8 Ways Loyalty Programs Grow E-Commerce

Explore how an integrated loyalty program boosts your e-commerce revenue.

Without a loyal customer base, there’s nothing to keep your business afloat to generate sales. This is especially true for e-commerce businesses.

This explains why online stores offer discounts and do their best to send personalized marketing messages. After all, there is a lack of face-to-face interaction with them.

Hence, it is imperative that you also have a loyalty program. But building customer loyalty is a process, and if you don’t have a solid plan in place, it will be a lot harder to reach your goals.

What is a Customer Loyalty Program?

Having a customer loyalty program is something that every company should strive for.

In fact, according to a Nielsen study, 84 percent of consumers say that they will instead choose a retailer that offers some loyalty program. 

Not only does this give your customers enough reason to keep coming back, but it helps generate more sales and build more brand awareness.

How Do Customer Loyalty Programs Work?

As with personal relationships, your relationship with your customer is successful if both are benefitting from it.

For instance, a rewards program allows them to enjoy discounts when purchasing from you. On the other hand, you get to generate sales from their purchases.

This explains why having a loyalty program for your e-commerce business can be a win-win situation.

How Does it Benefit Your E-commerce Business?

Now that you know what a loyalty program is and how it works, here are some advantages of having such a program for your customers:

1) Enhances customer retention

On average, loyal customers tend to spend 67% more than newer ones. 

This data is something that you shouldn’t ignore.

Similarly, acquiring new customers will also cost you five times more than keeping new ones. By applying this same principle when you start your ecommerce website, you’ll soon make a positive impact.

Without a doubt, this is one of the most effective ways of growing your business.

The primary benefit of having a loyalty program is that you can always do more to keep customers from coming back and relatively spending more.

As you turn your existing customers into loyal ones, you’ll see why customer loyalty management is vital in the long-term.

2) Increases revenues and sales

By increasing customer retention, you’ll get to boost your online business’s profits simply because loyal customers tend to trust your business more.

That’s why they’re likely to spend more, too.

Customers tend to enjoy loyalty programs because it is inherent for them to think it is one of their perks. Doing so makes your customers believe that the more they spend on you, the more bonuses they can enjoy.

Hence, the better your loyalty programs are, the more your customers will spend. And this can mean an increase in revenue for you.

3) Gives you a competitive edge

Brand awareness is vital in driving your customers’ purchasing decisions.

Because the global marketplace is becoming increasingly crowded, you need to stand out from the rest of the pack more than ever.

Moreover, 60% of customers are also more comfortable buying from a brand they’ve never heard of.

That’s the reason why driving brand awareness is so firmly linked with revenues and brand loyalty. Loyalty programs are also a great way to build brand awareness and boost online visibility.

As a result, you become a top-of-mind choice for your target customers.

4) Improves your reputation

Customer service programs serve a double purpose. It almost guarantees that your current customers feel esteemed. This encourages them to refer your e-commerce site to their friends and family.

By executing a successful loyalty program, you’ll get to expand your market reach. Because who would not want to share the perks they acquire from you, right?

The more that customers feel that your business is acknowledging them, the more they’ll be able to send the message out.

Mind you; word-of-mouth marketing is one of the cheapest forms of promoting your business.

5) Increase customer lifetime value (CLV)

Customer Lifetime Value, also known as CLV or CLTV, is the net profit attributed to the overall relationship you maintain with your customer.

It usually tracks how valuable you are to your customer and how much the ongoing bond will be in the future.

But why is this so important? Well, data shows that you’ll get to see this value within just 30 days. And two-thirds of that is realised on the first day alone, rising to up to 79% in only three months.

6) Offer better communication

An effective loyalty program provides you with a direct way to communicate with your customers. This could also come in handy during emergencies, like product recall.

Besides posting a notification on your website and social media channels, you can also send an email or SMS for a particular segment.

Meaning, there is no need to send a newsletter to all your subscribers. Instead, you only need to contact customers who bought a particular product that you need to recall.

7) Get important data

Modern customers prefer a more personalised customer experience. So much so that generation K and millennials prioritise personalisation.

What you need, though, is for your customers to fill out a form before making them part of a loyalty program.

Just remember only to ask what’s essential and leverage the data you can collect. For instance, you can send them a birthday discount since you have that information on your database.

8) Makes customers feel appreciated

A highly comprehensive and personalised loyalty program will make your customers feel valued.

This will help increase the emotional connection they feel with your brand. This could also mean that they will be extra patient with you in case of mishaps.

You can capitalise on that sense of appreciation by incorporating rewards or points that can delight your customers.

Over to You…

Loyalty programs do take a lot of work and planning. However, it’s undoubtedly worth implementing to ensure your business’s success.

By crafting well-designed loyalty programs, you can retain your customers. And this is one of the most cost-effective ways to boost your e-commerce business’s revenue.