This post was written by our friends at Loyalty Lion, a data-driven loyalty and engagement platform.
A loyalty program is one of the most innovative ways ecommerce brands can increase repeat purchases, average order value, and customer lifetime value. Customers are rewarded for their continued loyalty to a brand with exclusive members-only perks and points for purchases as well as other brand engagements. Loyalty programs can also be used to increase customer referrals through loyalty-driven incentives.
One of the best things about a loyalty program is that no two programs are the same. Brands are always looking to separate themselves from the competition meaning that rewards and incentives offered by each brand can vary wildly. Testing out your own loyalty program ideas using customer data to inform your decisions is an excellent way to create campaigns that really work.
This blog will outline three loyalty program experiments that your ecommerce business can use to level up its marketing strategy.
Statistically, customers who join a loyalty program are 47% more likely to purchase from your business at least a second time. This means that by encouraging more customers to sign up to your loyalty program using methods such as site pop-ups, you’ll automatically increase sales. These pop-ups can come in the form of on-site notifications that alert new visitors about your loyalty program, giving them easy to follow CTAs to learn more about your rewards and incentives. Kora Organics employs this technique extremely effectively, including a brief message detailing some of the benefits of the program. This is an effective strategy as 77% of customers feel motivated to sign up for loyalty programs when there is a clear communication of benefits.
One way to experiment with this is to run a loyalty program notification on your homepage for a limited time. This way you can determine its effectiveness by comparing it to a time when you didn’t use a loyalty program notification. You can also experiment with different messages to find out which one your customers respond to the most!
Another experiment you can run is a post-purchase sign-up notification. One of the optimal times to encourage a customer to sign up for your loyalty program is right after a purchase. The customer has just had their retail cravings satisfied by you. So, encouraging them to become a loyalty member rather than a guest checkout is far more likely to produce a positive result. Use a post-purchase notification outlining how many points the customer could collect to use for a future reward if they created a loyalty account.
Running this as a time-limited experiment will allow you to take stock of the situation after the allotted time, reconvene and decide exactly which strategy to pursue further. Like any good experiment, including a control group will be a useful addition as it’ll give you a baseline to measure success.
Find out more about loyalty campaigns.
Increasing Email Engagements
Personalizing emails with customer’s loyalty information is a great way to increase email engagement. Including statistics such as their points balance, loyalty tier information or even available rewards is excellent for click-through rates.
Experiment with this strategy by segmenting your customers into a group that receives personalized loyalty emails and a group that receives generic emails to show exactly how effective using loyalty information is for your email marketing.
You can even go a step further and find out exactly which kinds of loyalty information are the most effective by sending one email that includes a points balance and a link to your program, such as the ones used by Tower of London, and one which includes a points balance and added tier benefits, such as the ones used by Lively.
You can also use email to experiment with which kinds of incentives work best for customers. For example, you could email one group offering them 100 loyalty points for making a referral and another group offering 50 points for the referrer and 50 points for the referee, similar to the strategy that Rokform currently use, to see which campaign is the most effective.
Boosting Average Order Value
According to our research, the average basket size of a customer who uses a loyalty reward is 39% higher than a customer who doesn’t. Encourage your customers to increase their basket size in exchange for an exclusive offer or reward.
Using a loyalty campaign, you can display a notification showing shoppers how many bonus points they could receive if their basket reached a certain spending threshold. This idea aligns perfectly with the fact that 79% of customers report feeling loyal to a brand when they’re able to unlock exclusive benefits. This kind of exclusive offer will drive customers to increase their order value to receive bonus loyalty points.
You can experiment with this method by running it for a limited time and using a control group to evaluate if the strategy has a positive effect on your average order value.
Finding loyalty campaigns that work for your brand takes time. Choosing which incentives to offer or what information to include in loyalty emails will depend on your specific customer base. And landing on what strategies work best will require patience and experimentation.
Hopefully, this blog has given you the inspiration to run your own loyalty program experiments to get real insight from your customers, allowing you to truly understand how to build positive and lasting relationships with your shoppers.
If you’re yet to set up a loyalty program for your ecommerce brand, have a look at our ROI calculator to see how much revenue you could be making from your own loyalty program.