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Are Loyalty Programs Worth it for E-Commerce Websites?

June 13, 2016
Aaron Polmeer

By Sherice Jacob

starbucks-users

Since the very first brand loyalty program was launched (by Betty Crocker in 1929 in case you’re curious), rewards services like these have continually be used to not only entice customers but to re-market to them in a way that strengthens their affinity to the brand. But the advent of the Internet and mobile shopping has changed all of that. Are loyalty programs still effective in today’s on-demand marketplace? Or are they something that only major online stores can afford to launch? Let’s take a closer look:

Loyalty at Every Touchpoint

One need look no further for an excellent example of a rewards program than My Starbucks Rewards. And although it isn’t devoted solely to e-commerce, mobile transactions still make up a significant (and growing) portion of its sales – even when growth itself is staggering or even falling.

Image Source: Business Insider

The fact that the app goes above and beyond traditional “card only” loyalty programs and is raking in over 6 million transactions a week on its own is a testament to the power of loyalty. And it doesn’t stop at the app. Starbucks has integrated customer rewards everywhere its name is found, from kiosks to grocery stores to the exclusivity of the “Gold Card” – a reward in itself when a member accumulates enough loyalty points.

People who frequent Starbucks love showing off their custom-crafted drinks, so the Gold Card is just as much a way for them to save as it is for them to show off their dedication to the brand as a status symbol.

With this in mind, however, you may be thinking “I’m just an e-commerce site. I don’t have an app and my products aren’t on grocery store shelves. What can I do with a loyalty program? I don’t have all these touchpoints.”

Oh, but you do.

Just not the same kinds.

Your email marketing efforts. Customer service help desk. Live chat and remarketing offers are all examples of potential touchpoints you can use to help foster customer loyalty. Here’s how to do it.

Focus on Long-Term Benefits, Not Just Short-Term Gains

The best loyalty programs reward customers for their purchases over the long term. According to a 2015 survey from Colloquy, marketers were asked about how they split their acquisition versus retention efforts. Nearly half of those surveyed split their investments evenly, while 34% indicated they would spend more in acquisition and 18% would spend more on retention.

Yet research results from Invesp Consulting show that existing customers are 50% more likely to try new products and spend 31% more compared to new customers. That means the vast majority of your customer loyalty efforts should ideally be directed toward existing customers, not chasing down new members.

Give Them All the Right Reasons to Stay

Ever wondered why customers join your rewards program in the first place? And what makes them stay? Better yet, what makes them leave? The Colloquy report reveals some insightful details:

Why do customers join loyalty programs? Why do they leave?

<img class="aligncenter size-full wp-image-30973" src="https://blog.kissmetrics.com/wp-content/uploads/2016/05/why-continue-participate.png" alt="why-continue-participate" …read more

Source:: Kiss Metrics Blog

      

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