Customer Loyalty Programs Advantages For E-commerce Brands

E-commerce has been thriving these past decades, and it is forecasted to become even more relevant as we set foot into the future. One of the most common problems E-commerce brands have to face is how to connect with customers. With so many choices of brands available nowadays, it often feels impossible to make customers come back to your store after the first purchase. Given how easy it is to switch to your competition, today’s digital consumer is considerably more knowledgeable, understands what they want, and has next to no tolerance for poor customer service. So it is up to businesses to figure out their customer loyalty programs which include what your customers want, what will make them happy, and what will keep them returning to your store for more.

That is where Loyalty Programs come in. It is considered by many to be one of the best ways to connect with customers. More and more brands are realizing the undoubtable benefits of implementing such programs into their business. Loyalty programs are primarily used to adapt to what customers want, to create unique experiences that trigger emotional responses, and to constantly evolve with future trends. Customer loyalty programs are an additional growth channel that can assist E-commerce firms in improving various elements of their business, such as increasing repurchase rates and customer retention rates, cultivating a community of loyal consumers and more.

Listed below are the advantages of customer loyalty programs for E-commerce brands.

1. Improve Customer Retention

The first and foremost benefit that a loyalty program brings to E-commerce brands is the ability to retain customers. The customer loyalty program is a tool for retaining consumers, by providing them with a compelling reason to return to the store, and also for building habits. In today’s competitive and crowded market, growth is what all businesses aim for when operating. A modest improvement in retention can have a significant impact in various aspects of the business. As a result, customer retention is vital to the development of E-commerce brands.

The reason why retention is one of the most important metrics to keep track of is that it affects relatively most of the other stats. Retention means more repeat customers that will potentially deliver better return and better sales for your stores. It is also much more cost-effective than acquiring new customers and loyal customers tend to recommend the program to their peers and family to try out as well. We can also not forget that retention increases Customer Life-Time Value (CLTV) and reduces churn for businesses. The following advantages of loyalty programs arguably stem from customer retention.

2. Increase Sales And Average Order Value

As stated above, repeat customers mean better sales numbers. Loyal customers contribute a hefty portion of an ecommerce brand’s income. Should a customer fall in love with your products or services, they are more likely to come back and make that repurchase that all businesses always dream of. People enjoy receiving benefits such as discounts or gifts. They are great incentives for customers to return to your business and apply their benefits to their following order, improving the repurchase rate.

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Once you gain their trust and loyalty, they will prefer your brand over the competitors and will inevitably try out different products of yours (if you have any). Based on this insight, you can tweak your loyalty programs to include perks like free shipping for orders above a certain value, or you could go for cross-sell and up-sell. Offer discounts or freebies that you know your customer will love and so will not hesitate to spend a bit more in order to reach. Additionally, setting up VIP tier programs based on the amount spent is another great way to encourage more spending from customers to gain access to different tiers for amazing benefits.

3. Decrease Acquisition Costs (Using A Referral System)

Word of mouth marketing remains the most influential strategy that is still relevant to this day. Consumers are more likely to listen to recommendations from a friend or family over any other kind of advertising. This insight, combined with the steady rise of online marketing cost, is essentially a call to action for brands to look for more organic ways to spread the good word about your business to customers. One system that businesses can embed into their loyalty programs is referral programs.

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A referral program is a system that encourages previous, happy customers to recommend your products to their family and friends. This marketing strategy basically asks those customers to be your brand advocates. Referrals are essentially word-of-mouth advertising and are extremely effective in increasing brand recognition and decreasing customer acquisition cost. However, customers will not simply do something you ask without the promise of anything in return. Therefore, brands need to include incentives when creating referral programs. Incentivizing is a method to ensure that the referral is successful and everybody gets the desired results. The systems can easily help you lower the acquisition cost , yet still increase your new customers number and most importantly, create more brand ambassadors. 

4. Increase Customer Engagement And CLTV (Using A VIP Tiered Program)

Among the many loyalty programs, VIP tiered programs are a great way to further communicate and reward your most loyal customers and build a strong brand community. Naturally, people want to feel appreciated for their loyalty. This program type provides specifically that in the form of exclusive perks, rewards and privileges that only customers in a certain tier can receive. The various benefits you offer, which you select carefully based on your understanding of what encourages your customers to buy from you, are the main drive of your programs. 

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The program has gamification elements wired into it, making customers actively engage with your brand and not with your competitors. It also impacts VIP members’ repurchase rates, encouraging them to return to the store and redeem their rewards. They also improve these customers’ lifetime value since they are compelled to retain their membership and climb the levels in order to benefit even more from your brand.

5. Differentiate Your Brand And Build Community

Throughout the pandemic, it has become crystal clear that more and more brands are fighting for the top spots in the online market. This is a positive sign for customers as it will inevitably raise the standards of the customer service departments within the Ecommerce business. However, it could also represent challenges as it will increase the fierceness of the competition. Using thoughtfully crafted loyalty programs is a fantastic way to distinguish your business from the competition. Methodologically researching the market and collecting your frequent customers’ insight will prove useful in figuring out what your customers’ needs are and how your business can provide them. Your loyalty programs can  include features such as hosting your reward offers and enabling you to completely modify them.

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Community building also plays a big role in maintaining a strong connection with your dearest customers. Businesses should encourage customers to share stories, personal anecdotes and connect with one another through social media and so on. Combined with the previously mentioned referral programs, businesses could be seeing their customer engagement rates go up gradually. Your VIP tiers programs could include behind the scenes of production, or even early access to hot, popular items from your stores. This will keep your customers wanting to come back for more and eventually, increase your sales and brand awareness.

6. Conclusion

In the vast competitive market that is today’s reality, Ecommerce brands need to capitalize on the powerful tool of loyalty programs in order to keep a strong, steady relationship with their customers. Loyalty programs offer a wide range of advantages such as increased customer retention, the first and probably the most important factor, and the ability to encourage customers to come back for more. They can also push the sales numbers, the repurchase rate and average order value. Using various components of different loyalty systems, businesses can also improve customer engagement, build community, brand awareness, decrease acquisition cost and so on. 

Kyanon Digital hopes this article will provide useful information in helping you consider various aspects of an effective loyalty program for your Ecommerce business. If you want to gain more understanding related to this subject to help your business grow, do not hesitate to contact us for a specific consultation.

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