7 Ways an eCommerce Loyalty Program Boosts Customer Retention

Building customer loyalty and repeat business is key to the success of any eCommerce business. An effective loyalty program can greatly improve customer retention, but only if designed and implemented properly. Here are 5 ways an eCommerce loyalty program boosts customer retention.

1. Offering Store Credit Rewards

Instead of reward points that customers fail to understand, consider offering store credit as incentives within your loyalty program. Customers appreciate rewards in the form of dollars off their next purchase. Store credit rewards are simple, tangible, and immediately useful - motivating customers to take action and redeem their rewards. This fosters higher participation levels in your program which helps drive retention. There are very few rewards and loyalty apps in the Shopify Marketplace that allow you to do this. One of it is the Points VIP Loyalty Program.

2. Enabling Personalized Recommendations

Loyalty programs allow you to collect valuable customer data that you can then leverage to personalize the shopping experience. Use customers' purchase histories, preferences, past rewards redemptions, and more to serve up tailored recommendations and targeted promotions. Personalization makes customers feel valued and known which increases their lifetime spend and likelihood of returning.

3. Facilitating Customer Referrals

Referral programs are proven to boost customer acquisition and retention. Within your loyalty program, you can offer store credit rewards to customers anytime they refer a friend who makes a purchase. This encourages social sharing within their networks while rewarding loyal customers for helping grow your business. Both the referrer and referee are more likely to remain long-term customers.

4. Optimizing the Rewards Structure

The rewards structure - how often, how much, and under what terms customers earn rewards - has a major impact on retention. Customers appreciate rewards they can earn quickly and redemptions that offer good value. Experiment to find the optimal cadence and reward levels that motivate customers to return and maximize their store credit balances.

5. Sending Timely Communications

Communicating the value of your loyalty program to customers is essential. Send promotional emails with their accrued rewards balances, redemption reminders, tips to earn more, and recommendations based on their interests. Notify customers when a referred friend earns them a reward. Such well-timed, relevant, and personalized communications keep your program top of mind and incentivize customers to interact with your brand more frequently, boosting retention in the process.

6. Increase Average Order Value

Customers' average spending directly impacts your lifetime revenue potential. Several solutions exist within Shopify to grow AOV:

• Upsells - Offer complementary products to customers during and after checkout to increase cart size.
• Bundles - Create preset bundles of related products that offer a discount - incentivizing customers to buy more in one purchase.
• Frequently Bought Together - Recommend products customers frequently buy along with the current item to grow order totals.

Apps like Kaktus Product Upsell and Bundles can help offer automated upsell, bundle, and FBT recommendations to maximize AOV.

7. Conclusion

In summary, an eCommerce loyalty program goes beyond just offering rewards - it should aim to foster a more personal relationship with customers through a combination of the right incentives, recommendations, referrals, communications, and rewards redemptions. With the right approach, a well-designed loyalty program can significantly improve customer retention, increase average order values, and extend the lifetime of your best customers.