Tips To Set Up A Loyalty Program, Plus An Infographic


E-commerce has become an important concept in our present and future in terms of financial potential and online business models. In today’s economy, it is crucial not only the way a business attracts customers and consumers, but also the way a business keeps them.

The journey from New to Returning is paved with challenges for sure. To name a few: competition, personal preferences, shift and changes in the market, buyer “fatigue” – in some cases, buying or remaining loyal to a specific brand/product can be hard with all the other options out there – and many more.

So how do we keep what we get?

Here are a series of tips to identify and keep customers and brand followers in the brand loyalty zone, plus an infographic on a particular e-commerce segment: Retail – that reveals the differences between what we think we know and what really goes on in the mind of consumers, along with a new perspective into what actions should be taken to fill the gaps and increase the growth of an e-commerce business.

What the Stats Say about Loyalty Programs

According to surveys, in the United States alone, there are over 2 billion loyalty program memberships, with each household being involved in 18 different loyalty programs. Gamification and rewarding systems have been widely used by companies ever since the ‘80s in order to attract new audiences and retain the old ones.

Even more, in today’s mobile revolution, with smartphone users checking offers daily and more than 7% making a purchase after noticing an ad on their mobile devices, loyalty programs might just be the key in any e-commerce business growth model.

Setting Up the Game

A loyalty program need not exist without rules and motivators. A business should figure out which rules the consumers have to play in order to get their “rewards” and how to “stay” in the game.

Basic Rules in a Loyalty Program

  1. Start with knowing your audience. A survey, a contest, a quick analysis of their social media profiles – anything that reveals common patterns to create the foundation of your program is more than welcomed.
  2. Continue with knowing the products/services that drive sales on a semi-regular basis. These are goods and services which consumers willingly purchase, revealing a real “hunger” in the market.
  3. Use any data you have in your SQL databases or directly observed in the invoice system to determine a possible connection between purchased goods/services and prices. See how much the price influences the action of acquiring your product.
  4. Keep an eye on competition by being the best there can possibly be. Don’t leave gaps which the competition can explore and turn the odds into their favor.

The Motivation Factors

There are at least 5 factors that motivate a business to invest in a loyalty program:

  1. The Gain. Or should we say, “no game no gain”? Gaining new customers is always a positive drive in leveling up the game. And leveling up the game drives new gains, as well. It goes both ways.
  2. The Increase. Needless to say, every business has a thirst for growth and expansion, which can only be done through new customers or returning customers who buy more.
  3. The Retain. Your ultimate goal is to retain as many customers as possible, keep them more onsite, draw the attention towards your goods and services. You’re looking at forming a long lasting “marriage” with your customers.
  4. The Guide. Creating sales curves and bridges between the current buy or current interest and potential buy or potential interest is highly important, as any business aims at guiding customers towards higher margin products.
  5. The Challenge. This is probably one of the key motivators, since every customer is uniquely valuable to the business and should not be treated otherwise. It is a continuous challenge to identify and retain the value every customer holds for the growth of your e-commerce business.

Knowing Your Customers’ Online Behavior

We’ve mentioned earlier that every customer is uniquely valuable. However, customers fall into the 20/80 probability: 20% of the customers if handled the right way will generate 80% of the Sales. Usually, this 20% is located in the base or foundation of a customer pyramid. There are mainly 4 types of customers:

  1. Leads are located at the bottom of the customer pyramid, usually present in a large number. In most cases, they are just curious wonderers that “happen” to be online. Most of the times, they will not make a purchase, although their wishlist would suggest otherwise. Be mindful of not overspending or overinvesting as the ROI might be too painful to understand.
  2. The Regulars. They are the real foundation of the pyramid: these people will make a purchase often, going for cheap or discounted offers. If there’s a 10% code in the loyalty program, they will take it and use it, and expect a new one soon. They are worth small investments because in fact, they won’t cost you money. There’s also high potential of stepping up their game by moving to the next segment.
  3. The Time Travelers. We could say these are the gold of the business. They drop in from time to time, know what they need now and what they will need in x months’ time and buy according to what may come. Pricing is not an issue. They definitely deserve a high amount of your attention and for the financial health of your company, it’s best to focus and retain the relationship.
  4. The VIPs. These customers are situated at a higher level, a platinum/diamond level, we could say. They spend a great amount of money, so ideally you would want them as customers. The only issues are the irregular purchases and the limited faces – these are rare kinds. Their behavior is driven by lifestyle and status, and not by needs or trends.

Short Conclusions

Given these tips and insights, here is what you should ask yourself next:

  1. Does my business have what it takes to launch a loyalty program?
  2. Am I ready to value each customer the right way?
  3. What loyalty programs can I commit to?
  4. Am I ready as a leader to take my business to the next level?
  5. How do I plan to achieve my goals and objectives in terms of Customer Relations?
  6. Do I feel confident in taking straight on the challenges of a sustainable Loyalty Program?

Before you find the answers to all these questions, take a quick pick at this infographic to understand the differences between what we think we know and what really goes on in the minds of consumers worldwide.

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