Loyalty programs are on the rise. According to a study done by Accenture about 77% of customers participate in some sort of loyalty program. That's an extremely large percentage that doesn't look to be shrinking in the coming years. The take-aways from this statistic are twofold. For the consumer, its a great time to shop and its great to know that retailers are looking to reward their shoppers. But for business owners (especially those who own ecommerce companies), this large percentage should serve as a warning sign of what's to come in retail's future.
Some estimates say that there are more than 2 million online stores across the internet. If you're in ecommerce, that means there's 1,999,999 competitors looking for ways to outperform your store. In the past, the most surefire way to distance yourself from the pack of websites was to reward your customers. However, the industry has caught on the importance of loyalty programs, and retailers are being forced to continue to evolve. We're past the days where any ole loyalty program could translate into a competitive advantage.
In order for your rewards program to stand out, you first have to understand who you want to appeal to. Customer needs are highly specific to individual businesses, as a result its important to have an understanding of your target audience.
There are many small but important differences in shopping habits that are demographic dependent. Does your demographic skew mostly male? If so you should consider how your rewards program feels on mobile since according to Business Insider men are much more likely to shop on their smart phones when compared to women. Differences in customer preference don't just stem from gender; age, education, and lifestyle are also all key determiners in our shopping behavior.
While there are many things that can separate customer base desires, there are also several commonalities between all demographics. All customers can grow tired of simplistic rewards programs, in order to keep your customers incentivize them.
After you've developed an understanding of your customer. Think about how you want to design your program to fit your specific customers' needs. Rewards programs can be built in a variety of ways. However, the most successful programs tend to have a set of common features. The program's structure, usability, and uniqueness contribute to building a successful rewards experience for customers.
Structure
One of the most successful rewards program structures is a tiered program. Tiered programs are great when a merchant is faced with two (or more) purchasing patterns within their customer base. For example, Swell client Edens Garden saw that their customers fell into two separate groups: occasional buyers and frequent purchasers. In order to encourage shoppers to move from the former to the latter group, Edens Garden customized a two tiered VIP rewards program using Swell's platform.
A tiered program essentially makes shopping a game, as it appeals to our competitive nature. Edens Garden groups less frequent shoppers into their a "Lavender Tier" where they are rewarded one point per dollar spent, and a "Rose Tier" where shoppers earn two points per dollar.
Tiered structures make use of a process called gamification, or giving non-games game-like features. People are naturally inclined to want to be the best and earn the best possible prize. By capitalizing on our inclinations, online merchants can see real value added and a more active customer base.
Companies can outline spending goals needed to achieve the higher tier to further encourage customer engagement. Once they see the spending targets and the rewards that accompany the higher tier, occasional shoppers are likely to begin to convert to loyal customers.
Uniqueness
Uniqueness is one of the more obvious steps toward a creative rewards program; however, many merchants forget to remain on message when building their rewards program. A rewards program shouldn't feel different from the rest of an online store. It should be a natural continuation of the brand. The colors, images, and phrases that make your store unique should translate to your rewards page.
Unique and cohesive messaging can go a long way in connecting customers with brands. Shoppers innately desire custom connections with companies; research suggests that shoppers are way more likely to trust a company with a custom message.
One popular way to differentiate a rewards program is to give points creative names. This is common practice in the airline industry, because frequent flyers (like frequent shoppers) develop an attachment to their airline of choice. Creative names like Delta's SkyMiles and JetBlue's TrueBlue feed that attachment and further encourage loyalty.
Usability
Usability is one of the more overlooked factors by inexperienced merchants. Half of all online purchases occur within the first 28 minutes of the initial click, merchants should make efforts to keep this number low so a rewards program shouldn't increase this shopping time.
Rewards programs build with the customer in mind tend to attract more customers. Accessibility is the key gaining new customers and keeping your existing customers satisfied. Process complexity should develop with your customer relationship. Merchants should always seek rewards programs that are very simple to sign up for, but offer more advanced points methods for experienced and proven customers.
The program should seamlessly blend into the normal checkout process; it shouldn't add frivolous steps that don't add value for the customer. The Harvard Business Review article, Stop Trying to Delight You Customers, explains the downfalls of over complicating the shopping experience. The article reviews the notion of customer effort levels, and identifies the correlation between high effort and low retention. In order to maintain website stickiness, merchants should make sure they build programs that match customer desires and are simple to understand.
