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Ecommerce loyalty programs reward and retain customers in a digital landscape. The rewards in ecommerce loyalty programs are often diverse and can include discounts, early access to products, and exclusive online content, catering to the digital nature of the interaction and the varied preferences of online consumers. These programs not only offer exclusive perks to your loyal customers but also drive consistent revenue for your business.
Let’s dive into the nuances of successful ecommerce loyalty programs and their unique features. We’ll look at how brands powered by Friendbuy—like Olly, Saalt, Olive & June, and other online retailers—have increased ecommerce sales with the loyalty program features that we outline in this post.
What Is An Ecommerce Loyalty Program?
An ecommerce loyalty program is a tailored rewards system that ecommerce businesses, like yours, implement to encourage repeat purchases and strengthen customer loyalty online. Ecommerce loyalty programs provide varied rewards like discounts, exclusive content, and early product access, catering to the diverse needs of online consumers. While your customers enjoy exclusive perks and benefits, your ecommerce business sees a boost in retention and revenue.
What Makes An Ecommerce Loyalty Program Different From Other Types Of Loyalty Programs?
An ecommerce loyalty program lacks any type of physical location where everyday consumers may be reminded of a brand while making their way through the world. Brick-and-mortar stores, for instance, can naturally build customer loyalty simply by being a part of a community, on the way home, or a store that a neighbor mentioned.
Ecommerce loyalty programs provide that same convenience and familiarity that a physical location would otherwise provide.
Here is how Friendbuy's loyalty program software does this for our customers.
- Digital Touchpoints: Ecommerce platforms use personalized emails, push notifications, or checkout pop-ups to remind customers of loyalty benefits. For example, after purchasing from MZ Wallace, you get an email about the points earned and another one later about special rewards.
- Seamless Integration with Technology: Ecommerce loyalty rewards programs can offer dynamic rewards based on customer behavior data. For example, Friendbuy's software tracks customer behaviors on an ecommerce platform, offering tailored rewards like discounts on favorite items.
- Global Reach: Ecommerce loyalty programs cater to customers worldwide, irrespective of geography.
- Dynamic and Instant Updates: Ecommerce loyalty programs can be updated in real-time, adapting quickly to feedback or trends. For example, with Friendbuy's tech, brands can instantly advertise a special online reward on their website banner or with email updates.
Ecommerce loyalty rewards programs, though lacking physical presence, can offer unique benefits that loyal customers appreciate. We will go through examples of brands doing exactly this, powered by Friendbuy.
Want even more ideas? See our best loyalty program examples.
The Importance Of Loyalty Programs For Ecommerce Businesses
Ecommerce businesses operate in a unique landscape, distinct from traditional brick-and-mortar establishments. They face challenges such as:
- Driving repeat customers: Unlike local businesses that can rely on regular foot traffic and proximity, ecommerce businesses need to work harder to ensure existing customers return.
- Cutting through the digital noise: The online world is saturated with ads, making it challenging for ecommerce businesses to stand out.
- Data management and privacy regulations: Ecommerce businesses handle vast amounts of customer data, making them subject to stringent data protection regulations. The more data you collect on your customers, the more considerations your ecommerce business will have.
Given these challenges, loyalty programs become essential to ecommerce businesses. They fuel customer loyalty to an ecommerce store by giving new customers a good reason to come back.
Here are the most notable benefits of loyalty programs in the ecommerce industry:
- Boosted Revenue: Loyalty programs can lead to increased revenue. According to McKinsey, 64% of customers are more willing to buy from a brand frequently if they are part of its loyalty program.
- Incentivized Repeat Business: Paid loyalty programs make customers 43% more likely to buy weekly after joining.
- Strong Brand Connection: Loyalty programs help establish a strong connection between consumers and brands, ensuring the brand remains top-of-mind during purchasing decisions.
- Increased Sales: Many loyalty programs incentivize customers to make more purchases, driving sales.
- Promotion of New Products: Loyalty programs can be used to promote and boost sales of new products to specific customer segments.
- Data Collection: Loyalty programs provide an opportunity to collect first-party data directly from customers, which is valuable in today's data privacy-conscious world.
- Reduced Marketing Costs: Investing in loyalty programs can reduce overall marketing costs. McKinsey found that 62% of customers were likely to spend more on the brand simply by being part of the loyalty program.
- Creation of Mailing Lists: Loyalty programs can be leveraged to create powerful email and SMS lists, which have high marketing engagement and ROI.
- Incentivized Shopping: Loyalty programs can gamify the shopping experience, incentivizing more purchases and increasing customer engagement.
- Increased Average Order Value (AOV): Loyalty programs can lead to increased AOV and repeat purchases.
- Customer Retention: Retaining existing customers is more cost-effective than acquiring new ones. Loyalty programs play a crucial role in retaining customers.
A rewards program is what makes loyal customers, not the other way around.
How To Create An Ecommerce Loyalty Program
Creating an ecommerce loyalty program is a tried-and-true marketing strategy to retain existing customers.
Based on our recommended loyalty program best practices, here's a concise guide to help you set up a successful loyalty program:
- Identify Your Goals: Before diving into the details, determine what you want to achieve with your loyalty program. Whether it's increasing repeat purchases, enhancing customer lifetime value, or simply building a stronger relationship with your customers, having clear goals will guide your program's design and execution.
- Decide on Incentives: Incentives are the backbone of any loyalty program. Customer incentives can range from discounts, exclusive offers, early access to sales, or even free products. Ensure that the incentives you choose resonate with your target audience and are compelling enough to encourage repeat purchases.
- Determine a Structure for the Program: Loyalty programs can take various forms, such as point-based systems, tiered programs, or cashback offers. Choose a structure that aligns with your business model and is easy for customers to understand and engage with.
- Choose Rewards: According to a report by Bolt, it's essential to understand the types of loyalty program rewards shoppers engage with the most. Whether it's redeemable points, exclusive merchandise, or experiential rewards, ensure your rewards are attractive and relevant to your customer base.
- Promote Your Program: Once you've set up your loyalty program, use email marketing, social media, and on-site banners to inform your customers about the program and its benefits.
- Monitor and Adjust: Regularly review the performance of your loyalty program. Gather feedback from customers, analyze participation rates, and adjust your strategies accordingly to ensure the program remains effective and beneficial for both your business and your customers.
The key to a successful ecommerce customer loyalty program often lies in offering genuine value to your customers. With the right approach, your ecommerce loyalty program can become a significant driver for customer loyalty and increased sales.
Friendbuy is a leader in the industry. Contact Friendbuy today to learn more about our powerful loyalty program software.
Loyalty Program Strategy By Ecommerce Business Size
The loyalty program strategy that best suits your business varies based on the size of the business and its monthly revenue.
The following sections get into tailored strategies for different revenue brackets, ensuring that businesses can optimize their customer loyalty programs to align with their operational scale and customer base.
- Up to $50K in total monthly revenue. For budding ecommerce ventures generating up to $50K in monthly revenue, a do-it-yourself model is often the most feasible. Using software specifically designed for ecommerce customer loyalty programs can offer a straightforward and cost-effective solution. This approach allows businesses to establish a foundational loyalty system without the complexities of integration.
- $50K-$100K in total monthly revenue. As businesses grow and their monthly revenue falls within the $50K-$100K bracket, the need for a more integrated approach becomes evident. At this stage, it's not just about having a loyalty program, but ensuring it seamlessly integrates with the broader tech stack. This holistic approach to marketing ensures that the loyalty rewards program complements other marketing initiatives, offering a more cohesive customer experience.
- Over $100k in total monthly revenue. For ecommerce giants with a monthly revenue exceeding $100K, a generic loyalty program might not suffice. Partnering with a provider to craft a custom-built loyalty program becomes essential. This tailored approach ensures that the loyalty program aligns perfectly with the brand's identity, values, and customer expectations, offering a unique and enhanced customer journey.
Contact Friendbuy today to learn more about our powerful loyalty program software.
The Different Types Of Loyalty Programs For Ecommerce Businesses
There are a few different types of loyalty programs that ecommerce businesses can launch to reap the many benefits that loyalty programs provide. Some businesses have multiple loyalty programs running simultaneously.
Here are the most successful types of loyalty programs:
- Points-based loyalty programs: Customers earn points for every purchase they make. Once they accumulate a certain number of points, they can redeem them for rewards or discounts. It's a straightforward system that encourages frequent shopping.
- Tiered loyalty programs: These programs categorize customers into different tiers based on their purchase history. As customers move up the tiers, they unlock better rewards and benefits, motivating them to spend more.
- Value-based loyalty programs: In this model, when a customer makes a purchase, a third party or charitable cause benefits. It appeals to customers' sense of altruism, as their purchases contribute to a greater good.
- Paid loyalty programs: Customers pay an upfront fee to join these programs. In return, they receive exclusive deals, discounts, or other perks that non-members don't have access to.
- Subscription-based loyalty programs: Similar to paid programs, customers pay a recurring fee (monthly or annually) to access exclusive benefits. This model ensures a steady revenue stream for businesses and continuous perks for subscribers.
- VIP membership program: Customers pay a premium to join the VIP club, granting them access to special benefits, exclusive events, or premium services. It's a way to make loyal customers feel valued and special.
- Referral program: Reward customers for referring their friends, giving them a reason to loop their friends into your brand.
What Are The KPIs For An Ecommerce Loyalty Program?
A successful ecommerce loyalty program is not just about retaining customers, but also about understanding their behavior and preferences. By measuring specific loyalty program Key Performance Indicators (KPIs), businesses can gauge the effectiveness of their loyalty programs and make informed decisions to enhance customer engagement.
Here's a detailed breakdown of each KPI:
- AOV (Average Order Value): This metric represents the average amount spent by a customer during a transaction. A higher AOV indicates that customers are purchasing more expensive items or adding more products to their cart, which can be influenced by loyalty rewards or incentives.
- CAC (Customer Acquisition Cost): This is the cost associated with acquiring a new customer. A successful loyalty program can help reduce CAC by encouraging word-of-mouth referrals and repeat purchases, thus reducing the need for expensive marketing campaigns.
- LTV (Customer Lifetime Value): LTV measures the total revenue a business can expect from a single customer over the duration of their relationship. Loyalty programs aim to increase LTV by enhancing customer retention and encouraging repeat purchases.
- Enrollment Rate: This metric gauges the number of customers who sign up for the loyalty program. A high enrollment rate indicates a strong initial interest in the program's offerings.
- One-and-Done Rate: This measures the percentage of loyalty program members who engage once and never return. A lower rate suggests that the program is effectively encouraging repeat interactions.
- Active Rate: Represents the percentage of loyalty program members who are actively participating and engaging with the program, indicating its effectiveness in maintaining customer interest.
- Redemption Participation: This KPI tracks the number of members who have redeemed at least one reward, showing the tangible value members see in the program.
- Redemption Rate: The percentage of loyalty points or rewards that are actually redeemed by members. A higher rate indicates that the rewards offered are appealing and valuable to customers.
- Tier Distribution: In tiered loyalty programs, this metric shows the distribution of members across different tiers or levels, indicating how many members progress to higher, more rewarding tiers.
- Member Growth: Tracks the increase in the number of loyalty program members over time, indicating the program's appeal and reach.
- Member Lift in Spend: Measures the increase in spending from loyalty program members compared to non-members, showcasing the program's impact on driving sales.
- Reward Redemption Rate: The rate at which members redeem their earned rewards, indicating the perceived value of the rewards offered.
- Churn Reduction: Measures the decrease in the number of customers leaving or disengaging from the loyalty program, indicating its success in retaining members.
- Customer Retention Rate: The percentage of customers who continue to engage with the brand and make purchases over a specific period, highlighting the loyalty program's effectiveness in maintaining long-term relationships.
- Repeat Purchase Rate: This KPI tracks the frequency with which loyalty program members make repeat purchases, indicating their sustained interest and loyalty to the brand.
Each of these KPIs offers valuable insights into the performance and effectiveness of an ecommerce loyalty program, helping businesses tailor their strategies for maximum impact.
The Benefits Of A Loyalty Program To Ecommerce Customers
At the core of every successful ecommerce loyalty program is how aligned the benefits are with your customers. If your customers have no benefit to joining your loyalty program, then they won’t.
So what are some of the most successful (AKA enticing) benefits of a loyalty program to customers?
Here is our list of benefits to customers:
- Financial Savings: Customers earn points or credits for purchases, redeemable for discounts, cashback, or free products.
- Exclusive Access: Loyalty members get exclusive access to sales, new product launches, or limited-edition items.
- Personalized Offers: Customers receive tailored deals and promotions based on their purchase history and preferences.
- Birthday and Anniversary Rewards: Programs celebrate special days with unique discounts, gifts, or bonus points.
- Tiered Benefits: Climbing the loyalty ladder unlocks higher tiers with more perks, such as bigger discounts or priority customer service.
- Educational Content: Some programs offer tutorials, lessons, or content that helps customers maximize their purchases.
- Free Shipping and Returns: Loyal customers often enjoy free shipping or hassle-free returns.
- Special Events and Experiences: Loyalty members might be invited to exclusive events or experiences curated just for them.
When creating your own loyalty program, consider which of these benefits would most resonate with your existing customers. In fact, we encourage you to poll your customers periodically to see how they want to redeem rewards and what kinds of perks that they want with your brand. Then give it to them.
This will not only make your loyalty program more attractive to customers, but it will also increase customer satisfaction overall because you listened to them.
10 Examples Of Ecommerce Loyalty Programs
The best loyalty program can both encourage customers to spend more and also attract customers. These are the best ecommerce loyalty programs that demonstrate how to do both seamlessly.
Olive and June
Olive & June, a brand synonymous with all things nails, has designed a customer loyalty program that not only rewards customers for their purchases but also for their engagement with the brand. At its core, the program is simple: Go shopping, get rewarded.
By creating an account, members instantly earn 5 points. From there, every purchase, review, photo addition to a review, or attendance at a Masterclass Series adds to their points tally.
The program also offers double points on the first system purchase and additional points for hosting painting parties or renewing memberships.
The points accumulated can be redeemed for a variety of exclusive products and experiences. For instance, 100 points can get you a pack of files or a stylish 'Olive Your Mani' print bandana. As the points increase, so does the value of the rewards, ranging from mini polish duos to complete mani systems.
The program has a tiered structure where spending more annually can elevate a member from a 'Friend' to 'BFFs' and then to 'Besties', each level offering enhanced point multipliers on purchases.
MZ Wallace offers a tiered loyalty program that allows customers to earn and redeem points based on their spending. For every dollar spent, customers earn one point, and every 10 points can be redeemed for a $1 discount.
The program is segmented into three tiers:
- Silver: For customers spending between $0 and $199.
- Gold: For those spending between $200 and $1199.
- Platinum: For high spenders with purchases of $1,200 or more.
Members of the program also enjoy perks such as early product launch access, double points days, VIP events, free shipping, and exclusive gifts.
Adopting a similar customer loyalty program can incentivize repeat purchases and foster customer loyalty. Using software like Friendbuy can enhance and streamline the loyalty program, ensuring it aligns with business objectives and resonates with your customers.
Annmarie Skin Care
Annmarie Skin Care offers a loyalty program called the Wild & Beautiful Collective. Members earn points for every purchase and for participating in specific program activities where they might earn double or triple points.
Then loyalty program members can redeem points by applying the discounts on any new purchase.
A special tier within this program is the Wild & Beautiful Collective Insiders. To become an Insider, members need to subscribe to one or more products from Annmarie Skin Care. Insiders get added benefits like exclusive discounts and access to educational resources. They also receive priority access to new offerings, helping them make informed skin care choices.
A subscription based loyalty program like this provides yet another way to increase lifetime value.
Saalt has ingeniously crafted an online rewards program named "Period Perks" that rewards customers for both their purchases and their engagement with the brand. Upon joining the program, members are immediately rewarded with 50 bonus points. From there, every dollar spent on saalt.com translates to a point earned.
Beyond just purchasing, Saalt has integrated other avenues to accrue points, such as signing up for their emails, participating in quizzes, responding to surveys, and notably, referring friends to the brand.
The referral system is especially lucrative: when a member introduces a friend to Saalt, the referred individual is granted a $20 discount on their initial order (given they spend a minimum of $40). In return, the referring member is rewarded with a $20 coupon and an added 50 Period Perks points. Impressively, there's no limit to the number of referrals, making it a compelling option for loyal customers.
Saalt's approach serves as a prime example of a well-structured loyalty program. It not only incentivizes purchases but also fosters deeper brand engagement. It also encourages customer referrals, bringing in the many benefits of a referral program.
OLLY offers a compelling loyalty program that rewards customers based on their spending. For every dollar spent, customers accumulate points, with the rate of earning increasing as they spend more. Loyal customers earn
- 1 point per dollar up to 150 points,
- 1.25 points per dollar up to 250 points,
- and 1.5 points for every dollar spent beyond 251 points.
These points can then be easily redeemed for discounts during checkout, with 100 points translating to a $5 discount, and so on.
The success of OLLY's program lies in its simplicity and VIP program. By incentivizing higher spending to earn more points, it encourages customers to make repeat purchases, effectively increasing their lifetime customer value.
By incentivizing repeat purchases through a tiered rewards system, businesses can foster customer loyalty and boost revenue. Integrating this with powerful platforms like Friendbuy can further amplify the benefits.
Bed Threads has masterfully crafted a loyalty program named "Dream Club" to reward its loyal customers. Upon joining, members are immediately welcomed with 80 Bed Creds, the program's unique currency. As they shop, they accumulate more of these Creds, with every dollar spent translating into points.
But the earning doesn't stop at shopping; Bed Threads has ingeniously integrated social media engagement, birthday celebrations, and even SMS subscriptions as avenues to earn more Bed Creds. These accumulated points can then unlock exclusive discounts, ranging from $35 to a generous $120.
The brilliance of the Dream Club is further highlighted in its tiered membership system. Starting as a "Dreamer," members can ascend to "Napper," "Early Riser," and the coveted "Deep Sleeper" tiers. Each level brings its own set of perks, from early access to new products to special birthday bonuses and exclusive sale events. The higher the tier, the more lucrative the benefits.
And for those who love to share, the "Share the Dream" initiative is a win-win, offering both the member and a friend $20 discounts.
The Dream Club is a shining example of a loyalty program done right. It seamlessly blends shopping incentives with engagement rewards, all wrapped up in a tiered system that encourages more interaction and purchases. As you consider crafting a similar program for your business, remember to align the rewards with your audience's preferences and your brand's ethos.
Peach And Lily
Peach & Lily offers its customers an enticing loyalty program named "Peach Perks." By simply creating an account, members are instantly rewarded with 25 Peach Points. As they engage with the brand, whether it's through shopping, following on social media platforms like Instagram, TikTok, and YouTube, or even celebrating their birthday, they accumulate more of these valuable points. Reviews, especially those with photos, and referrals further boost a member's Peach Points tally.
These points can then be traded in for impressive discounts, with 175 points equating to $10 off, and scaling up to a whopping $100 off for 1750 points.
Peach & Lily has designed a tiered membership system to further reward its most loyal customers. Starting with "Peach Preferred," members enjoy benefits like exclusive sales and a special birthday offer. As they spend more, they can ascend to the "Peach Premiere" and "Peach Platinum" tiers, unlocking even more exclusive benefits, including free shipping, new product testing, special events, and annual gifts.
Peach Perks serves as a prime example of a loyalty program that effectively blends shopping incentives with engagement rewards. The tiered system adds an element of exclusivity, motivating customers to engage more to unlock better benefits. If you're contemplating a similar reward program for your venture, ensure it resonates with your target audience and aligns seamlessly with your brand's values.
FRÉ Skincare invites its customers to join the "FRÉnds Club," a loyalty program designed to reward and celebrate its dedicated shoppers. By becoming a Club Member, individuals have the opportunity to earn points, aptly named "FRÉ points," for every purchase they make. The earning potential doesn't stop at shopping; FRÉ Skincare has incorporated various engagement avenues, such as social media follows on platforms like Instagram, TikTok, and Facebook, and even leaving product reviews with photos or videos. Birthdays are also celebrated with a generous gift of 100 FRÉ points.
These accumulated points can then be redeemed for discounts, ranging from $10 to $50, making the shopping experience even more rewarding.
The FRÉnds Club is structured with tiered memberships, each offering its unique set of benefits. Starting as a "FRÉnd," members can progress to "Best FRÉnd" and then to the elite "VIP FRÉnd" status. Each tier amplifies the benefits, from earning more points per dollar spent to receiving exclusive promotions and even complimentary travel sets.
FRÉ dials in on attracting new customers too through the loyalty program by rewarding customer referrals. The program promotes a referral initiative, allowing members to offer their friends a 15% discount on their first order, and in return, they receive a $15 reward.
Sephora's Beauty Insider program stands as a testament to the brand's commitment to rewarding its loyal clientele. The program is tiered, with three distinct levels: Insider, VIB, and Rouge. Each tier is determined by the annual spend, with the Insider being free to join, VIB requiring a $350 yearly spend, and Rouge necessitating a $1,000 annual expenditure.
Members across all tiers enjoy perks such as free standard shipping, the ability to apply 500 points for a $10 discount, and access to seasonal savings events with discounts ranging from 10% to 20%. As members ascend the tiers, the benefits become even more enticing.
VIB and Rouge members, for instance, enjoy point multiplier events, end-of-year discounts, and access to auto-replenish services, which offer a 5% discount on subscription deliveries. The crème de la crème, the Rouge tier, allows members to exchange 2,500 points for a whopping $100 off their purchase. Additionally, all members celebrate their birthdays with free gifts, with the number of gift options increasing as one moves up the tiers.
Sephora's Beauty Insider program serves as an exemplary model of a tiered loyalty system. It not only incentivizes spending but also ensures that the most loyal customers receive the most significant rewards. Integrating such a program requires a deep understanding of your customer base and a commitment to offering genuine value at every tier.
Lively Root offers a loyalty rewards program where members can earn reward points for various actions that all support the business. By simply joining the program, members are awarded 2,500 points. For every purchase, members earn 10 points for every dollar spent.
Additional points can be earned in various ways: creating an account (2,500 points), celebrating a birthday (500 points), leaving a review (100 points), adding a photo to a review (200 points), engaging with the brand on social media platforms like Facebook and Instagram (100 points each), and even reading their latest blog (50 points).
Members can redeem these accumulated points for a range of rewards. For instance, 500 points can get you a House Plant Invigorator, while 2,200 points can be exchanged for organic plant food or bio insecticide. Every 100 points equate to $1 off during checkout.
The program also features a tiered system:
- Sprout Squad: The starting tier where members earn 10 points per dollar.
- Bloomer Bunch: Upon spending $250, members earn 12 points per dollar.
- Evergreen Group and V.I.P.P: Both these tiers offer 15 points per dollar, with the requirement of subscribing to any product to attain this status.
Is A Loyalty Rewards Program Right For Your Business?
Brands like Olly, Saalt, Olive & June, and many others have successfully harnessed the power of loyalty programs, many of which are powered by Friendbuy's industry-leading software.
Dive deeper into the world of ecommerce loyalty programs, and discover how Friendbuy can elevate your brand's customer engagement and revenue. Ready to transform your ecommerce experience? Contact Friendbuy today and let's get started!