How to Design an Ecommerce Customer Loyalty Program

A fantastic way to keep customers engaged, loyalty programs tell your customers you appreciate their business and help you generate more sales. However, the incentives must be thought through rather carefully, both to ensure customers participate and your business reaps the full benefit of offering the program. With those factors in mind, here’s how to design an ecommerce customer loyalty program.

Know Your End Game

The first step is to get a handle on what you want to accomplish. Do you want to entice your existing customers buy more often, do you want to get them to spend more each time? The program you design will be based around your ultimate aim. Let’s say you sell makeup. If you want your customers to spend more each time, set the program up so they gain points based upon the total amount of their purchases. If you want them to buy more often, set it up so they attain a reward after a set number of purchases over a particular period of time.

Simplicity is its Own Reward

The best loyalty programs are simple to implement and easy for your customers to understand. Each layer of complexity you add will make the program less likely to succeed. Signing up should be as easy as possible and keeping track of the customer’s progress in the program should be effortless. “Buy eight items and get the ninth item free.” “Spend $100 in August and get a free set of makeup brushes.”

Membership Must Have Benefits

Another approach involves having customers pay up front to get exclusive rewards and benefits. Wineries have long employed this strategy to good effect with wine clubs. Members either get discounts on shipments, or they pay a set amount each year to receive a certain number of bottles each month, with varying “class” levels, based upon the amount of their spend. “Silver” members get a certain set of perks, “Gold” members get even more and “Platinum” members get it all. This will pre-sell a certain amount of makeup for you each year and it will keep you top of mind when members need something else. It also brings their ego into play. Everyone wants the best, so people are more likely to go for “Platinum” status than “Silver”.

Rewards Must Have Value

The rewards have to be something the customer will consider desirable in order to be an effective enticement. The trick here is to make sure it’s something you can afford to give away for free (or bury the cost within the overall amount of their purchases) while also being valuable enough to get your customers to do what you need them to do to get it. In addition to deals on makeup, membership in your loyalty program can offer perks like exclusive makeover videos, first peeks at each season’s newest looks, or consultations with local makeup artists with whom you can partner.

Give Them A Head Start

Researchers have found a phenomenon known as “The Endowed Progress Effect” improves customer participation. Two different sets of customers were given two different sets of customer loyalty cards at a car wash. The first group got cards with ten spots on them. Once each spot was stamped they got a free car wash. However, the first two spots were stamped in advance. The second group was given a card with eight spots on it to complete. Ultimately, both groups needed eight stamps to get the free wash, but the group with the head start completed the program with far greater frequency than the second group. The head start gave them a psychological incentive.

Stay In Touch

The members of your loyalty program also form the nucleus of your mailing list. With a makeup business, you can take advantage of this to keep them apprised of new offerings, makeup tips from season to season, fashion advice and a host of other lifestyle-oriented information members might find valuable. Just be careful to avoid over saturating them, so they look forward to your emails rather than becoming annoyed because they come so often.

The whole point of a customer loyalty program is to make your customers feel valued. Discounts and free gifts are nice, but they can also make your customers feel like part of something cool, rather than just somebody out to get discount. If you design your ecommerce customer loyalty program well, you’ll improve your business and build a community.