Shopify Ecosystem

Top 5 Reasons Why Ecommerce Businesses Consider A Loyalty Program

top-5-reasons-why-ecommerce-businesses-consider-a-loyalty-program

We surveyed over 400 new ecommerce brands that joined the LoyaltyLion platform from the second half of 2020 to the first half of 2021. We wanted to find out the top five reasons why merchants are considering a loyalty program.

90% of ecommerce start-ups end in failure within the first 120 days of launching. Some of the top reasons are due to poor online marketing, lack of online search visibility, and little to no market for their products or services. 

And for the ones that survive after 120 days, it doesn’t get easier. You may have the key challenges under control, but other challenges could intensify. These can be price and costing issues, increased competition, or retail giants dominating a larger share of your market.

It isn’t surprising then that most ecommerce brands set up loyalty programs to combat external threats and, as a result, see financial gains (like better profit margins and achieved revenue targets). Exactly why a loyalty program is the best answer to achieve long-term success.

Let’s dive into the reasons why you should consider a loyalty program and how one will influence your long-term success.

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1. The need to drive lifetime value

This reason is also number three in our blog about the top three key objectives merchants want a loyalty program to achieve. So it’s no surprise that it is the number one reason for triggering the need for a loyalty program.

If competitors and retail giants are taking away your customers this means your repeat business and customer advocacy declines as well. Realizing a return on investment on customer acquisition becomes a distant dream. But it also means the relationship you have with your customers is short-lived, influenced by price and there is no emotional connection to make them loyal to you.

Creating a unique loyalty program that reflects your brand and allows your customers to interact with you in meaningful ways such as:

  • Rewards that matters to them and reflects your brand value
  • Answering quizzes that inform you more about them,  influence product development and marketing strategies

These are but a few things you can do with your loyalty program to engage with your customers in a more meaningful way. This makes customers feel you care about them as an individual, rather than just another number. 

2. Relaunching your website

Retail giants in particular have a lot of resources and budget to build custom websites that fit into their ERP systems. These support their omnichannel presence to deliver a great customer experience with an optimized customer journey.

Relaunching your website is the best way for you to compete with your competition (no matter their size). It allows you to rethink your customer journey and how your customers engage with you at each step of the journey. For the most part, loyalty can be part of each step so you start building and earning a customer’s loyalty from day one. Rather than when their digital foot is halfway out the door and turning towards your competitors.

Here’s how to build your website with loyalty in mind:

  • Start the relationship with your customers with loyalty activities rather than product discounts
  • Integrated Loyalty Page – to make loyalty a natural part of your website and provide customers with more information about your loyalty program
  • Add loyalty touchpoints, for example, link buttons to your loyalty program and how many points can be earned on products, across your website for example in the site’s navigation bar

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  • Post-purchase is the best time to interact with customers to drive loyalty program sign-ups and referrals with post-purchase campaigns
  • If you have a brick and mortar store use loyalty to incentivize customers to visit your store

3. Customer feedback

This is one all merchants can’t ignore. As a product marketer, I value customer feedback (aka “the voice of the customer”) as most business owners should too, If you are always doing right by your customer, your chances of success significantly increases.

When customers are proactively asking if you have a loyalty program, it really means they want a deeper relationship with you and your brand. Just buying, again and again, isn’t enough for them, especially if they have a higher average spend and are not interested in just products that are on sale. They want more frequent engagement and interactions with you.

A loyalty program allows you to seamlessly engage with your customers and easily make them feel special. You can:

  • Integrate with an ESP and automate emails using loyalty data, customer loyalty status, special events, and activities completed
  • Customers want their voices heard so encourage reviews by award them points for leaving one – this also helps your website SEO too

4. Agency advice

If you outsource your website development and relaunch or are re-platforming with an agency and they could recommend a loyalty program. You can be assured this recommendation comes from proven experience and results of implementing many loyalty programs for past and current clients.

Of course, you must do your due diligence to make sure having a loyalty program is right for your business but also make sure you’re choosing the right partner. That’s why it’s good to make sure the agency you are working with is an official partner with loyalty platform providers. It means they have gone through quality checks, received the seal of approval, and have a good understanding of the platform and capabilities. Loyalty platform provider accredited agencies are best placed to advise you on the best loyalty platform to meet your business objectives. 

5. Once you’ve replatformed

Moving from Magento to Shopify Plus (or vice versa) is a bit like moving house. It’s a big task that consumes a lot of time and resources. The move is usually fueled by wanting to improve customer experience, drive team productivity and increase flexibility to scale your store.

Choosing a loyalty platform partner that is able to take advantage of what each ecommerce platform has to offer is key. If they are unable to do so then you may not be able to create the best loyalty experience for your store and customer journey.

Loyalty platform providers should be:

  • Internal expertize that can support ecommerce platform queries and issues. It saves you time when they can identify if queries can be answered by your loyalty platform or your ecommerce platform provider

Loyalty is the key to long term success

Merchants will go down different or multiple journeys before they find the need and the importance of a loyalty platform. But they all have one thing in common. To find the key to or long-term success and reams of loyal customers. Therefore choosing the right loyalty platform partner is crucial in improving your CLTV and customer relationships.

Speak to a Loyalty Consultant today and see how loyalty can drive long-term business success.

About the author

Thuan Bui

Thuan is a Product Marketing Manager at LoyaltyLion. He has worked for global brands leading and executing product management, product marketing, service marketing and portfolio marketing strategies across both B2B and B2C markets. At LoyaltyLion, Thuan manages our product marketing strategy, to make sure our readers are kept informed and learn to get the best out of our new and existing platform capabilities.

Special thanks to our friends at LoyaltyLion for their insights on this topic.
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