How Your Retail Brand Can Make More Conversions Through A Smart Loyalty Program?
Brands adopt a well thought out series of tactics to offer the best customer experience with their brand. And, one of the most popularly used among these approaches is the Loyalty Program.
Loyalty programs have gained immense popularity among e-retailers. They have proven to help brands increase sales, generate revenue, drive brand awareness, and boost conversions. Loyalty schemes not only boost sales and conversions for e-commerce stores, but they also offer retailers the opportunity to bond with customers and build meaningful relationships with them.
But what makes loyalty programs so effective in helping boost conversions?
Loyalty programs encourage customers to sign up for accounts in return for exclusive offers and rewards, thereby driving customer engagement. Customers who sign up have a reason to return and shop from that store again and again. By rewarding individual actions as part of the loyalty scheme, retailers can enjoy higher conversion rates by implementing effective loyalty programs.
Popular Loyalty Program Models
There are various types of Loyalty programs in use today. Not all models suit all business types. So, if you’re an online business looking forward to incorporating a loyalty program to boost conversions, then make sure it addresses your target customers’ needs.
You may choose one of the following models or combine the features of two or more of these programs to create a unique one of your own –
Points-Based Loyalty Programs
Arguably the most commonly used Loyalty Program models, the points-based system has been on the market for quite a while now. It works in a very simple manner – the more the customers interact with the brand, the more points they earn. These points can further be used to avail more goods/services/offers.
Japanese video game giant Nintendo uses such a reward system to keep its customers hooked. Customers receive points in the form of coins when they make a purchase. These coins can then be used to purchase specialty items made available exclusively to Club Nintendo members.
Fee-Based Loyalty Programs
The fee-based model works best for businesses that are built on frequent purchases. The upfront fee that customers pay offers them VIP status, relieves them of certain inconveniences that they faced as guest visitors, and encourages them to buy more to redeem the value of the fee they paid.
The epitome of the fee-based loyalty program is Amazon, the commodity-focused e-commerce behemoth that offers its Prime members an array of benefits at a premium fee. Not only has this boost conversion rates but the company became one of the firsts to reach the one trillion mark in terms of revenue.
Tier-based Loyalty Programs
This system is quite similar to the point-based system. However, it encourages long-term aspiration by allowing customers to upgrade their level by either paying a membership fee or continuing their patronage to the brand. This tier-based encourages customers to increase their spend amount or buy repeatedly to avail benefits.
Goibibo, one of India’s leading air and hotels aggregator uses a tier-based loyalty program to offer benefits to its customers. It initially rewards points to customers based on the various activities they perform and later, based on how many points they’ve earned, customers advance from one tier to the other.
Cause-based Loyalty Programs
Another model of loyalty programs that is catching trend is the cause-related loyalty program. Giving customers the option to use their points to help those in need is a strategy that has proven to work well. Consumers are willing to pay for products and services from companies committed towards a positive environmental and social cause.
Well-known shoe designer and seller TOMS, has implemented such a loyalty program. For every purchase made, a pair of shoe is donated to an underprivileged child while the purchase of each item from its line of bags is offered to aid maternal health workers in remote areas.
Gamified loyalty programs
Gamification of loyalty programs is a rather new concept and is trending across the e-commerce space. In this model, customers play to win a reward. However, if you’ll thinking of adopting this fun and engaging way to reward your customers with deals, discounts, or points, make sure that the entire process is realistic.
Starbucks is a leader when it comes to personal service in favor of customers. Its “My Starbucks Reward” used gamification tactics to augment the Starbuck’s experience and to spike sales as well. As per the program, after registering through the Starbuck mobile app, the customers were awarded stars every time they purchase a Starbucks product. Based degree of user loyalty and frequency of visits, regular visitors were awarded through an upgraded level.
Features of a high-converting Loyalty Program
You can always do something unique to make your brand’s loyalty program stand out or use a hybrid loyalty program I.e., combine features of two or more of the above-mentioned programs, to attract and engage customers.
However, there are certain features that can make your e-commerce loyalty program an absolute success –
- The loyalty program you design should be simple to understand and easy to comprehend.
- Make it easy for the customer to join the program. Don’t employ a never-ending sign-up form where a simple email entry would suffice.
- Whether you decide to award points or some other service as a benefit, make sure that it’s realistic and attainable.
- If you want your customers to buy more, make sure your loyalty program is compelling enough to bring them back to your site.
- An effective loyalty program will show customers when they started, how far they’ve come and how much they’ve achieved.
On a Final Note
There is no rule as to what type of loyalty scheme or reward system an e-commerce store should employ. However, there’s surely a guarantee of the sales and revenue you’ll come across once you have your loyalty program in place.
Smart Loyalty programs are sure to increase conversions. It may not be easy on the pocket to start a loyalty program but the paybacks definitely outweigh the costs.