7 Highly Effective E-Commerce Customer Loyalty Programs

Ecommerce is a crowded market. The barriers to entry are low enough that you can face a lot of competition. To make it in these conditions, you need to differentiate your business and keep your customers coming back. 

For most types of e-commerce businesses, the tried and true way to increase customer retention is to implement an effective customer loyalty strategy. 

Boosting Your Retention through Customer Loyalty 

The biggest reason your e-commerce store can benefit from customer loyalty is because of customer retention. Research has consistently shown that a 5% increase in retention can increase your revenues by anywhere from 25% to 95%. Loyalty programs are all about retaining more customers. 

Beyond the benefit of increased customer retention, loyalty programs also provide their own benefits. Here’s a sneak peek at what you could get out of it: 

  • 86% of consumers are more likely to recommend brands they are loyal to
  • 81% of people say that loyalty programs make them spend more with the company 
  • 71% of people stated that loyalty programs were a meaningful part of brand relationships 
  • Businesses with loyalty plans are twice as likely to collect useful customer data for identifying new customers, improving current products/services, and profiling customers 

All this from a customer loyalty program? The benefits are real and tangible for those businesses that implement a good customer loyalty strategy. With 85% of retailers in the US already running loyalty programs as of 2019, you’re actually behind the curve if you don’t have one. 

Killer Customer Loyalty Programs to Emulate 

1. Membership Programs 

Membership loyalty programs work well for both physical stores and e-commerce stores. While physical stores can offer gateway membership programs that restrict access to members only, like Costco or Sam’s Club, e-commerce can benefit more from optional memberships. 

Amazon serves as a longstanding example of using an optional membership to improve customer loyalty. While anyone can make a purchase from the website with a free account, there are perks to having a paid Amazon Prime account. 

Prime members get access to faster shipping, a video streaming service, special discounts, credit offers, and a lot more little benefits here and there. 

Membership plans like these keep people coming back to your website by providing extra value on top of what they’re already paying for. The perks of membership are enticing enough around 142 million people were estimated to be Prime members in the US alone in 2020. 

The good thing about a membership plan is that it often pays for itself over time. In the case of Prime, the benefits given to members may cost more than the monthly subscription itself. However, Amazon makes up the difference by simply making more sales to Prime members. In 2019, the average Prime member spent $1400 per year on Amazon

2. Referral Programs 

For e-commerce companies, referral programs have a few different forms. The central theme is that when you get someone else to sign up or make a purchase, you’re rewarded in some way. That may be through a discount, gift card, cash, or an exclusive gift. 

Almost every online retailer offers some version of this, especially discount codes for referrals. It’s such a common strategy because it works. A study by Nielsen showed that 84% of people polled trust recommendations from their friends, compared to 48% who trust online video ads and social media ads. 

3. Reward Points Programs 

The concept of reward points is simple. You spend money with a specific company and you get something in return. 

Airline companies and credit cards are famous for reward points, offering a certain number of points when qualifying purchases are made. These points are then redeemable for specific rewards, such as discounts on future travel purchases or cashback. 

Reward points work well for many e-commerce companies, especially those selling commodities. The incentive of getting reward points gives customers a reason to continue buying from the same company. Essentially, it increases the switching cost for your customers, encouraging customer loyalty. 

4. Tiered Rewards Programs 

Tiered rewards are a good way to encourage larger transactions, especially on luxury items or other non-necessities. 

These programs essentially offer perks to customers who make purchases over a certain amount. At each set tier, another perk is offered. Perks could be anything from free shipping to discount codes, enhanced customer service, or special gifts. 

These kinds of programs work well because they provide that extra push to increase transaction sizes. They also give customers a reason to come back, because they know when they want to make a larger purchase, they’re going to get a nice perk to go along with it. 

5. Social Welfare Programs

Some reward programs have less to do with giving back to the customer and more to do with giving back to society. Especially among Millennials, social responsibility is a big selling point for a company. 

ThredUp is an example of an e-commerce company that promotes its social impact as a selling point. Their main service is working as a reseller for pre-owned clothing. Anyone can create an account and send in clothes and accessories that will be professionally photographed and offered for sale on ThredUp’s website. 

The brand’s core message is that reselling clothing prevents unnecessary waste. They present this to customers by showing the impact their site has on reducing waste, educating people about the environmental impact of the fast fashion industry, and funding startups and small organizations focused on sustainable fashion. 

All of these efforts are tied directly into the branding and marketing of the company. When customers make a purchase, they are told about the impact of their purchase and made to feel like part of the effort to reduce waste in fashion. 

When done correctly, social welfare programs are effective because they make customers feel like they’re part of solving a huge and complex problem. Companies that tackle difficult social issues are well placed to earn customer loyalty by making the solutions seem tangible and realistic. 

6. Partnership Programs 

Ecommerce websites that want to stay top of mind tend to look for beneficial partnerships that keep customers using their products, even after making a purchase. 

A good example of this type of program is Fitbit. Order a fitness tracker from their site and you’re going to also download their app to connect to the device you bought. That app helps you record and monitor your progress over time, providing you with consistent value even long after your purchase. 

While complimentary services like these are a bit more direct, there are also partnership programs that can give ongoing value to customers using products that were purchased. The right connections with other brands and service providers can help you give your customers even better results that keep them coming back.

7. Subscription Programs 

Today you can find subscriptions for almost anything. One of the most common models for e-commerce stores are subscription boxes. They’re a great example of everything that works about this strategy, from a customer loyalty perspective. 

The subscription model works because you are locking people into buying from your company continuously. If you provide them with a good enough service at a reasonable price, they will let your purchases run on autopilot. 

There are subscription boxes for almost everything. The key is always differentiating. If you want this strategy to work, you have to offer something on top of just the product you’re selling. This added value is where you create your loyal subscription customers. 

Wine of the Month Club is a prime example of subscription services that work. They’ve actually been shipping wine bottles out since 1972 using a subscription model. Customers can choose how many bottles they want per month and put in any wine preferences they have. As you receive bottles, you give feedback about what you like and don’t like and they adjust your preferences automatically so you always receive something you’re going to enjoy. 

Subscriptions work in many different industries, from clothing to cooking and hygiene. The ones that stick are those that offer customers a service they can’t get elsewhere for the same price. That added value is enough to keep people registered and paying each month. 

Choosing the Right Type of Plan 

These 7 customer loyalty strategies all work, but they work differently for each e-commerce company. Customer loyalty is not a one-size-fits-all because your customers are not the same as every other company’s customers. 

By far the most important part of choosing is that customer loyalty programs should match customer expectations. Pick a plan that makes sense for what you offer to your customers, while also serving as a genuine incentive for repeat purchases. The best loyalty plans should: 

  • Meet customer needs 
  • Provide a better, more enjoyable experience 
  • Remain consistent with your branding & core message 
  • Offer real benefits  

If you sell discount clothing, for example, a membership may not make sense because your customers are likely looking for deals wherever they can find them. However, if you sell household items at wholesale prices that save customers a lot of money, they may be willing to pay for a monthly membership for access to your offers. 

It pays to have loyal customers. Look at your business model and see what kind of strategy you can implement to boost loyalty in your customer base. ROI from customer retention is worth the investment!