discount on their initial purchase.
Here, you can make the referral process simple and user-friendly. Provide customers with shareable referral links or codes that can be easily shared with their network through social media, email, or messaging apps.
Thus, this referral marketing technique can assist in converting loyal customers into brand enthusiasts.
Example of Nykaa’s share and earn loyalty program.
#5 Gamified Loyalty Programs
In this rapidly digitizing world with a tech-savvy audience, the fusion of gamification and customer loyalty has proven to be a winning combination for e-commerce brands. By transforming the shopping journey into a delightful game with irresistible rewards, brands have set new benchmarks.
Online stores can enhance the buying experience by adding gamified aspects to their reward programs. You can set up social media challenges or competitions that allow users to take part by contributing user-generated content, using a particular hashtag, or sharing their experiences.
Likewise, introduce a virtual spin-the-wheel game where customers can earn rewards like discounts, free products, or bonus points.
Flipkart, one of the top e-commerce platforms is known for using gamified elements in its “Flipkart Plus” loyalty program. By making purchases, participants in this program can earn “SuperCoins” that can be used for a variety of benefits, such as discounts, partnership offers, and access to exclusive events.
#6 Subscription-based loyalty program
In subscription-based loyalty programs, customers subscribe to a product or service, pay a price upfront, and receive benefits.
Online stores can implement subscription programs by offering exclusive benefits to subscribers, such as free shipping on all orders, early access to sales and new products, special discounts, and priority customer support.
Further, reward subscribers with loyalty points or exclusive rewards in exchange for their continuous participation in the subscription program. This can help a brand build a loyal customer base, produce consistent revenue, and encourage long-term relationships with its valued customers.
Zomato Gold is a dining program that requires a subscription and gives members early access to restaurant deals as well as free food and drink at partner restaurants. Other brands like Myntra Insider, Flipkart Plus, BigBasket Smart Bachat Club are a few examples that have subscription-based customer loyalty programs.
#7 Member Exclusive Access
A member-exclusive access loyalty program is a customer retention strategy implemented by businesses to reward and retain their most loyal and valuable customers.
Exclusive access makes your customers feel valued and appreciated, fostering a sense of belonging and loyalty to the brand. Additionally, it creates a feeling of exclusivity, which can drive customer engagement and word-of-mouth marketing as members share their experiences with others.
Online stores can create a sense of exclusivity and provide members access to VIP events or exclusive product previews to make them feel like valued community members. Further, you can provide a dedicated team to ensure they get quick and kind assistance when they need it.
For instance, Cult.fit provides its members with access to exclusive live training sessions, nutritional guidance and fitness challenges.
#8 Limited-time Loyalty Program
Limited-time loyalty programs create a sense of urgency and excitement among customers by offering exclusive benefits or rewards for a limited time. This program is often related to special events, holidays, or product launches.
Limited-time offers generate excitement and buzz, leading to higher engagement on your online store and social media channels. This program attracts new customers who are enticed by the special deals and helps to expand your customer base. Further, you can offer a limited-time loyalty program during Christmas, Diwali, Black Friday, or even special occasions like your store’s anniversary.
For instance, every year Myntra organizes “End of Reason Sale”. This limited-time event offers heavy discounts on popular fashion brands and products. Myntra frequently provides members of its loyalty program, Myntra Insider, with unique early access to EROS deals and exclusive discounts.
#9 Coalition Customer Loyalty Program
A coalition program also known as a multi-brand or joint loyalty program involves collaboration between multiple businesses to create a unified loyalty program. This strategic alliance enables customers to earn loyalty points or benefits when they purchase at any of the participating brands, boosting their entire shopping experience.
In addition, the coalition customer loyalty program allows each participating brand to access the consumer base of other partners, thereby boosting their reach and potential customer acquisition.
The Big Bazaar- PAYBACK loyalty program is an excellent example of a multi-brand collaboration that offers customers the opportunity to earn rewards points while shopping for daily essentials at Big Bazaar.
#10 Cash Back Loyalty Program
Cashback is used as a customer loyalty program to reward loyal customers with a percentage of their purchases as well as save them money on future purchases. As customers make additional purchases, the cashback rewards accumulate in their loyalty accounts. The more they spend, the more cashback they earn.
Depending on the terms of the program, customers have a variety of options for redeeming their cash back. It can be turned into store credits, used for future purchases, or transferred to the user’s bank account as options.
Paytm, a popular mobile wallet and e-commerce platform, offers cashback rewards on various transactions, such as bill payments, mobile recharges, and online shopping.
#11 Mobile app loyalty program
The loyalty program is seamlessly integrated into the brand’s mobile application. This allows customers to access rewards and track their progress directly from their smartphones. Customers can earn points by carrying out various tasks within the app or by making purchases, referring friends, sharing, or posting on social media.
Online stores can encourage users to make purchases through the mobile app by providing special offers and promotions that are only available through the app. This increases mobile app installation and helps the brand gain new users.
For example: McDonald’s mobile app loyalty program offers exclusive deals, discounts, and digital coupons to app users for use in their restaurants.
#12 Cause-Related Loyalty Programs
These initiatives seek to increase customer loyalty by associating the company with a good cause that resonates with the target market. The idea behind the concept is that people are more likely to support and engage with a company that actively supports social or environmental causes.
Based on client behavior or purchases, the business develops a way to support the preferred cause. This might include setting a fixed price for particular products or services or giving a portion of each purchase to the cause.
Transparency is important in such loyalty programs. Businesses can keep their customers informed by providing success stories, impact reports, and updates regarding the cause.
Through the Starbucks Foundation, the company supports education, youth empowerment, and community development initiatives.
Choose the right customer loyalty program for your business
Implementing a loyalty program is a smart move for business owners who want to build brand loyalty and encourage repeat business. Choose a program that is simple to set up and manage to reduce the workload on your employees. To simplify program tracking and communication, explore integrating technology and digital tools.
By including gamification features, you can increase customer engagement and participation. Communicate the benefits of your loyalty program clearly and consistently to your customers. Further, use a variety of platforms, including social media, email marketing, and in-store signage, to notify customers about their rewards and upcoming promotions.
Make sure your loyalty program reflects your brand’s values and the preferences of your target audience. Instead of focusing on expensive rewards, provide customers with benefits that have value, such as unique discounts, gifts, or early access to new products. Additionally, keep a close eye on how it is performing and be open to making changes in response to customer feedback and behavior.
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