Creating a customer loyalty program allows you to recognize your customers for their loyalty to your store. Whether they’ve purchased from you once, or they’re on their hundredth visit, it’s important to appreciate every customer who engages, visits, or buys from your store. According to Harvard Business Review, acquiring a new customer can be up to 25 times more expensive than keeping old ones. Thus, if you build strong relationships with your previous customers you can reduce costs and make more money. According to Bain & Co., even if you only increase your retention by 5% you can increase your profit by as much as 95%. In this article, you’ll learn why you should create a customer loyalty program, loyalty program ideas, best loyalty apps on Shopify and tips for creating a customer rewards program.
What Is A Customer Loyalty Program?
A customer loyalty program rewards customers who’ve been loyal to your brand. A customer can be loyal to your brand by purchasing from your online store, following you on social media or subscribing to your email mailing list. Customer loyalty programs can reward customers by offering special discounts that aren’t offered to the general public. You can also create a points system where customers receive free items, discounts or special offers. The goal of the customer rewards program is to keep customers happy to ensure that you retain them as customers so that they continue to buy from your store.
Why You Should Create a Customer Loyalty Program
- To increase sales: According to Loyalty 360, on average, brands that track their loyalty programs notice that their customer value is approximately $1803. Notably, 75% of brands see on a return on investment on the customer loyalty programs they create. It’s more more affordable to turn a customer into a loyal customer than to keep finding new customers. You’ll be able to lower your ad spend while increasing your profits by remarketing to customers who are already familiar with your brand.
- Affordable to set up: You don’t need to own a million dollar company to be able to set up a customer loyalty program. When starting out, you can either create a simple customer rewards program or use a Shopify app to develop a more sophisticated program.
- Build brand loyalty: Creating a customer loyalty program can help your customers build their loyalty to your brand. According to Facebook, millennials and baby boomers are often considered brand loyalists. What’s even more interesting is that millennials are 1.75 times more likely than baby boomers to say that they want to be brand loyalists. If your business targets millennials, present them the right offer in the right way and you could build a relationship with a lifelong customer.
- Lower ad spend: Acquiring a new customer is expensive.According to Leading on the Edge of Chaos, retaining 2% of your customers is almost equivalent to decreasing your costs by 10%. If a customer has previously purchased from you, you typically have enough data to market to them more affordably. You can retarget them with ads, email them special promotions or engage with them on social media.
- Learn more about your customer: Customer loyalty programs can help you better understand how to market to your customers. You can test promotions and special offers on your biggest fans to better market to the casual browser. Do your customers prefer discounts, freebies, or buy one get one free offers? What motivates them to keep buying? Why do they love your brand? What type of products do they really love and need? Once you understand what makes certain customers loyal to your brand you can use those findings to build brand loyalty with your store browsers.
- Easy to automate with apps: Shopify has a range of loyalty apps that create an automated experience for you, the entrepreneur. You can automate most of your loyalty program to lower your workload so that it isn’t an additional burden while still ensuring your customers have a great experience shopping at your store.
- Improve retention: Rewards programs can help boost customer retention. By providing perks, discounts, and freebies to your one-time customers you can encourage them to continue buying from your online store, turning them into repeat customers. Since the goal of the loyalty program is to increase customer retention, it’s no surprise that 65% of marketers use them to retain their customers. You’ll help lower your business’ churn rate.
- Boost referrals: According to CrowdTwist, 74.14% of women said they’d recommend a loyalty program which they’re part of to their friends. You’ll be able to increase your sales, lower ad spend, and build more relationships with a greater pool of customers.
Customer Loyalty Program Ideas
VIP Club Experiment
I recently ran an email marketing experiment on one of our online stores. We wanted to create a loyalty program via email since we already had all of our former customer’s emails. This is the email we sent:
Subject: Welcome to the VIP Club
As a [store name] customer, you’re automatically enrolled in our VIP Club. Using discount code: VIPCLUB you’ll get an additional 10% off all your future purchases, just for being a member.
With 50% off promotions still running, you’ll be able to save up to 60% off your purchases today.
We’ve added some great new products this week, [here’s a sneak preview.] (link to product collection)
If you have any questions, feel free to personally email me anytime.
Founder, [Store Name]
The email I created had a 42.6% open rate with a 9.6% click rate. We split tested this against other emails with the same offer but without mentioning the VIP Club and none came close to converting as well. The VIP email is sent within 24 hours of a customer’s online purchase. The average order value of the email is $53.33 which is higher than most of our other emails which only have an average order value of approximately $20.
Offer Points With Purchase
Sephora offers its customers a great loyalty program and offers points to earn rewards. With every purchase you make on their store, you earn the equivalent number of points which you can redeem on products or experiences. To make their loyalty program profitable, customers need to either have over 750 points or make a purchase to redeem their points. The typical rewards include lip glosses, perfumes, tote bags, skin care products, and other beauty related items. However, the most loyal Sephora shoppers, with 10,000 points, can use their points on a spa experience or a Sephora private class party.
Charge for a Loyalty Program Card
Suzy Shier charges their customers $25 to be enrolled in their loyalty program, Prestige. For a customer to get a free Prestige card they need to spend a certain amount of money. A loyal Suzy Shier customer would benefit from all the discounts they can receive with their card. Customers receive 10% off without any exceptions on all their purchases for an entire year. They also receive exclusive offers that non-Prestige members aren’t entitled to, like access to early bird sales.
Disney has one of the best customer rewards programs around. Their loyalty program provides customers with points after purchase,. however, they also have a Zero points section for those who haven’t earned any points. Their zero points section includes printable stickers, printable coloring sheets, activity sheets, posters and more. Disney understands that having freebies can help build customer loyalty. They even have questionnaires you can fill out to get points without having to make purchases. You can redeem some of your free points for physical products.
Celebrate Their Birthday
Giant Tiger celebrates their customers’ birthdays when they sign up for loyalty program. On a customer’s birthday they can choose to get a free gift of a tin of coffee, chocolate covered almonds/raisins, or a mini apple pie. This helps customers feel special on their most important day, which helps build customer loyalty.
Best Loyalty Apps on Shopify
The loyalty apps in this section are for Shopify store owners, making them compatible for Oberlo users. When offering free gifts to customers, you the store owner will need to incur the cost and pay the AliExpress supplier for the cost of goods. Be sure to price your products to ensure that your business remains profitable while running loyalty programs.
Sweet Tooth: One of the best loyalty apps, Sweet Tooth, allows store owners to reward customers with a points system. Customers can redeem their points to earn free shipping, free products, or discounts. Customers can view their point balances on your website easily. The program allows you to reward customers for their purchases, referrals, social media engagement, birthday, and more.
Swell: Swell is free for store owners with under 100 orders a month. The loyalty app allows store owners to reward their customers in ten different ways. Customers can be rewarded for writing product reviews, spending money on your store, referrals, creating an account, and more.
S Loyalty: S Loyalty is one of the best loyalty apps on Shopify. It allows you to design the look of your program, set your own custom redemption levels, offer bonus points on special holidays or weekends, and celebrate your customers’ birthdays. You can even set reminders to encourage customers to use their points.
Loyalty Lion: Loyalty Lion allows store owners with under 400 monthly orders to use their loyalty app for free. Customers can be rewarded for social engagement, store visits, purchases and more. They offer rewards to customers such as discounts, free products, and free shipping.
Loyalty Points by Bold: Bold’s Loyalty Points loyalty app is a great choice for those looking to create a customer rewards program. It allows you to give bonus points on tough to sell items. It showcases the point value of each product next to the price. You can even view reports to better understand how well your loyalty program is doing.
MailChimp: While MailChimp isn’t a loyalty app, you can create an email based loyalty program for your customers. The options are a bit more limited. However, you can send loyalty emails to customers who sign up for your list and offer exclusive deals and promotions.
Tips for Creating Your Customer Rewards Program
- Give them a reason to sign up: When it comes to creating your rewards program offer discounts, freebies, contests, and special offers they can’t get anywhere else. Offer incentives for those who haven’t bought from your store too.
- Talk numbers: Show the financial benefit of being in a rewards program. Do you offer a discount per point? Does a customer save more money by being a member? Will the customer receive special discounts they can’t get without being in the program?
- Educate your customers: Having a rewards program isn’t enough. You need to let your customers know that the program exists. Send an email out to all your past customers to let them know about your program. Occasionally post about it on social media. Include a section about your rewards program on the purchase email your customer receives. Do whatever it takes to get the word out there about the program.
- Set milestones: Rewards programs work really well when customers have milestones or goals they need to achieve. Offering a free gift after ten online purchases helps encourage customers to keep shopping at your store. The goals need to be attainable otherwise the rewards program won’t be as effective as it could be.
- Incentivize early: Offering a bonus early on in the loyalty program can help get customers excited about shopping at your store.
Starting a rewards program can be profitable for your business by strengthening your relationship with your customers. All businesses can benefit from creating a loyalty program whether you’re a dropshipper, working on a tight budget, or struggling to keep your customers.
Let us know in the comments if you’ve ever tried creating a rewards program? What worked or didn’t work? Were you able to boost sales?