It's easier to retain existing customers than to acquire new ones. For each new customer, you have to go through the entire courting process -- growing brand awareness, building trust, and finally getting them to fall in love with you and convert to a sale. For existing customers who already trust you, you just need to encourage that next purchase.
But customer loyalty is dropping. 15% of consumers are less loyal to the brands they shopped with regularly before the pandemic, according to a recent study by PwC.
And younger generations are more likely to try a new brand compared to older consumers. In fact, Gen Z shoppers are twice as likely to try a new brand than Baby Boomers.
That said, Gen Z and Millennials are also more readily swayed into brand loyalty through personalization and perks that reward repeat shopping.
So to keep customers around, modern ecommerce brands need to invest in loyalty marketing. In the end, it'll help you get more out of your existing customers so you can spend less acquiring new ones, and that initial investment can go further.
What is loyalty marketing?
Loyalty marketing is a promotional strategy that focuses on retaining customers by providing incentives to keep shopping at the same brand.
Typically, customer loyalty programs work by rewarding customers for specific actions they take, like purchases, referrals, or posting on social media.
The rewards can be points that can be exchanged for discounts or free products. Or they can be perks, like access to exclusive access to sales and product launches, when a customer reaches a certain purchasing or points tier.
This system encourages customers to continue shopping at your brand because the more purchases they make, the more rewards they can earn.
How to start a loyalty program
Ready to start growing your base of loyal customers? It's easy to get started, but also easy to make one that falls flat! So keep your goals in mind and your customer experience at the forefront to craft an engaging and enticing rewards program.
Determine your goals
Before starting a loyalty program, consider what you want to get out of it. Are you looking to increase brand awareness? Improve customer retention? Boost referrals? All the above?
This will help you determine exactly which actions you'll reward and which KPIs you'll measure to know whether you're on track.
Choose a loyalty marketing platform
Loyalty marketing has been around for a while now, so there are plenty of excellent customer loyalty platforms that can help you achieve your goals.
Here's what to look for when choosing a platform:
Ability to reward multiple actions: For customers to get rewarded for any action you might want to incentivize, including purchases, leaving reviews, and referring friends.
Flexible rewards: So customers can benefit in various ways, like freebies, discounts, or access to special events.
Option to create tiers: For customers to earn better perks, the more points they've earned or dollars they've spent.
Integrates with your marketing stack: So your marketing campaigns don't conflict, and you can promote your customer loyalty program through other channels.
Connects to your POS system: A necessity if you have a brick-and-mortar store so customers can earn points and redeem discounts in person.
Analytics and reporting capabilities: So you can measure the success of your loyalty program and make improvements as needed.
Start your research with these 15 customer loyalty software options.
Set up your loyalty program's parameters
Once you've chosen a loyalty platform, it's time to set up your rewards program. You'll want to consider how loyalty program members can earn points, how they can redeem them, and a tier structure.
First, determine what actions customers can earn points for and how many points they'll receive for each action. You'll want to align these with your goals.
Here are some actions you can reward by goal to get you started.
Customer acquisition: Post on social media, referrals, product reviews
Customer engagement: Follow on social media, subscribe to emails or texts, event attendance, have a birthday
Customer retention: Loyalty program sign-up, purchases
Then, decide how you'll reward your customers, including how many points it takes to redeem each prize.
Here are a few things you can let customers exchange points for:
Free products and samples
Tiers are a really effective way to drive more purchases because they give customers better perks the more they spend or the more points they earn.
If you opt for a tiered approach, you can offer these perks depending on a customer's rewards level.
Free shipping and returns
Early access to launches
Gift for entering a tier, like a free product or sample
Birthday treats (discounts, points, etc.)
Limited edition product access
You might want to offer some of these perks from the moment a customer joins the program, but it's up to you to decide what they can access and when.
Want more inspiration? Check out how these seven brands structure their loyalty programs.
Promote your loyalty program
Now that your loyalty program is set up, it's time to let customers know about it.
Use your loyalty platform's promotion tools, like email and SMS integrations and loyalty program widgets for your website. But also promote the loyalty program through other channels, like social media and in-store signs.
Consider adding a banner to your checkout page to let shoppers know about your program. Or include information about it in your post-purchase email and text flows.
Make sure to include the benefits of joining the loyalty program to get them excited to join.
Evaluate and optimize your loyalty program
Once your loyalty program is running, keep a close eye on your analytics so you can optimize performance.
Look at the data in your loyalty program platform to see how engaged rewards members are compared to non-rewards members.
You might find that certain actions aren't getting as much engagement or rewards aren't being redeemed. Make changes to ensure your loyalty program drives the results you want.
Also, consider gathering customer feedback through a survey. For example, are they satisfied with their reward options? Is there anything they'd like to see added or changed?
Use this information to continuously improve the loyalty program and ensure it aligns with your goals.
Boost your loyalty program with SMS
Now you have everything you need to launch an engaging loyalty program. Take it to the next level by integrating your loyalty program with SMS.
Send loyalty members reminders about points expiration, reward redemption options, and loyalty program events. You can also use texts to incentivize actions like referring friends or posting social media reviews.
Want to get started with an engaging SMS strategy? Emotive is an SMS marketing platform built for ecommerce. With features like conversational SMS and the ability to place orders right in the text thread, you can make SMS your next best revenue stream.