Loyalty program for an online store

The task of a successful online store is not just to attract more customers but also to retain them. Stores use a loyalty program to turn customers into loyal customers. This article will tell you what a loyalty program is, what it is and why it is needed.

The task of a successful online store is not just to attract more customers but also to retain them. Stores use a loyalty program to turn customers into loyal customers. This article will tell you what a loyalty program is, what it is and why it is needed.

Why do you need a loyalty program?

Promoting your online store consumes a lot of resources, and as competition grows, it becomes more and more complicated to attract new customers. Easier and cheaper is to work with existing customers, pushing them to repeat purchases. But quality products or services may not be enough for that, so customers need to receive another incentive. That's the problem the loyalty program solves.

A loyalty program is a system of receiving rewards for purchases and regular customer interaction with an online store. By implementing it, the business makes customers want to come back, buy more and show different types of activity. As a result, the store gets:

• a loyal audience of customers;

• increase in demand;

• growth of the average check;

• a quality customer base;

• active communication with clients;

• new customers.

What loyalty programs are available

Online stores choose a loyalty program depending on their assortment, target audience and website features. There is no need to invent your unique mechanism because there are proven and effective programs. All you need to do is figure out what program will work best for your business. Types of loyalty programs:

• discount system;

• referral program;

• bonus system;

• cashback;

• paid subscription format.

Discount system

The discount system is a permanent discount given to customers in exchange for loyalty. The rebate can be fixed or cumulative. A fixed discount applies to all customers who perform a specific action, and its size does not change. The discount means its increases depending on the total amount of purchases. For example, making several orders for a total of $200 to $500, a client receives a 5% discount. Orders over $800 receive a 7% discount.

Customers love discounts, so the discount system is probably the most popular loyalty program. The program is clear to customers and encourages them to buy more if it is a cumulative discount.

The size of the cumulative discount in the store depends on the number of purchases

Advantages:

• easy to implement;

• popular with customers;

• the simple mechanism of action;

• suitable for most niches.

Disadvantages:

• limited room for scaling discounts;

• lowers product margins.

Referral program

A referral program is a way to attract new customers through recommendations from regular customers. The customer who leads a client receives a reward, for example, an additional discount or money for a purchase in the store. If the referral program is two-way, the referral, i.e. the one who comes to the recommendation of his acquaintance, also receives a reward. In this way, the online store stimulates loyalty from both regular and new customers. You can read in our article what referral marketing is and how to use it in your store.

Advantages:

• increases sales;

• promotes the online store through word of mouth;

• encourages customers to recommend the store;

• expands the customer base.

Disadvantages:

• an implementation may require extraneous software or site refinement;

• it is desirable to have a core of loyal customers.

Bonus System

The bonus system means that customers get specific points that can be converted into rewards. The online store can give bonuses not only for purchases but also for other actions, for example, for extensive product reviews. More often than not, bonuses equated to the money you can spend to purchase an item at the rate of 1 to 1. To stimulate purchases, the online store can set a minimum number of bonuses that you can use and an expiration date after which they burn off.

Advantages:

• can be combined with other loyalty programs;

• if the customer does not use the bonuses, the store will not forfeit the value of the goods;

• increases the frequency of purchases.

Disadvantages:

• some shoppers may be unhappy with the limited validity of the rewards;

• works only in niches with a high frequency of purchases;

• the bonus mechanism is complicated to implement.

Cashback

Cashback is a refund of part of the purchase price. The money is returned to the customer to a particular account on the site, and he can use it for further purchases. But, unlike the bonus system, you can withdraw money from the Account to an ordinary card. Usually, the cashback does not apply to all products and is no more than 2-3%.

Advantages:

• rarely found in Ukrainian online stores;

• the opportunity to "earn" money on a purchase attracts customers;

• the alternative to the usually fixed discount.

Disadvantages:

• difficult to implement;

• the amount of remuneration may seem insignificant.

Paid subscription format

The subscription format is different from other loyalty programs because the customer has to pay the online store to receive the benefit, but not for the product. By buying a subscription, the customer gets a range of benefits unavailable to other customers. For example, for a subscription, the store provides customers with free shipping and returns, cashback, etc.

The subscription format allows customers who are confident they will keep buying from the store to improve their experience. By subscribing, they gain special customer status and stand out from others. The store can create unique promotional offers for the customers and encourage regular customers to subscribe.

Advantages:

• builds the most loyal customer audience possible;

• opens up new opportunities to work with clients;

• gives the store a small additional income;

• allows customers to feel privileged.

Disadvantages:

• suitable mainly for large online stores;

• the tool won't work without really profitable services;

• difficult to launch.

Conclusion

Every seller who has sufficiently developed a business should consider implementing a loyalty program. It helps retain customers, making it easier to promote your online store. Choose a loyalty application, depending on the characteristics of your business and target audience. Make it understandable and valuable to the customer - then it will have its effect.