Loyalty design was pioneered by airline companies to give passengers discounts for buying tickets early in the form of miles. More recently, with the emerging of new technologies and social media platforms (Facebook, Instagram), loyalty programs have evolved from a traditional reward system to a vast collection of creative and personalized ways for customers to interact with the brand.
Loyalty programs are designed to define and reward customer behavior, keeping them engaged with the brand, and ultimately, buying more. Nowadays, e-commerce loyalty programs are all the rage online with big players like Amazon and Sephora using them heavily in their marketing strategies. Today, as e-commerce continues to grow even more rapidly due to the 2020 pandemic, online loyalty programs are becoming a priority for most online retailers to keep their customers engaged and shopping.
The importance of loyalty design to a loyalty program cannot be stressed enough. According to a study by Accenture, loyalty Program members boost revenue growth every year between 12 and 18 percent and 57 percent of customers spend more on brands or providers to which they are loyal. Furthermore, a study by Mastercard found that 74% of consumers are more likely to buy from brands that demonstrated concern and provided excellent care for customers during the pandemic. Indicating that while the misfortunes of 2020 had a significant influence on shopper purchasing behaviors, consumers who liked a brand stayed loyal despite the difficulties of the pandemic.
This means that customer retention is just as important for your online store's success as attracting new customers. Moreover, the acquisition has proven itself to be costly and time-consuming. So if you want your business to thrive & grow sustainably online, we recommend that you start looking for ways to make your loyalty design better. This applies before or after you’ve launched your online loyalty program as there’s always room for improvement.
We're sure you've already come across some loyalty design examples during your online shopping routines or when browsing through other e-commerce stores looking for inspiration. Loyalty programs are all around us, even in places where we don't expect them to be. Supermarkets have been using them successfully since the mid-'60s with their stamp cards. Even though loyalty design started as a paper-based system, nowadays most of these programs have an online version which offers much more opportunities for personalization and interaction with the customers.
A successful online loyalty program is not only beneficial for you but also for your customers. It starts with defining your clientele, then moves into the key components to consider when implementing your loyalty program.
If you've been struggling to come up with ideas for what features should go into your program, this post will provide five tips to help get the design process started.
Customer loyalty programs... why bother?
You want to make sure that your loyalty program is built in a way that helps you reach your sales goals. This means creating an experience where customers are more likely to return and purchase from your DTC store again.
Three important reasons make strategizing your rewards program structure very valuable in the long term. These reasons come up again and again, no matter what type of loyalty program you currently have or plan to develop.
The first reason to pay attention to the loyalty design structure is that they may be utilized as a basis for developing your marketing plan in general. It also ensures consistency throughout all areas of your marketing plan, which is so important because it helps to build brand awareness and makes everything much easier in a way that makes sense to your customers' journey map.
It is a fact that rewards can be very effective, especially when you are looking to incentivize customers, but it only works when it's planned and implemented as part of a larger loyalty-management strategy. This includes making sure that all the elements of your loyalty program work together to achieve marketing goals. The structure is the foundation for integrating your other marketing programs, so there has to be a lot of consistency in the look and feel.
The structure of a loyalty program should also be flexible enough to allow for rapid changes in the future, especially if you want to keep ahead of the competition. The general idea is that you want to make sure that the design of your reward program fits in with everything else about your company and how it fits with your brand. Make sure to use customer loyalty analytics solutions to help you understand better your loyalty program over time
To further illustrate this, take a look at how Starbucks designed its loyalty program. It all begins with a clear mission statement on the homepage of their website: "Here's to making moments special." This is a great example of how Starbucks has integrated its loyalty program into the overall design. This statement is printed on every receipt they give out. They also use this statement throughout their social media accounts to further install it in their customers' minds & stay consistent with the brand.
Customer Loyalty Loop by GeneralAssembly
The second reason is that it affects how consumers behave with your brand when they participate in a program. Members of a rewards program are more likely to spend more time on the website or purchase more items on an online store if they feel fairly rewarded for their behavior. This means that any changes in the loyalty program structure will also affect the behavior of customers participating in them.
Loyalty design is also crucial when it comes to maintaining customers who are just beginning to participate in your programs. According to Segment, 54 percent of consumers expect to receive a personalized discount within 24 hours. If you don't offer enough value in the beginning, customers will progress quickly through the customer journey and fail to grow any deeper attachments with your brand.
It's also important to remember that customers are different, so you need to focus on their specific needs and goals. This is why the structure of your loyalty program must allow for some sort of personalization. This could be achieved by allowing customers to select their preferences and customize experiences according to their needs. Customer segmentation can also be a useful tool to make sure that every customer gets the recognition and attention they deserve.
By making sure that you structure your loyalty program with your customers in mind, it will be easier to keep them engaged and satisfied. In the end, it's all about creating a win-win situation where you can get an edge over your competitors. So you must have a clear plan for how the program is going to work before jumping into the design
The third reason is that it affects how much the program will cost you. The costs associated with developing a loyalty program are directly related to the number of people that will be participating in it. More customers mean more effort is required for the development process. This is why it's important to pay attention to the design structure from the beginning because you don't want your costs to get out of control.
Rewards program structures correspond directly to how your company will see a return on its investment, meaning if you lack a clear strategy, you'll likely end up with a slim profit margin or even an operating loss. Ultimately, your ROI should outweigh your costs.
It's also important to remember that costs are related not only to the cost of development but also to the cost of maintaining and supporting your program. This doesn't mean you should focus solely on cost-cutting, but it's important to remember that costs should be kept under control so you don't go over budget.
The good news is that there are easy-to-implement solutions that can help you minimize the costs of your loyalty program. For example, a tiered system where customers spend more to get additional benefits, or a customer referral program where existing customers help promote the product and bring in new members. Another way is by sticking with a simple design for the loyalty program and focusing on what matters, which in this case is your customer's needs. This means that you should make sure to provide extra value for every purchase they make when participating in the program. The more value you provide, the fewer points they need to redeem rewards. This means that your costs will remain low even if there are a lot of customers participating in your program.
One of the most important requirements for your company is to ensure that your loyalty program operating cost does not exceed the budget of managing it.
A good online loyalty program structure should have at least one commercial goal. In other words, each action of the customer needs to bring value for both parties involved in some way or another, whether monetary/quantitative or qualitative. An example would be if you give out loyalty points to your customers in return for their purchase, but you also give them the chance to be included in a draw with an opportunity to win something.
This is because this type of reward will not only make the consumer feel like they are getting more value out of purchasing from you (which can encourage future purchases), it will also increase brand awareness and create a sense of belonging. At the same time, it can also lead to higher loyalty because customers will feel like they are part of something bigger than just buying from you.
“Loyal customers, don't just come back, they don't simply recommend you, they insist that their friends do business with you.”
There is no specific formula for designing a good customer relationship management strategy that works best in all contexts. However, there are some important structures that you should always keep in mind when designing your loyalty program to give your customer the best experience possible :
It is often a good idea to have the costs of the rewards vary depending on their value. This way, people will feel like they are getting the best deals on your site.
However, it can also be a good idea to create rewards that are more expensive for better value. This way, you can create a sense of prestige and exclusivity around your program instead of just something everyone can have access to.
Loyalty programs should not erode your margins, as such, you should always try to find a balance between the value of your rewards and their costs as well as how many people you want to be able to access them.
A good way to manage loyalty program costs is to be aware of the following:
- The cost per customer metric
- Low, medium, and high-value customers, as well as those who fall in between these different levels of profitability.
It is important to define your objectives and retention KPIs before creating a loyalty program. This will help you figure out what type of rewards or actions you want to incentivize.
It's also crucial to establish these, as well as experiment with ways of quantifying them so that you can distinguish whether your program is effective or not. For instance, if you want to encourage more frequent buyers on your site, you should measure how many customers purchased within a certain period after they signed up for your program. This way, you can monitor whether or not the program is effective at increasing this metric.
In addition, you have to measure the ROI of your loyalty program to determine whether or not it is worth it for your business. If you can't measure the effectiveness of a program, then there's no point in having one, to begin with
Great, clever, and creative names are essential for loyalty programs because they can have a huge impact on their success. In other words, the name should be catchy and easy to remember to make it spread across the web and social media.
Naming your loyalty program is an important step to take when designing it because a great name can be what makes or breaks its success. These create a sense of belonging with your consumers and make them feel like they are part of something bigger than just buying from you.
For example, if you're a sportswear brand and want to create an online loyalty program that encourages your customers to purchase more often from you, you might want to use a name like “Speed” or "Kick It Up!" which both have the double meaning of being related to the sport, while also being something that your customers can relate to. In this way, you are using a name that has two meanings and that will appeal to your audience in a way that is both relatable and memorable.
When deciding what kind of rewards to offer, you should consider your target audience. A loyalty program for a pet store might not be the best fit for an eCommerce site that sells high-end electronics. Some examples include gift cards or discounts on future purchases; however, if there are specific products that customers use often then offering rewards on those items will keep them coming back.
Furthermore, think about rewarding loyal customers with special prizes (one way to do this is by having dedicated programs such as Loyaly membership tiers including VIPs, or those who make the most number of purchases) or soft benefits such as early access or permanent free shipping to your highest tiers.
Membership structures should be flexible- offers should be customized to the customer base and tailored according to specific frequency of visits or spending patterns. For example frequent shoppers can earn points at a faster rate than infrequent shoppers. Those who purchase higher-priced items can also benefit from increased point incentives than those who spend less.
Customers must find it easy and quick to redeem rewards when they want them. The easier it is for them, the more likely they will be to use their points and turn them into rewards. You should make sure that your loyalty program is easy for customers to find, especially across every channel of communication you have with users such as email, websites, and apps. A great way to accomplish this is by including a link in the most frequently used pages on your sites like the checkout page or the shopping cart page.
In addition, you could make it easy for your customers to redeem their points by having an online catalog of available prizes using loyalty program software.
If customers can't find it then they won't use it. To avoid this, you should make sure that your loyalty program is easy to find on your website. One way of doing this is by adding a link to it from the main navigation menu or as part of your welcome message, which would require some technical expertise.
An easier way to do this is by using Loyaly's customizable widget. You can match it to your website's look and feel, & the widget will be seamlessly integrated on your website no code required.
One of the best ways to create a better loyalty program is by rewarding customers for their actions and interactions on your website. This includes things like referring friends, taking polls, and filling out customer satisfaction surveys. These types of rewards can work in two different ways: they can either provide something of value to the customer (such as rewards) or make it easier and more likely for them to complete a certain action (i.e., by removing steps like having customers input their email address).
In addition, you could use sign-up rewards to encourage new and existing customers to join your loyalty program, which is one of the best ways to stay in touch and give them updates on new products or sales.
As soon as the customer has earned enough to exchange for something, they should be able to use their reward. You can do this by taking advantage of loyalty programs' features like point balances and automatic redemptions, which will allow the customer to redeem their points as soon as they have enough of them.
Another way you can do this is by having a real-time widget on your site so that customers can see their balances and redeem them right away.
Rewards should be simple to implement. Your loyalty program must have a fast redemption process with easy-to-understand reward options that can easily be shared on social media
In general, the more you give away the more likely customers are to join and remain active participants. You can use loyalty programs as a way to gain customer insights into what they want from your business by offering relevant rewards that reflect their interests.
Keep in mind though, if you offer too many incentives it may turn users off and make them feel like they're being spammed.
Gamification is a great way to make your loyalty program more engaging and help customers stay interested. There are many different possibilities you can explore with this such as offering points for completing tasks or challenges, encouraging competition between friends through leaderboards, etc. The key here is to offer rewards that appeal to the interests of your customer base.
The use of gamification in e-commerce loyalty programs is a great way to make them more engaging and help customers stay interested.
According to a study by InMobi, 70% of customers use their smartphone while shopping and 45% do so when they're on the go. This means that if you don't have a great loyalty program for smartphones or tablets then you could be missing out on huge opportunities! It's important to make sure that your program is accessible and easy to use on mobile devices. By keeping it simple you will be able to offer a better experience for users, especially if they want rewards while on the go.
Lastly, it's important to always stay in touch with your customers. You should send out newsletters that include updates on new products, sales, and the latest happenings in their favorite categories. The more personalized the better, as this will make customers feel like they are still an important
The best eCommerce loyalty programs are those that take into consideration their target audience's wants and needs to create something truly engaging.
To give you more real-world examples of what an effective e-commerce loyalty program might look like, let's briefly analyze the following loyalty programs structure :
Amazon's loyalty program was launched in 2005. To be part of Amazon Prime, users have to pay a fee per month or year and take advantage of several benefits such as free shipping on all products.
By being part of this powerful business ecosystem, customers are more likely to go back for other purchases because they already paid a fee to be a member of the program.
In addition, this is an example where free shipping became one of the main drivers for customers coming back and buying more from Amazon. It's estimated that Prime members spend about double compared with their non-Prime counterparts.
With over 100 million users being part of its loyalty program, Amazon Prime is one of the most successful online loyalty programs in place today.
Another great example to look at when it comes to loyalty e-commerce and free shipping, we have Zappos. This company was acquired by Amazon for $850 million back in 2009. They specialize in shoes and clothing items but also offer a wide range of other products.
To create strong customer loyalty, Zappos has been offering free shipping on all purchases since the beginning of its business activity. Even though they have recently created a membership program, called Zappos Insider Rewards, where customers can get discounts and other benefits based on how much they purchase from them every year, this company still offers free shipping on all orders.
This is a great example of how companies can turn their offline presence into an attractive eCommerce environment with several benefits for their customers, along with free shipping on purchases
Another example of online loyalty e-commerce is Sephora. This cosmetics company has been offering a program called Beauty Insider since 2009 to reward its customers for their purchases. In fact, the more a customer spends with them, the higher status they get and thus have access to exclusive deals and promotions.
In addition, Sephora allows its customers to earn points through different activities, such as sharing their favorite products on social media.
This is a great approach for companies who want to reward not only the most loyal of their customer base but also engage them more to get feedback about new products and services they could create.
Furthermore, their loyalty programs design is easy to use and understand for their customers and has been a major contributor to Sephora's growth over the past few years.
In 2020, Walmart decided to launch a new loyalty program called Walmart+, where customers can earn and redeem cash rebates directly on their accounts. This is the result of an expanding relationship between them and Ibotta, who has been operating in this space since 2018. Customers will be able to use these rewards at checkout, for grocery delivery orders, or purchase on Walmart.com or from within the Walmart app itself.
In addition, Walmart+ members will have access to the Black Friday deals before everyone else, starting on November 13th of this year, with four hours of early shopping available. Other benefits include free and unlimited grocery deliveries to the home for orders of $35 or more and access to an app that allows customers to skip the checkout line for a yearly membership fee of 98$ a year or 12.95$ monthly.
This is another example where companies are using loyalty programs to engage customers and turn them into advocates for their brands. Not only can they earn cashback by making purchases but also gain exclusive discounts and benefits during the holiday season.
Furthermore, since Walmart has an estimated 32 million U.S. households enrolled in its program, they see this as a great opportunity for growth, especially at a time when many shoppers are worried about online out-of-stocks during the holidays.
With this in mind, it's easy to see why Walmart is betting on its loyalty program and how companies can use these types of initiatives to drive more revenue for their business while rewarding loyal customers.
The new program is called "Costa Club" and it replaces their previous one (which launched back in March 2010) where customers could get points and gain access to exclusive benefits. This is a great initiative for companies who want to engage their customers in different ways while rewarding them with more than just discounts.
This new program was created after taking input from 17,000 consumers about what they wanted out of the loyalty programs. Another interesting aspect that sets this apart from other similar initiatives is how it will be integrated with the Costa mobile app, providing customers with more opportunities to earn and redeem points through their smartphones.
The new service departs from a points-based loyalty program. After purchasing eight coffees, customers may earn a free drink of their choosing. Costa Coffee is offering a free drink to anyone who uses a reusable cup to buy four drinks until 31st March 2022. Customers will also receive one free cake on their birthday, as well as other rewards and treats.
In addition, the loyalty program will be free to join and open for anyone. It is expected that it will have a positive impact on the company's revenue, as it will be able to attract more customers and keep them engaged throughout the year.
The Body Shop, a cosmetics company based in the UK, has been offering customers their Love Your Body Club loyalty program since 2013. This global program is currently active in 56 countries and allows its members to enjoy benefits such as one free product every time they spend over $40 and invitations for exclusive events.
The main reason it has succeeded is that it allowed customers to earn points in exchange for their purchases, which they could, later on, redeem in the form of free products or discounts.
This approach has helped The Body Shop create greater value for its customers and increase sales at the same time.
Emirates has one of the biggest loyalty programs in the airline industry. Their program is called "Skywards" and it was launched back in 1981. Customers who want to join this program have to be members of Emirates Skywards Blue, Silver, Gold, or Platinum tier.
As a member, they will have the opportunity to enjoy great benefits such as earning miles for all flights and getting access to airport lounges. They can also redeem their points for free upgrades on specific routes, along with extra baggage allowances, priority check-in, and boarding, seat selection, lounge access, dedicated phone line, or email address.
Emirates' tiered system recognizes that not all customers are created equal. This allows them to reward their highest-value customers, such as business class travelers, who spend a lot more on their flights and travel more frequently. On the other hand, blue & silver members who spend less can still enjoy several perks, which will encourage them to fly more frequently with Emirates. You can also move up the ladder by using a Skywards co-branded card, where you can pay for your everyday purchases and earn Tier Miles for the Skywards Miles you earn.
Another interesting aspect of the program is that it offers so many options for customers to gain benefits. This includes purchasing products directly from Emirates, as well as other things such as hotel stays and car rentals. This loyalty program has helped Emirates reach a large number of potential customers who are looking for great rewards in return for their purchases.
This is a good example of how creating multiple tiers based on the value that each customer brings can be effective in terms of loyalty programs.
In conclusion, there are many great examples out there when it comes to designing an online loyalty for e-commerce that you can learn from. However, what matters in the end, is to design an effective customer loyalty program that can bring real results to your business & significant value to your customers.
As you can see, there are several different ways in which online retailers make use of the power of rewards such as free shipping offers, discounts, or other soft benefits. This is why it's so important for e-commerce businesses to understand how they work and what benefits they offer.
Only after understanding the basics, you will be able to build a powerful loyalty program that can bring real results.
The search for loyalty by John Story
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Marketing Manager at Loyaly & eCommerce growth specialist. I believe that retention is the new acquisition, and online customer loyalty programs make it possible.
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An increase in loyalty of only 7% can grow
Customer Lifetime Value (CLV) by over 85%
