Why Your eCommerce Brand Needs a Loyalty Program

Customer retention is an extremely important part of growing any eCommerce company profitably. In fact, A 5% increase in customer retention correlates with at least a 25% increase in profit. [source]

One of the best and most proven ways to help increase customer retention is to introduce a loyalty program to your eCommerce store. A loyalty program offers discounts, rewards, and other incentives to attract and retain customers. By design, they aim to encourage repeat business by offering an incentive for being loyal to a brand. Typically, the more a customer shops with a store and the more they spend, the more they’re rewarded. 

It wasn’t until three years after launching our in-house eCommerce brand, DermWarehouse, that we started offering a loyalty program. As soon as we did, we began reaping the benefits. We began to see customer retention increase and our customers were so excited to be a part of our program!

Your customers are the most important part of your business. A loyalty program lets them know you value them and it keeps them coming back to you. It’s a win-win and will be a game changer for your eCommerce business. 

Want to learn more about our eCommerce services? Contact The Media Captain!

Why Does My Company Need a Loyalty Program? 

Integrating a loyalty program with your e-commerce platform can increase average order quantity by 319% [source]. That right there should tell you all you need to know! A loyalty program will have so many benefits for your eCommerce business:

Improve Customer Retention

Retain your customers by rewarding them for continually shopping with your business. The cost of acquiring customers is high and you want to make sure you get the most out of each customer on your site. A loyalty program will do just that. As customers continue to shop with you and build up points for their purchases, shopping somewhere else won’t be worth their while.

“In fact, 81% of shoppers remain loyal to businesses with a loyalty program. Furthermore, 69% of shoppers state that they choose retailers based on the customer loyalty or rewards which they can earn.” [source]

Enhance Customer Experience

Creating a great customer experience is always the aim to help keep customers happy and coming back to shop. Implementing a loyalty program will undoubtedly improve your customers’ experience by providing them with added value while shopping on your site. If you make it easy and intuitive to join your company’s loyalty program and give great rewards, you’ll have some very happy customers!

Increase Revenue & Profit

Retaining customers and keeping them coming back to shop with you is going to be a huge driver of additional revenue and profit. Instead of shopping around at different retailers, your customers won’t think twice about coming back to shop with you when they know that they have points to earn and loyalty dollars to spend. 

Not only that, getting new traffic to your site is expensive. When you’re spending on advertising, you want to make sure you’re getting the most of your ad dollars by converting customers and then keeping them around. Increasing customer retention will lead to an increase in profitability.

Create Brand Advocates

When your customers are happy with the experience they’re getting and they’re continually shopping on your site, they’re going to want to tell others about the great experience they’ve had and the great value they get out of your loyalty program. These brand advocates will bring in more referrals to your site!

Learn More: How to Improve eCommerce Customer Service

Collect Data About Your Customers

When you create your loyalty program, you can collect customer information such as birthdays, favorite product types and more. For DermWarehouse, we ask customers for their birthdays to send them a gift card during their birth month. We ask them what kind of products they love and what type of skin they have. Being able to collect data like this enables us to really target our marketing efforts to make them as effective as possible.

If you’re still not convinced that your eCommerce site needs a loyalty after reading all of the reasons above, read these incredible loyalty statistics.

How Do I Create an eCommerce Loyalty Program?

When creating an eCommerce loyalty program, you want to make sure that it’s:

  1. Intuitive & easy to use
  2. Provides a great value for your customers
  3. Doesn’t have too many restrictions

Here are the steps you should take when setting up your eCommerce loyalty program:

Choose Your Loyalty Rewards

Think about what rewards you want to give to your customers. Do you want to offer them points? Will you have a tier based system? What other perks will you give your loyalty members (free shipping, birthday discount, exclusive sales or products, etc.).

Make sure you do some competitor research to see what other similar companies are offering. You’ll want to ensure that your rewards are as good as or better than what your competitors are offering, otherwise you’ll still have to worry about your customers jumping ship. 

Here’s what our points breakdown looks like for DermWarehouse. Our rewards are very competitive with what our competitors are offering and we break it down in a way that’s easy to understand and easy for our customers to use:

DermWarehouse Points Breakdown

  • Earn 5% back on all purchases!
  • Spend $1, earn 5 points
  • 500 points = $5, 1000 points = $10, 1,500 points = $15, etc.

Think about what can make your loyalty program stand out. For DermWarehouse, what makes our loyalty program stand out is that you don’t have to reach a certain threshold to use your points and our points never expire. This is something that our competitors aren’t offering. Our customers love that they can use their rewards whether they’ve earned $2, $20 or $200. They also never have to worry about the points they worked hard for expiring.

When you’re determining what rewards you’re going to offer, make sure you’re thinking about margins and profitability. While you of course want your loyalty program to be the best, you don’t want to give discounts so high that you’re losing money. 

Find a Plugin or Rewards Software to Use

Whether you’re building your loyalty program from scratch or using a plugin or pre-built software, make sure you do your research and find something that works great with your site. For DermWarehouse, we built our loyalty program from scratch, however, there are many out there that offer really great out of the box options. Some software even offer bundles with a referral program!

Whatever route you choose to go, you want to ensure the process is fully automated, easy for your customers to use on the front end and for you to use on the back end. You’ll also want to consider what kind of reporting and analytics different software provides, as this can be very valuable information to have.

Announce Your Program to Your Customers!

Once you’ve built the loyalty program of your dreams, it’s time to market it to your customers. Of course, no one will be able to use it if they don’t know it exists! When we announced our loyalty program, we sent out an email to all customers to let them know. We also offered to backfill points to anyone who had made a purchase in the last 90 days once they signed up. This ensured we got a ton of customers signing up right off the bat!

Learn More: eCommerce Email Marketing Statistics

In Closing

  • A loyalty program offers discounts, rewards, and other incentives to attract and retain customers.
  • One of the best ways to help increase customer retention for your eCommerce store is to introduce a loyalty program. 
  • Not only that, a loyalty program will also enhance customer experience, increase revenue & profit, create brand advocates, and allow you to collect important customer data.

Stefanie Parks

Stefanie is the Co-Founder of The Media Captain. She's currently the CEO of DermWarehouse, The Media Captain's in-house eCommerce brand. Stefanie is an expert on all things eCommerce. She's grown DermWarehouse to beyond $5 million in annual revenue and has a customer base beyond 250,000. Stefanie provides helps with eCommerce strategy development for The Media Captain. She's a frequent contributor onto the TMC blog.

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