Key considerations when implementing a loyalty program
Launching a loyalty program is a strategic move for online brands looking to boost customer loyalty. By rewarding customers for shopping with you, you boost customer satisfaction and show appreciation for their brand advocacy.
There are so many benefits to having a loyalty program, such as improved customer retention metrics and more referrals from your customers’ friends and family. Something I also harp on about a lot is cost efficacy, and I will die on that hill! It is far cheaper for your business to keep your existing customers returning than spending up to x5 more to acquire a new one. Fact!
If you’re thinking about implementing one within your business, there is a bit of groundwork to do before you get started and some things to consider along the way. Here are some of the key considerations to make.
Know your customer
Knowing who your customers are, is the foundation of making informed decisions and doing this before creating a loyalty program is no different. So, who are they, and what motivates them to shop with your brand?
Objectives
These objectives should be completely aligned with your overall business strategy. Do you want to increase customer lifetime value, increase order value or the repeat purchase rates of your existing customer base. Whatever objectives you choose, you must ensure they’re both measurable and achievable.
Rewards
Having a clear picture of what drives your customer to purchase with you and defining clear objectives will in turn, dictate the structure of your loyalty program and help you to choose the right rewards for your customer base.
In terms of program structure, here are the most common you’re likely to see with DTC business.
Tiered: This is where customers get differing benefits based on their rank. Brands often rank membership into cohorts depending on certain metrics like spend or purchases within a specific time frame. These customer rewards programs give customers a goal, e.g. Gold, Silver and Bronze. The higher their tier, the more exclusive the reward.
Points-based: These are the most common rewards programs you’ll see. They allow customers to collect points, which they can redeem for brand perks such as money off or exclusive gifts. Customers can earn points not only through spending but also by leaving a product review or sharing content on social media.
Paid: This is a fee-based loyalty program where they give customers immediate and ongoing benefits for participation at a cost that is either recurring (annual) or one-time to opt-in. The most well-known example of a paid loyalty program is Amazon Prime, where you get perks such as expedited delivery and Amazon Video.
Value-based: This is where brands look to connect with their customers more meaningfully, for example, by making donations to charitable causes. This program doesn’t actually reward customers with a gain as such. However, it works on a deeper level for them, as the rewards are used for the greater good.
Tech
Next, you need to consider the type of tech to support your loyalty program. There is a lot on the market, each with its pros and cons. Here are some of my favourites and why.
Yotpo: A leader in the loyalty and referrals space, Yotpo supports brands in building customised rewards to engage existing customers and find new ones. Brands can reward their most loyal customers with membership benefits and perks or build a tailored program to maximise customer engagement and increase lifetime value. If you’re on Shopify, the integration is seamless!
LoyaltyLion: A similar proposition which has been in the space for the last decade, LoyaltyLion promises to boost repeat purchase, LTV and retention rates.
Stamped: This tech helps brands maximise customer engagement, supporting brands in growing customer lifetime value with powerful programs that perfectly fit the brand's needs with fully customisable AI-powered points, rewards, VIP tiers, and referral solutions.
Brands that are getting it right
I’ve shopped with many brands that have a loyalty program, and I can tell you that they’re not all equal.
Here are some brands that, in my opinion, are nailing it:
Space NK: Being the beauty junkie that I am, I’ve been part of their N Dulge program for over 10 years. Whether shopping in-store or online, being part of this means you can collect points for money off future purchases, receive a free gift on your birthday and gain exclusive access to double points days and sales. If, within a 12-month period, you spend over a specific threshold, you give even better rewards.
Sweaty Betty: Their Insiders program ensures you are part of their ‘inner circle’, full of unmissable offers you won’t find anywhere else. Perks include 50% off on your birthday, free delivery forever and sale previews. The eCom and marketing team have got the messaging spot on.
This is a whistle-stop tour of loyalty program key considerations, and you can see that there’s a lot to consider. Are you thinking about implementing one within your business but unsure where to start? Get in touch, and we can chat about how I can support you.