Article

Scale your e-commerce business with a loyalty program.

Scale your e-commerce business with a loyalty program.
Sam van Hees
Sam van Hees

40% of a store’s revenue comes from repeat customers. Only 8% of all store visitors are repeat customers. Whether you have a direct to consumer e-commerce brand or physical stores, repeat customers have a huge impact on your business. The best way to create more repeat customers and raving brand enthusiasts is by having a good loyalty program in place.

Starbucks

Starbucks is a leading company when it comes to loyalty programs. As of now, 40% of its revenue comes from customers who make use of the loyalty program. Starbucks reward program as they call it, lets customers save stars with every purchase they make. These stars can later be redeemed for free products.

Since its launch in 2009, they have added lots of features to the reward program. Today, customers can directly download the Starbucks Rewards app to their phones and use it as a digital card in-store. Members can access the menu and place orders before they even get to the cafe. And to encourage customers to return to the store more often, the app also sends push notifications about product promotions.

Premium Loyalty Program

Starbucks and another great example, domino’s pizza loyalty program, which lets you save points that ultimately result in a free pizza, are a more classical approach to loyalty programs. Amazon revolutionized loyalty programs, with a premium loyalty program. Premium loyalty programs are paid benefit programs.

In 2007 Amazon launched Amazon Prime, which was offering an unlimited one-day delivery membership program for about a million products. Now a prime membership offers more than just free-shipping such as access to Amazon Prime video, gaming, music, free shipping of groceries, and many more services.

RH - Restoration Hardware

The success of Amazon Prime and other paid loyalty programs had many traditional businesses rethink their loyalty program. RH, a wildly successful luxury furniture store in the US is now the latest retailer to launch a premium loyalty program. One of the reasons a premium loyalty program was a no-brainer for RH, was the following statistic. More than 70% of households in the US with a $112,000 + income (affluent shoppers) are subscribed to a paid loyalty program.

For $100 annually, members receive the RH Grey Card. It entitles them to 25% off in all departments and 10% off clearance items. It also gets them first access to clearance events and lower interest rates on the RH credit card. Members also receive free interior design services.

Gary Friedman CEO of RH stated, “We believe the new membership program will greatly enhance the customer experience, render our brand more valuable, improve execution, and significantly reduce costs.”

So far it seems to be working, Q2 revenue rose 13% to over $615 million.

In a world where brand loyalty is at an all-time low, it is time to shift focus from short-term relationships to making new customers for life. Loyalty programs are an essential tool in earning customer trust and repeat purchases.

Purpose-driven Loyalty Program

Edgard and Cooper, the natural pet food brand, use their loyalty program to differentiate themselves from other pet food companies. Instead of just rewarding customers with discounts, their custom rewards let shoppers exchange their points to plant a tree or donate a meal to an animal in need.

This way their brand-purpose is alive across the whole customer journey. Results show that Egard and Cooper’s loyal members have a 70% higher average order value than guest shoppers. Their loyalty program members also generate 62% of their total revenue, despite only making up 14% of their customer base.

Loyalty Program best practices

  • 57% of consumers want to engage with their loyalty programs via mobile devices.

  • 77% of customers are motivated to join a loyalty program if the benefits are clearly communicated.

  • To encourage members to repeat purchases and interactions, showcase the members’ current points balance, and available rewards on their homepage.

  • 78% of customers become loyal to a brand if they’re individually recognized and rewarded for their loyalty (such as birthdays).

  • 79% of customers feel that they are loyal to brands if they can unlock exclusive benefits.

Related articles

E-commerce Audit

To see how we can boost your business in 15 mins