Customer Retention

It’s the Perfect Time to Launch a Loyalty Program

The pandemic is prompting consumers to stay at home and buy online. It’s a perfect opportunity for ecommerce companies to introduce a well-defined loyalty program.

Also called rewards or points, loyalty programs help the business and its customers in three key ways.

  • Higher lifetime values. Customer lifetime value is a crucial factor in measuring the success of an online store. It reflects the total amount of lifetime purchases from a customer with that store. Rewarding shoppers for repeat purchases can increase their average order value by up to 20 percent and their purchase frequency by as much as 20 percent, in my experience.
  • Increased organic communication. Rewards customers are more apt to open branded emails and texts and engage with brands on social media. They’re also more likely to review products and share content.
  • More accurate customer profiles. Analyzing data from loyalty-program members can help target other consumers and can otherwise provide a complete view of your target audience’s buying habits across many sectors. The result is better products, pricing, and marketing.


The ideal loyalty program provides something of value right out of the gate. It can be an immediate discount, sign-up points, or a gift. It should be exclusive, not a 10-percent-off coupon you might already offer to new email subscribers.

Customers should be able to sign up during their first purchase and earn points on those items.

Other compelling features include:

Bonuses for special activities. These should be easy tasks that provide you with actionable data or expanded marketing opportunities, such as installing an app, answering surveys, and sharing content.

Kohl’s, for example, offers 50 extra points when its Yes2You Rewards members install the Kohl’s app.

Kohl's Yes2You page, explaining how you can get 50 points for downloading the mobile app.

Kohl’s offers 50 points when its Yes2You Rewards members install the company’s app.

A birthday reward. Points work, but a voucher is better. Give participants a full month to redeem birthday rewards.

Bonus periods when members can receive double or triple points. However, don’t run these so often that members hold back immediate purchasing.

Early access to products. Members need to feel they’re appreciated. Being among the first to receive product notifications is an excellent way to thank them.

Referral bonuses. Offering points for the referral of new members helps the community grow. But require new shoppers to make a purchase before rewarding the referrer.

Unique challenges. Rewarding points for recurring or one-time activities can be entertaining. You could, for example, prompt members to show how they use your products or post pictures of four-legged friends on National Pet Day (April 11). You could also partner with another company, such as Walgreens, which gives Balance Rewards points for various health-related activities such as walking and weigh-ins via connected apps.

Dedicated support. One of the benefits of being a Delta SkyMiles member is never having to wait on hold. The airline has a dedicated SkyMiles phone number, and members can request a callback. Online alternatives could be a designated email address or a code for reserved live-chat channels.

Exclusive content. Many social media influencers and business consultants offer freemium content. Users can read plenty of web articles for free, but for a few dollars a month, one can unlock additional resources. Offering “no other way to get it” content to rewards members can be a unique selling point, especially for fashion, sports, and home improvement categories.

The appeal of giving back. Rewards are not always monetary. Offering the option to donate points to important causes strengthens your brand and helps loyal customers feel better about their purchases. For example, The Body Shop, which sells cosmetics and skincare products, provides three charities for customers to donate points.

Image of trees and fields, accompanied by text saying you can pick a charity to support.

The Body Shop lets customers donate rewards to one of three charities.

Don’t be afraid to mix things up. You could occasionally match a customer’s rewards with a donation.

A Real Experience

A loyalty program retains longtime customers and attracts new ones by rewarding them for repetitive purchases.

But it can be much more. Think outside the box. Switch things up. Offer more than a traditional rewards program, but rather a real experience that drives word-of-mouth advertising, generates publicity, boosts overall engagement, and increases sales.

Pamela Hazelton
Pamela Hazelton
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