Online Loyalty Programs

Loyalty programs are ubiquitous in today’s offline world. From retailers like Bestbuy, coffee shops such as Starbucks to numerous Airlines. Online loyalty programs do play an essential role in most marketing departments.

However, customer loyalty programs are not yet fully established in today’s Ecommerce landscape. Only bigger market places such as Amazon or Rakuten successfully use loyalty programs to increase revenues.

But not only big brands and retailers are benefiting from the positive influence loyalty programs have on customers' purchase decisions.

1. Loyalty rewards will differentiate your online store

Loyalty programs help online stores to increase brand awareness. In a direct comparison of 1000 online stores, shops running a loyalty program stayed more significantly top of mind in comparison to their competitors not offering a rewards program. Today’s customers face an ever increasing amount of online stores. Offering a loyalty program to customers helps to increase differentiation.

2. Rewarding your customers for purchasing has a positive impact on customer feedback ratings

Stores offering their customers the option to participate in a loyalty program earned on average a 15% better customer feedback rating. Customers seem to be more satisfied with both services and products offered by the shop if the shop rewards the customer for their purchase.

Loyalty programs, hence, contribute not only to customer satisfaction but also help increasing the shop’s reputation.

3. Loyalty programs display the strongest incentive to make customers return

Amazon, Starbucks, Bestbuy and Delta Airlines (just to name a few companies) all saw a substantial increase in returning customers after the initial introduction of their loyalty programs. The likelihood that a customer returns increases on average by >23% in retail due to the implementation of a loyalty program.

The mechanics are easy and well known: Customers come back more often if they know that they get rewarded for it.

4. Loyalty programs are already well known by your customers

The average American household joins four different loyalty programs. From coffee shops to supermarkets, clothes shops to drugstores, rewards programs are well known and accepted. Big merchants such as Walgreens and Bestbuy have achieved a competitive advantage through loyalty programs. Similarly, loyalty programs will enter the Ecommerce domain and being among the first ones will allow online shops to even attain a first mover advantage.

5. Joining a loyalty network can help you to acquire new customers

Apart from pure customer retention, the right multi-partner loyalty network can help online shops to win new customers by using the co-marketing opportunities within the network. Frequent travel programs have long been using networks to shift customers from airlines to hotels and car rentals.

The aspect of acquiring new customers becomes especially powerful when the participating merchants are offering complimentary services.

6. Loyalty programs help you to learn more about your customers

Lastly, loyalty programs help you to learn more about your customers. The right insights can help your business to target the right customers or to adjust the products offered in your store. Today, Amazon is generating more than a third of its revenue through customer data driven optimization of their product inventories, marketing campaigns and product recommendations. So far, small shops have lacked the opportunity to follow the market leader Amazon by setting up their own online loyalty program, but now they have their chance.

By Paul Gebhardt

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