Acquisition, acquisition, acquisition… Why is everyone so focused on getting a new customer when 41% of an eCommerce store’s revenue comes from only 8% of its customers?
That’s where launching and growing a loyalty rewards program for your business comes in.
Your store can’t survive on new customers alone. By launching a loyalty program, you’ll be able to engage customers in a way that drives repeat purchases, referrals, lifetime value, revenue, and, most importantly, profit margins.
Cut to the chase.
Why Do You Need a Loyalty Program?
I want to emphasize this impact on profit because you probably try everything to increase profit, from conversion rate optimization to upselling, tweaking pricing, and lowering your shipping costs… However, loyalty is the fastest way to achieve stronger profit margins.
Why? Because your acquisition cost (of a new purchase from an existing customer) is significantly lower than any other channel where you are acquiring a customer for the first time.
And the deeper the loyalty, the true loyalty of the customer to the brand, the more they will refer others to you, share on social media, and come back at a cheaper and cheaper repeat “cost of acquisition” or “re-acquisition.”
Loyal Customers Cost Less
And to be clear, loyalty does have a cost. You may offer some sort of point rewards, discounts, or free products, and that’s the cost you pay to get the customer coming back. But almost always, that cost is significantly lower than the cost you paid to get them to purchase in the first place. Studies show it costs 5-25X more to acquire one customer than to keep one. If you’re not trying to find ways to engage your existing customers, you’re missing out on potential sales.
Also, identifying and getting to know your best customers will allow you to fine-tune and reduce your acquisition marketing costs. You may think you know your best customer (maybe it’s “new moms”). Still, as you enrich them, you may find the loyalty program shines through specifically on something different (i.e., certain geographic regions, moms of 2+, working moms, city moms, etc.). You are likely to find key insights as you build loyalty with your customers, which will improve acquisition costs through the improved copywriting and targeting opportunities that come from getting to know them.
Win Back Lost Customers
Sooner or later, loyal customers will forget about your brand, even if they’ve been buying from you for months or years.
However, that doesn’t mean you should give up on lost customers.
A loyalty program will help you identify which customers you need to win back. You’ll understand why they left and optimize your campaigns to bring them back to your store.
True Brand Differentiation: Stand out From the Competition
A well-executed loyalty program delivers an exceptional user experience that delights and surprises customers. By rewarding customers for various shopping activities (reviews, purchases, etc.), you make them feel valued and give them a reason to return and buy more products. This process simultaneously indoctrinates them into the brand, bringing them closer to you psychologically (in a very healthy way).
A lot of marketing is purely emotional. By rewarding your customers, you treat them like friends—not money. (They can be both!)
Boost Your Brands’ Reputation
In the age of the internet and social media, reputation is everything - especially for online brands where almost every customer reads reviews before making a purchase.
There are two main ways that loyalty programs can boost your online reputation:
- First, you can encourage your store’s customers to leave a review in exchange for a reward. The rewards can include free samples, redeemable loyalty points, or product discounts.
- The second tactic is to ask customers for a review once they receive a reward. During this moment, they just had a positive experience with your brand, which makes them more likely to leave some kind words about your business.
It’s a simple way to boost your online reviews and position yourself as a brand that customers can trust.
Examples of Best-In-Class Loyalty Programs
Loyalty programs have become a staple of many great businesses. They boost revenue and customer retention and increase a brand’s credibility and reputation.
Here are four brands killing it with retention and rewards marketing:
1. Sephora: Beauty Insider Program
Sephora is one of the leading brands in the beauty industry. Its loyalty program, the Beauty Insider Program, is free for customers to join. More than 10 million customers are already part of the program.
Members of Sephora’s loyalty program earn redeemable points for each purchase. For American customers, one point is equal to one dollar.
The program is divided into three tiers, which include:
- Beauty Insider: For members with 0-350 points.
- VIB: For members who’ve spent over $350 on Sephora products in one year.
- VIB Rouge: This is for members who’ve spent over $1000 on Sephora products in one year.
Every Tuesday and Wednesday, Sephora organizes its “Rewards Bazaar,” where customers can get exclusive rewards. We’re not just talking about any gifts—the Reward Bazaar offers products that customers won’t find anywhere else.
2. Adidas: Creator’s Club
Adidas has an exceptional loyalty program called Creator’s Club, a VIP member program in which loyal customers are rewarded for their engagement.
Program members can benefit from various exclusive perks, such as access to limited edition products, invitations to special events, and priority customer service. The more customers purchase products and attend Adidas events, the more rewards they get.
The VIP program includes four branded tiers to achieve rewards:
- Challenger
- Playmaker
- Gamechanger
- Icon
Customers can unlock higher offers as they grind up the levels and earn more points. For example, once they reach the Game Changer or Icon status, they can earn sweet rewards such as personalized training apps, custom workouts, or exclusive parties.
Adidas’ program is so great that it can go beyond products and discounts. They offer their customer experiences, which proves they value them.
3. Barnes & Noble: B&N Membership
Customers are more likely to join your loyalty program when they feel the value outweighs the membership cost.
Take a look at Barnes & Noble, for example, with their B&N Membership Program. When customers join, they can receive around $60 in discounts, bonus coupons, and other exclusive benefits, which include:
- Free shipping
- Special birthday offers
- Early access to events
The best part? Customers only cost around $25 a year to join. It’s an opportunity for them to get good value for their money.
4. Amazon: Amazon Prime
Last, no one has brand loyalty better than Amazon with its Prime membership program.
Amazon Prime is so successful because it addresses the most significant pain point of most online buyers: high shipping costs. For an annual fee, Amazon Prime members get access to unlimited 2-day shipping on any product they buy.
As a result, Amazon Prime members spend more on products than non-me, which Amazon Prime doe’s subscribers expect to double in this decade.
Tools That Are Related to Loyalty, but Not Quite Loyalty
It’s worth mentioning that some other types of tools seem like loyalty tools but are not.
Outside of loyalty programs, there are also other tools you can use to promote your online store and delight customers, which include:
- Referral programs - they incentivize referring a friend and may even give a reward, but they don’t allow for any other types of loyalty outside referral.
- Facebook Messenger and SMS marketing providers are great channels for marketing and keeping in touch with customers, so they feel like they create “loyalty,” but in fact, they are just a medium of communication, not a full-fledged loyalty program.
- Influencer marketing tools: Staying in touch with influencers and building an influencer program can build a certain type of loyalty with them, but that is still not a loyalty program, which falls short of what we want.
These tools share similar features, such as the ability to drive more customer engagement with your brand. However, they also have key differences that separate them.
Let’s find out why:
Referral Marketing Tools
With referral programs, the goal isn’t really to drive repeat purchases; it’s to land new customers. Customers are encouraged to spread the word and recommend your brand to others, typically using their own discount code or referral link.
Referral programs are merit-based, and rewards are only issued to the customer when a successful referral is made.
Many referral marketing tools offer cash reward payouts, which is especially valuable in businesses with low repeat purchases (For example, Mattresses).
Examples of Referral Marketing Tools:
Facebook Messenger & SMS Marketing Tools
Facebook Messenger currently has 1.3 billion users worldwide. In addition, 53% of people who use messaging apps to reach brands are more likely to shop with a business they can DM.
For a more personalized customer service experience, there are various tools you can use to set up a Facebook chatbot in your store. While they’re not loyalty programs, Facebook Messenger tools do similarly work to drive deeper engagement and retention.
Examples of Facebook Messenger & SMS Marketing tools:
Influencer Marketing Tools
Many influencer marketing tools help you build relationships and get free and paid promotions from micro and macro influencers. Some may encourage affiliates or partners to share about you, but they aren’t precisely customer-facing tools that boost loyalty.
Examples of Influencer Marketing Tools:
The Best Loyalty Rewards Tools For eCommerce
As an eCommerce store, you need a tool that builds loyalty programs that are frictionless, exclusive, and compelling enough for customers to join. The program you pick also depends on your current budget, company revenue, and specific needs.
To compile our list of the best loyalty tools, here’s what we took into account for each platform:
- Easy-to-use user interface (UI) that helps you create loyalty programs in hours, not days
- Advanced analytics that measures the performance of your loyalty program
- Customization feature to create unique programs
- Simple integration with your favourite eCommerce platforms and marketing tools
So, without further ado, let’s take a look at six apps that are going to supercharge your customer retention and boost your revenue (in no particular order):
LoyaltyLion
LoyaltyLion is a loyalty provider trusted by thousands of eCommerce stores, including Ancient Nutrition and Skinny Dip.
With LoyaltyLion, customers can receive points for various actions they take with your brand, such as purchases, web visits, and social media likes.
And display the customer rewards in your own custom dashboard:
The platform will also pair you with a success manager to provide you with advice and help you grow.
Best For: Loyalty Lion has produced amazing results for health, wellness, beauty and fashion brands. However, if you’re not generating much revenue yet, it will likely be better to go with another option.
- Easy-to-use UI to create a loyalty program that reflects the look and feel of your brand
- Go beyond rewards — encourage referrals on social media and email
- Onboarding advice to help you set up the platform
- Assign loyalty tiers for your best customers
- Reward subscriptions via ReCharge payments
- Analytics that identify who your most loyal customers are and which ones you need to win back
Pricing
LoyaltyLion offers a generous 14-day free plan, during which you can host unlimited customers and receive 800 orders per month. Once the free trial is over, the membership starts at $159/month.
Smile
Smile is currently the most popular loyalty rewards program for Shopify stores. It’s been used by more than 30,000 stores and serves over 50 million members.
The platform allows you to create various types of rewards systems, such as loyalty points, VIP tiers, and referral programs. Its editor makes it easy to customize your loyalty program and build something unique without the need for a developer.
Best For: Smile is great for any online brand looking for more customization when building its loyalty program. Its easy-to-use interface allows users to launch beautiful programs with just a few clicks, combining ease of use with a robust feature set.
Features
- On-site reminders that encourage visitors to sign up when they’re most receptive
- Responsive programs that look good on any device
- Access to hundreds of resources to set you up for success
- Detailed reports on interactions members have with your program
- Create a sense of urgency with “expiring points” campaigns
- Save abandoned carts with point reminders
- Integrates with some of the best tools in the market, such as Klaviyo, Omnisend, and Mailchimp
Pricing
Smile starts at $49 a month, with its growth plan at $199/month (ideal for mid-sized businesses) and the pro plan at $599/month for companies approaching scale.
Rise
Brand Ambassador and Gift Card Platform for Both Online and Online/Retail Stores
Rise helps Shopify brands boost their customer loyalty with the power of gift cards. Customers can become brand ambassadors and seamlessly send branded gift cards to their loved ones via email.
The platform doesn’t just settle for gift cards to boost brand loyalty. It also has a store credit system that handles customer refunds and returns.
Best for: This is great for retail brands looking to invest in word-of-mouth marketing and manage their re-engagement in one platform.
Features
- Send store credit using automated rules with Rise’s workflow feature
- Motivate buyers with credit, discounts, or loyalty points
- Create marketing campaigns to re-engage old customers and target a new audience
- One-click checkout for customers
- Integrated with Recharge, Bold Cashier, Out Of The Sandbox, and other referral apps.
Pricing
Rise offers a free 7-day plan for users. After the free trial, the monthly fee is $16.99 for 100 monthly store orders and $47.99 for 400 monthly store orders.
Lootly
Well-Rounded Loyalty Tool
Lootly is a rewards program for Shopify stores that does not limit the number of orders or members you can host, no matter which plan you choose. You can reward customers for leaving a product review, celebrating a birthday, creating an account, and more.
With its built-in sharing system, customers can easily share their referral discounts on social media or email, and both the sender and recipient can be rewarded.
Best for: Companies that want to boost their brand loyalty and retention without worrying about how many customers they can host.
Features
- Unlimited orders and unlimited customers, even with the free plan
- Customize everything with no limits — emails, on-site displays, and more
- Analytics that cover relevant details on your audience, such as order and referral history
- Dozens of ways to reward points, from purchasing reading content
Pricing
Lootly offers a free 7-day trial for all of its plans. Pricing starts at $79 for its Growth Plan and can go up to $599/month for its Enterprise plan.
Next Steps
Test out a few tools, get a demo, and feel out what is right for you. Strategize with your team on the best-fit loyalty functions—do you want a larger social media following, more reviews, and a customer portal for members to come back and check on their rewards, or perhaps the referral component is the most valuable for you? Each store is going to be different, and you need to roll out the program that is right for you.
One of the most important things is tracking and reporting. Loyalty programs are designed to get customers to use their loyalty points. And while that costs you money, technically, you should be thrilled to see customers using these points. Tracking loyalty points acquired and used by customers and making sure that they are spending them, incentivizes and reminds them to spend them. Don’t try to hide them from the customer and make it confusing, like some brands. Embrace the value of giving them loyalty and treat it as an investment in the relationship. One that has been proven to pay off in the long run!
To maximize your store’s sales, you must implement a retention strategy to delight and engage your current customers. The best way to do this is to launch a loyalty program, which will not only increase your revenue but also win back lost customers and make you stand out from the crowd.
With this list of the top loyalty rewards tools, you should be able to choose the right platform for your brand. For the best results, integrate your loyalty program with email marketing.
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