by Tom Shackleton
Running a loyalty scheme is a fantastic way of rewarding your customers. You’ll help strengthen the relationship with your shoppers, and collect some valuable data in the process. A well run loyalty scheme can lead to loyal customers and even brand advocates.
Nurturing a loyal customer base is the key to growing a successful and sustainable eCommerce business, so creating a loyalty scheme for your eCommerce store is certainly something you should consider.
To create a loyalty scheme that adds value, produces data and informs your marketing efforts, here’s what you should consider:
At the core of your loyalty scheme should be the value that it adds, both to your business and to customers. Think about the reasons you want to implement a loyalty scheme and assess what the key indicators of its success should be.
If you’re implementing a loyalty scheme mainly for customer retention, you’ll want to think about how you can create a proposition for customers that encourages them to give you repeat custom.
On the other hand, if the main purpose of your scheme is to collect data that can inform and improve your digital marketing, how will you collect this data in a way that’s not off-putting? There’s no need to collect data that you won't use, so consider what will add value to your business before deciding on the kind of scheme you’ll run.
You’ll also want to think about a scheme that fits naturally with your products and customers. Your brand image can help determine which kind of loyalty scheme would add the most value to your business.
Creating Your Scheme
In theory, there are an infinite number of different ways you could organise and run a loyalty scheme for your eCommerce store. You’ll find that schemes usually fall into one of the following basic categories:
A basic scheme is as simple as it gets. They require the least time and monetary investment, but will produce less valuable data as a result.
An easy way to run a basic loyalty scheme would be to reward customers who place a certain number of orders on your store. We’ve all used those basic stamp cards handed out at coffee shops, and a basic loyalty scheme follows the same principle.
You could reward customers with a free gift or order after they make a certain number of transactions. This could be done manually by filtering out your monthly reports, or automated with the free version of an app such as Sweet Tooth.
If you’re looking to make things a little more complex, and collect more detailed data, you could opt for a tiered loyalty scheme. A tiered loyalty scheme gives customers access to different levels of rewards and discounts as they purchase more.
This scheme from US fashion brand Sephora is a fantastic example of a tiered loyalty scheme. It gives loyal customers something to aspire to by setting out a clear structure with generous rewards for those spending a large amount. If you’re loyal enough to spend over $1000 a year, you’ll get your own private hotline and invitations to exclusive events.
You can definitely get creative with a tiered loyalty scheme and offer some unique rewards to customers who show a significant investment in your brand. It’s these unique rewards that really make a tiered scheme work.
VIP schemes work on a slightly different principle to the other formats listed here, in that they ask for a joining fee upfront.
Certainly the most famous VIP loyalty scheme out there is Amazon Prime, offering an increasingly varied range of perks and services for a £79 annual fee. Whilst they work slightly differently to other schemes, VIP schemes still reward loyalty, as the more the customer spends, the better value for money the scheme becomes.
A VIP scheme is relatively easy to implement, but you’ll have to think carefully about how this scheme would allow you to collect and use data. Your scheme essentially becomes a product in itself, so be sure that it still fulfils its original purpose of fostering loyalty.
A rewards or points scheme converts your customers’ purchases into a points total which can be redeemed for vouchers or discounts.
Running a rewards scheme can become pretty complex, but also offers you the greatest level of flexibility when it comes to customising your scheme and collecting data. You can personalise every aspect of your rewards scheme, down to the actions that are rewarded and the value of your points.
You can run points promotions where customers collect a boosted number of points for a given period, creating a sense of urgency. You can even dive down into the behaviour of customer segments and target them with rewards promotions.
eCommerce tools like Loyalty Lion give you vast customisation options, with everything from gifts on your customers’ birthdays, to email automation.
Managing & Using Data
Once you’ve decided on the kind of scheme that would suit your store, there are plenty of considerations around how you manage your scheme and use all of the fantastic data you’ll collect.
Collecting Useful Data
Be sure that any data you ask for as part of your loyalty scheme is useful. You can then reward customers for completing useful actions such as completing a customer survey or referring a friend.
Think about the data that will be useful to your business. Collecting email addresses for your mailing list is a good place to start. Beyond that, the needs of every business will differ and you need to consider what would benefit your eCommerce business.
You’ll need a system for collecting and storing all of the data you collect. This will allow you to manage data, and will make analysing it later on much easier. Limiting the data you collect to useful information should ensure that your forms and checkout process don’t become bloated. You don’t want your loyalty scheme to damage conversion rates.
You’ll also need to consider data protection regulations when collecting customer details. This will have to be factored into how you collect and ask for information from customers, as well as how you store and use data.
With all of this great customer data, making the most of it is a key part of any loyalty scheme. You’ll be able to analyse the popularity and success of your loyalty scheme, as well as linking it to sales and trends.
Good eCommerce loyalty tools will usually have some great inbuilt data analysis features, but you may want to export data and use it to gain greater insights into your sales and customer behaviour. Depending on your choice of scheme, you’ll have varying amounts of data at your disposal. However, there should be some great insights to be had, even with simpler schemes.
Try using your data to analyse customer habits. You can segment data by different demographics and use these insights to help build customer profiles and shape your strategy.
Informing Your Marketing
Data from your loyal customers is fantastic for informing your marketing activities. These customers fit exactly into your target market, and gaining a deeper understanding of their behaviour and state of mind can be a powerful marketing tool.
Social networks like Facebook have some incredible demographic targeting tools. You could even build lookalike audiences that are made up of people similar to your most valuable customers. You can target certain segments of your target market with the right message at just the right time.
Don’t forget about your loyal customers. Use their purchasing habits to recommend products, invite them to events or even send them free gifts.
Running a loyalty scheme can be fantastic for improving customer experience, building a strong brand and crafting powerful, insightful marketing campaigns. If you can use your loyalty scheme to reward customers who are invested in your store, and attract more who’ll do the same, you’ll be on the road to a successful eCommerce store.
Wondering how a loyalty scheme could benefit your eCommerce store? Just get in touch with us, and we’d be happy to help.