Customer Loyalty and Rewards Programs: What to Consider

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Why are customer loyalty and rewards programs so popular? Data suggests that when part of such a program, online shoppers tend to consider a narrower set of retailers, both out of habit and to ensure they derive as much value and/or perks from their membership status as possible. This is true whether the program simply involves racking up points on purchases toward a freebie or discount, or if a set membership price delivers a suite of benefits.

If you’ve been thinking about adding a customer loyalty or rewards program to your ecommerce store, here are a few points to consider.

 These programs don’t come without cost

If you’re banking on those increased sales, be aware that you may find yourself absorbing costs – such as free shipping or discounts – in the process. It may help for you to think about those costs as going toward long-term goals.

 You may see sales increase faster than you’d expect

If your membership or loyalty program does indeed drive store loyalty, you’ll need to be prepared to keep up with demand in terms of inventory, personnel and communications. For rewards programs, you’ll also need to devise a system for keeping close track of past purchases.

 You’ll have to price your membership accordingly

Shoppers are wary about purchasing benefits ahead of time, so if you’re creating a paid rewards program you’ll need to find the sweet spot in terms of pricing. Find out what similar stores are charging, or consider how much you’d invest yourself for the potential of perks.

 Think about creating a tiered program

If you intend to charge a membership fee and aren’t sure about that sweet spot, perhaps a tiered program is right for you. Offer multiple levels of rewards and price those levels accordingly. Down the road, you might offer free or discounted upgrades to those who bought lower-tier memberships early on.

You may find yourself in direct competition with big-name stores

Amazon.com’s Prime membership changed the landscape of customer programs, and the marketplace offers a wide variety of products. Meanwhile, Sephora, Barnes & Noble and other well-known stores have developed their own programs.

 Design your program around your store’s personality

Don’t just replicate what others do – find a way to make your rewards or loyalty program mesh with the overall message you’ve worked to craft. Think of it as not just a customer perk, but as an extension of your brand.

 Think about ditching loyalty and membership programs altogether

The benefits are there – but can you achieve the same level of loyalty and your sales goal without these programs? What can you do to foster that sense of exclusivity without requiring shoppers to enroll? Can you guarantee the lowest price, work “free” shipping into your regular pricing, or find other ways to recognize loyalty?

Author: ShipWorks

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