eCommerce has been steadily growing for the past decade, but following the recent hyperjum in digitalization, the adoption of online shopping went through the roof – to a point where it’s expected that the global eCommerce sales will reach $6,3 billion by 2024. Whether you run an essential business that faces higher demand, or a non-essential business that is restructuring, there’s one thing for certain: eCommerce loyalty programs are now more important than ever.
Looking for the most up-to-date trends about the current and future loyalty program landscape? Check out our insightful report!
The reason is simple: people still need to replenish their stock. However, they now have more time to spend on the Internet searching for products. And relying solely on discounts won’t be enough to stand up to massive competitors like Amazon.
This means you need to offer not only good prices and great products, but also a convenient buying process and tons of engagement points that keep customers coming back. This article is meant not only for purely eCommerce companies, but for any retailer that wants to branch out into online sales or strengthen their eCommerce channels.
The pandemic, as devastating as it is, has definitely pushed more people to try ordering online. In some cases, maybe even for the first time. These new customers are an easy catch as they can only shop online. One of the tactics for online retailers to employ is to have a loyalty program. Online shops should focus on program enrollment, so they can stay in touch with customers post Covid-19.
Key Takeaways – TL; DR
- Maintaining newfound customers is the definitive challenge after the recent eCommerce hyperjump
- Standing out from the competitive market requires brands to engage customers outside of the buying cycle
- In the current market environment, long-term engagement and emotional loyalty pays out at the end
- A new emerging trend is to Reward charity and active lifestyle through
- Diversifying the reward system for each country can help businesses hyper-tailor the membership experience for different audiences
Table of Contents
What Are the eCommerce Loyalty Programs?
An eCommerce loyalty program is a customer retention tool geared towards keeping and engaging your existing customers, so they will buy in higher quantities, shop more often, or interact with your brand more frequently. The best programs are easy-to-understand, show a clear path to higher tiers and rewards, and offer a fun experience!
The world of eCommerce sales is generally characterized by high purchase frequency and equally high churn rates. Many companies believe that customer loyalty no longer exists, and use deep discounts in an effort to differentiate themselves. However, this constant price war has conditioned customers to hunt for the best markdowns, which has made brand loyalty even harder to achieve.
Next-gen eCommerce loyalty programs can create a devoted community around your brand, by helping you stand out in the following ways:
- A redefined buying process, to make online shopping feel seamless
- Incentivized customer profiling, to generate richer data and boosts other marketing activities, such as personalization
- Experiential rewards and VIP benefits, to increase overall customer lifetime value
- Special interest clubs, to build communities and emphasize exclusivity
- Viral social media contests, to encourage word of mouth and build trust
I think the consumer will come back more slowly than most people think. We may be entering a few years of extended pullback, the primary reason for this is lack of available jobs. This will cause consumers to be more cautious. In general, the biggest area where a loyalty program for eCommerce can help is by making it easier for the consumer to keep purchasing additional items from the same brand, rather than choosing a new brand each time. This is true for both digital, as well as traditional physical loyalty programs.
The Biggest Challenges for eCommerce Companies in Terms of Customer Retention
High purchase frequency and cutthroat competition aren’t the only defining factors of eCommerce.
Going Outside of the Buying Cycle
Keeping the engagement rates high is one of the important KPIs for eCommerce brands. However, it’s difficult to maintain a relationship with members if the only touchpoint you have with them is transaction-related. As such, eCommerce reward programs should go beyond the ‘points for purchases’ mentality and start rewarding other behavior as well. For instance, offering bonus points for writing user reviews, helps to generate positive word-of-mouth, while implementing an online treasure hunt feature encourages product discovery.
And because first-time customers are able to earn points in an online loyalty program with non-transactional actions, they’re more incentivized to stay around and redeem the points in a second or third purchase.
We’re seeing some shifts in expectations and behaviours now, for example, the evolution in creativity in user-generated content. We’ve also seen a very browsy behaviour during this period, so a focus on engagement would be key for brands. There is a greater focus on virtual communities and online shopping in general.
Building Emotional Loyalty
Businesses can also forge customer trust and brand advocacy by showing sympathy, as well as demonstrating their core values. In case of an online rewards program, this can be done by rewarding customers for bringing back used products, like clothes or beer kegs, or donating to charity. Customers who shop at the brand because they like it or the company’s actions resonate with their own are more likely to stay, even if the competition offers better deals. This is called emotional loyalty.
During the period of uncertainty, we needed to re-invent our marketing strategies and we needed to do it very quickly. In order to keep up with our competitors, we had to anticipate and increase discounts on spring/summer 2020 collections like never before. We also extended the return period to stay closer to our customers in such a complex moment. Our loyalty program is helping us retain our customers too: the increase in sales we are seeing in this period, indeed, is mainly due to our long-term customers rather than the new ones.
Fear of Amazon
In the US, half of online spending goes through Amazon. But trying to match the service of Amazon Prime without a loyal customer base would be detrimental to your bottom line. But there’s one thing Amazon is missing: the ability to go beyond rewarding transactions. Still, Amazon isn’t the only big fish to look out for. You also have to measure up to other eCommerce businesses, who, just like you, are aiming to attract customers with superior experiences.
eCommerce businesses are the lucky ones in the pandemic. Locked down consumers become online shoppers. And with that shift more companies will be entering the fray – and the struggle for customers will become more intense than ever. If you’re an existing ecommerce business you’d better hold on to your current customers and start thinking about loyalty, and not be fooled by growing sales, which may actually be hiding a growth in customer attrition, as consumers are being lured away by competitors.
Simple and Convenient Buying Process
The reason behind Amazon’s popularity is that leaders at the company quickly realized that convenience is just as important to customers as the price itself. In the current economic climate, this lesson rings truer than ever: customers expect a great ecommerce experience: relevant product recommendations, one-click checkout, and lightning-fast delivery. Amazon split testing further allows sellers to test variations of their listings to find the best combination of copy and images.
Discounts Aren’t Enough to Stand Out
In eCommerce, there’s no such thing as ‘footfall’, so the level of engagement is measured by touchpoints. More touchpoints mean more opportunities to interact with customers. To boost eCommerce sales, companies need to think creatively when it comes to designing the reward experience, so the simple notion of engaging with the brand feels like a moment worth remembering.
As customers become restricted and isolated their brand satisfaction may be more influenced by emotion, availability and trust. Therefore today’s online rewards programs need to constantly fuel a 360-degree view of the customer to make experiences personal, seamless and entertaining. To retain customers, today’s brands need to see beyond the value of transactions and focus on capturing and rewarding data exchanges and interactions, in order to retain customer attention and trust, let alone business. At a time when consumers cannot experience physical shopping, there is still an opportunity to make customers feel special, which in turn results in brand alliance.
Best Loyalty Program Features for eCommerce Companies
With these key challenges in mind, here’s a list of some of the best online loyalty programs to inspire you.
1. Loyalty Program Types That Fit Your Business
Point-based loyalty programs
One of the oldest loyalty program mechanics, earn & burn is all about earning points, then spending them. In a more up-to-date approach, customers can earn points for a variety of interactions, not only purchase transactions, for example sharing product pages on social media, completing their profile, or subscribing to a newsletter. Point systems are easy to manage and quick to implement, perfect for companies who want to launch quickly.
Tiered loyalty programs
Tiered programs are a fan-favorite among online shoppers because the system allows them to progress through the program, earning better benefits as they spend more money or earn more points. Higher tiers are associated with more exclusive brand experiences and VIP rewards, rewards which many people will work to achieve. Because tiers represent a status within the brand, customers are more inclined to make additional purchases to avoid losing their status. Lastly, climbing the ranks requires a serious investment, meaning members are less likely to give up their benefits only to start from square one in another brand’s loyalty program.
Perk programs completely abandon points, giving all members benefits, unconditionally. Perks are a great approach if you have a unique service or are just looking to increase goodwill among your customers. For these reasons, this program type is ideal for brands aiming to make the shopping experience more enjoyable or generate brand awareness.
In most cases, eCommerce companies chose a hybrid-type loyalty program, mixing and matching elements from the above program types to maximize efficiency and drive specific KPIs. This includes the addition of loyalty logic, such as gamification (e.g. badges and challenges), as well as loyalty communities.
Customers ARE acting differently. And loyalty programs help to identify this new purchase behaviour, e.g. comparing past purchasing habits vs new habits. A loyalty program allows for a more direct, focused approach to customer retention. By knowing program members better, we can be more relevant for them.
Subscription-based loyalty programs
Generally, the biggest appeal of loyalty programs online is that they’re free to use. Customers view this as getting coupons and gifts for free, even if acquiring these benefits requires them to make a purchase or complete a specific action. However, if you have a well-established brand and offer truly desirable services—think Amazon Prime—you can make the program subscription-based. Some people might pass on the membership, but those who opt in will be much more likely to engage more with the service and make the most out of their subscription.
2. Loyalty Program Approaches to Stay Relevant
Engage customers outside of the buying cycle
Only rewarding customers when a purchase takes place limits your opportunities to deliver an emotional high. Unless customers are buying constantly, being a loyalty program member is rather uneventful. And, if customers don’t have a reason to log in to their profile, they will forget their credentials, or even forget about the entire program and switch to a competitor. That’s why next-gen eCommerce loyalty programs should give members a reason to come back day after day by incentivizing frequent logins, friend referrals, user reviews, photo uploads, surveys, competition, or other engaging activities.
At the moment, online shopping is the dominant trend. But the post-pandemic times brick-and-mortars and physical stores need as much help as possible to recover. If you have a retail presence, bridging the gap between offline and online shopping with a loyalty program can enable you to increase footfall in various ways.
No loyalty program for eCommerce is complete without a loyalty HUB. This is a custom web page that’s seamlessly integrated into your website. The loyalty HUB acts as a gateway. Here customers can learn about the rules of the program, browse and redeem rewards, review their progress, unlock new badges, complete challenges, and more.
If you’re selling on the global market and have an audience in various countries, it’s imperative to display the spend-to-point ratio in local currency. This helps the audience better understand the value they get by making a purchase. It also increases trust and participation if the loyalty HUB is available in multiple languages.
3. Advanced Loyalty Logic for Next-Level Engagement
Badges, online challenges, sweepstakes, prize wheels, voting: gamification come in all shapes and sizes. No matter which feature you use, the goal is the same—to make the loyalty program more engaging and fun. Gamification is a valuable program element to incentivize repeated behavior. For instance, offering a badge for members who log in at least twice a week encourages members to make a habit of checking back on a regular basis.
If you want to avoid giving discounts in your loyalty program, opt for double or triple-point campaigns. These limited-time offers can follow the theme of the current holiday, promote your latest collection, or just get people interested in products you have in stock. Offer management is a tool that helps marketers create and organize this type of campaign more effectively.
In order to build a relationship with customers, you need to be present on their favorite channels. In terms of an online loyalty program, this means hosting a social media contest. For instance, set up a contest hashtag contest on Twitter, or a photo contest on Instagram, asking people to submit funny content, or photos of themselves enjoying your product. The winner should receive a prize, such as a loyalty point bonus or branded gift.
eCommerce lives and dies on being relevant to customers. In order to make email communication and product recommendation personalized, you need more customer data. Fun surveys and questionnaires are a great solution to this problem, but without a loyalty program to incentivize survey completion, customers won’t bother filling them out.
Antavo enables you to encourage customers to fill out various types of surveys at different touchpoints. For example, during loyalty enrollment, after completing a purchase or when entering a sweepstakes or contest. Once the data is collected, you can personalize each member’s loyalty experience using our Segment Builder, or sync this information to your CRM to run targeted campaigns.
Gathering user-generated content, such as customer reviews increases product engagement and lends authenticity to your brand. If you plan to offer rewards to customers to write a review, keep in mind that only those who have actually made a purchase should be allowed to submit a review. Also, consider limiting the number of reviews that are eligible for a reward in any given time span.
Special interest groups, or VIP clubs, are niche communities within the loyalty program. They can be invitation-only groups, or customers can buy their way in using their points. In exchange, insiders enjoy additional benefits, like early access to the hottest product releases or members-only content. VIP clubs serve to motivate customers and entice them with exclusive offers and content.
7 Loyalty Programs Examples for Inspiration
Now that we’ve reviewed the ins and outs of an eCommerce rewards program, it’s time to see—and analyze—some of the best eCommerce loyalty programs out there.
1. DSW VIP from Designer Shoe Warehouse
Designer Shoe Warehouse (commonly referred to as DSW) is an American footwear retailer of designer shoes and fashion accessories. DSW operates a hybrid program, mixing together tiers, earn & burn elements and free perks.
- Customers earn 1 point for every $1 spent, and receive a $5 Reward after spending $100
- There’s a $5 birthday coupon, motivating customers to share their birth date
- DSW VIP has three tiers in total, based on annual spend
- At higher ranks, tier members gain access to free gifts and double-point events
- Free shipping is available to all members, without a coupon
Why it works:
- Combining point and tiered mechanisms creates the most convenient and most creative foundation for a loyalty program.
- Free gifts and free shipping are highly recommended, because coupons get old very quickly.
- The number one motivation for customers to share personal detail is the surprise&delight birthday reward.
2. Muscle & Strength Rewards Program
Muscle & Strength is a fitness site and retailer designed to help people achieve their muscle-building and fat-loss goals. Their loyalty program shows how popular physical rewards can be, and demonstrates how brands can maximize the appeal of completing valuable actions.
- Customers earn 2 points for every $1 spent
- Friend referrals are worth 500 points—serious motivation to invite a friends
- There’s a built-in share button at the end of the checkout process, where customers can share what they’ve ordered on social media to earn points
- Gifts and rewards are shipped alongside the order, which makes unboxing a thrilling experience
Why it works:
- Offering 2 or more points per currency spent is a clever mind trick that would increase the perceived gain in the eyes of the customer.
- Friends referrals should be a crucial acquisition strategy in any eCommerce loyalty program
- The same goes for social media integrations, like built-in share buttons.
3. Bergzeit Club By Bergzeit
Seller of mountaineering products in Germany, Bergzeit set out two goals for its loyalty program, Bergzeit Club: get customers the 2nd and 3rd purchase, and build a like-minded community of sport fans.
- The program utilizes a hybrid structure with tiers and earn & burn logic
- Members can earn additional points by referring friends and writing product reviews
- The benefits include coupons, partner rewards and access to members-only sales
- Members can earn points by simply being outdoor and climbing mountains, thanks to the Strava integration
Why it works:
- Members-only sales is a very enticing benefit for customers who crave exclusivity and special treatment.
- Giving customers the encouragement to go out and climb mountains will enrich their lives, which will partially be attributed to the brand. This forges true brand love over time.
- Using wearables, sport trackers and apps to stay in touch with customers unlocks a new layer of touchpoints for omnichannel engagement.
4. IKEA Family From IKEA
Unlike other retailers, IKEA doesn’t use points. Instead they rely on members-only perks, benefits, and special content.
- There are surprise & delight offers that are sent out as emails
- Members have access to free workshops and events
- Free Oops-assurance (If something breaks during transport or while assembling IKEA furniture)
- Members also receive free tea and filtered coffee at their stores
Why it works:
- Surprise & delight offers are powerful incentives and they should be used more often, not just during the member’s birthday.
- Benefits like members-only events or access to workshops are what make a membership part of a customer’s life.
- Extended insurance is an often overlooked benefit for loyalty programs, despite customers loving it.
5. LVR Privilege from Luisa Via Roma
The foundational belief of luxury fashion retailer LuisaViaRoma is that customers seek experiences, not just products. The company wanted a loyalty program that mirrored this sentiment. At the same time, they wanted a reward system that provides an edge in the market.
- 1€ spent equals 1 LVR point
- The four-tiered program is based on points earned
- Their popular Sneakers Club is a private special-interest club where members can access limited-edition sneaker drops
- Customers can make purchases by spending their points on single-use discounts or by acquiring the Privilege Card. The latter gives online loyalty card owners a 15% off on all purchases for six months
The loyalty program became wildly successful, resulting in an 59% increase in customer retention, and €16m in revenue. Read the case study here.
Why it works:
- Creating a tiered systems with four levels instead of the usual three can easily spice up the reward experience
- An insider group within the loyalty program is a great way to establish a premium service without asking for money upfront.
- Early access that’s built around a top-selling product category can easily become the highlight of a loyalty program.
6. Dell Rewards
American multinational computer technology company Dell runs an eCommerce rewards program that’s available in multiple countries, including the US, UK and Canada. Interestingly, the reward options change in each country.
- In the UK, Dell Rewards includes points that can be earned through transactional and non-transactional means. Points then can be spent on Dell Cash upon a purchase
- In the US and Canada, the membership requirement is to spend at least $800 in a 12-month period, and you’ll be eligible for 3% cashback on all orders
- Dell Rewards members in the US and Canada also enjoy free expedited shipping, early access to sales and special promotions
Why it works:
- In case you are looking for an easy-to-adopt loyalty concept, use cashback.
- Offering different loyalty logic in each country or region is a great way to personalize the loyalty experience to the local needs.
- For electronics, free shipping is a highly requested loyalty program benefit.
7. PetSmart Treats
PetSmart Inc. is a retail chain that sales specialty pet animal products. This includes pet food, furniture, habitats, and accessories. The company is a great example of how to gear loyalty benefits to a specific audience—in this case, pet lovers.
- Customers earn 8 points for every $1 spent (including services and donations, which are fairly common in this industry)
- Exclusive offers are sent via email to boost open rates
- Customers can erarn points for donating to PetSmart Charities
- Free surprise to celebrate pet birthdays
- Free Doggie Day Camp session when members buy at least 10 products
Why it works:
- Rewarding customers for doing good through charity helps them grow closer to the brand.
- If customers frequently receive exclusive offers via the mail, the open rate for all kinds of emails will grow.
- For pets or baby products, the brand should celebrate the birthday of both the customer and their loved one.
Revving Up the Engine for Your Online Loyalty Program
It doesn’t matter whether you are experiencing a boom or a downturn in customer interest. Why? Because eCommerce loyalty programs can be essential tools for keeping customers engaged. So don’t let these challenges overwhelm you! And if you’re ready, Antavo is more than happy to lend you its enterprise-grade loyalty technology. Let’s spark a conversation on how our platform can aid you by booking a demo with our experts or including us in your loyalty program RFP.
And don’t forget to download Antavo’s Customer Loyalty Report, an in-depth report that showcases dozens of statistics as well as future industry trends to help you navigate the world of next-gen loyalty programs.