Fostering Loyalty with Rewards – Two Strategies

loyalty rewards

Loyalty to your brand can be hard to come by, but when it does, it’s important to not let it get away from you. It’s actually something we’ve written about before. There are a couple of ways to make sure you’re getting the most out of your loyal customers. This article describes two ways to do just that. One is a traditional and proven method. The other is a new and untested, but promising, strategy.

Fostering Loyalty with Rewards – Two Strategies

Programs that drive revenue and return customers

Recently, one of the commenters on our blog suggested targeting loyal customers on the order success page. I suggested that, instead of just a pat on the back, you could reward loyal customers with low-cost, low-weight items for reaching milestones. That way, you keep your investment and shipping costs low, and you are able to provide them with a physical representation of your gratitude. It sounds an awful lot like a Customer Loyalty Program, but by keeping the rules secret, you make the reward feel more organic and personal.

Depending on the needs and resources of your business, you may want to choose between a loyalty program and a secret rewards program. In addition to whether or not you let them know the rules, you would also choose when you let customers know about the reward during the shopping experience.

How an eCommerce Loyalty Rewards Program Works

With a loyalty program, you would most likely place information on the front of your site for customers to see immediately. It might even be found on category pages, product pages and the cart. The copy may read something like:

Hit $250 in lifetime purchases and receive a free pint glass.
Reach $500 and receive a free shirt!

minicart displaying a loyalty points counter

It’s like a rewards card, except, instead of taking up space in your customers wallet (or trash can), the card is stored on the site. To add to the sense of urgency and to simplify your customers’ experience, you could add a counter to the cart or minicart as a reminder of how much more they need to spend to get their reward. Or better yet, you could use a product like Sweet Tooth Rewards to set up a points program, where customers earn points for spending, sharing, and signing up.

Many businesses who use this strategy see more regular customers who spend more money. Despite that fact, it can hardly be said that these programs are fostering true loyalty to your brand. You’re simply setting up an expectation and are now obligated to deliver. You’ve not created loyalty. You’ve created a contract.

Secret Rewards Programs

A new, more organic approach

In contrast, a secret rewards program is nothing like a punch card. It’s more like the good memory of your local neighborhood barista, who gives you a free scone after you’ve been going there a long time.

He recognizes that you spend more at his local shop instead of going to the big chain and that you’re loyal to his small business. Now, you keep going back to buy coffee there, because your actions were justified. You were recognized. Plus, you feel there’s a chance he might give you a free scone again.

How do you mimic that kind of experience in an online store?

One way is to surprise your customer with a reward on the order success page and leave out the specific numbers they reached. While a loyalty program may drive average order value up, a secret rewards program would leave more of an impression and have a greater chance of creating a loyal customer.

Instead of your customer feeling like they are the beneficiary of an algorithm that farms loyal customers, they would feel like you, their new favorite eCommerce shop, took the time to recognize their continued loyalty and rewarded them. Shoppers, especially younger shoppers of the millennial generation, seek affirmation of their choices. This program does exactly that.

Make a Lasting Impression

More tangible + more surprise = more memorable

A third option would be to wait until your customers receive the package in the mail. The surprise is stronger because it is now tangible. The more senses you can appeal to, the stronger the memory, and the more they will recall the gesture when making their next shopping decision.

The opportunities with this kind of delivery are endless. For example, over the holidays I ordered an expensive gift from an eCommerce store that sells upscale home decor, which was, in this case, a hand-painted vase. When I received the order, I was happily surprised to find they had added a free stack of “thank you” cards. The item was lightweight, probably inexpensive to produce, and tastefully smothered in their branding. More importantly to me, it was relevant to my life, especially given the season. After the holidays, I sent the free cards out to my friends and family.

Essentially, the eCommerce store created not only a loyal customer, but a brand ambassador, for the cost of printing some stationary. Could you do this? Of course. Can you come up something even better, and more specific to your store? I bet you can.

thrive sells modern furniture named after American presidents

Imagine you’re Thrive, and you sell modern furniture named after American presidents. Your customers appreciate that you create truly modern furniture, something that few do nowadays. Not only that, but they like how you show an appreciation for the time period in which the style was created.

Now, let’s say someone buys the Kennedy Chair. In return, you could include a small photograph of the Kennedy brothers lounging in the Oval Office, along with a note thanking them sincerely for their loyalty and reminding them why they bought from you. You connect them to your brand, and you recognize their contribution to your business.

Whatever you end up doing, make sure it’s relevant to your customers. Remember, the neighborhood barista gave you a scone because he thought it would go nicely with your coffee. If he gave you a paint sample, you might be a little thrown.

The Right Criteria For A Good Decision

Choosing between strategies

The cost of the items you send is basically identical, but the impact on your customers is different. A loyalty reward program drives average order value (AOV) and return customers. A secret reward program that surprises loyal customers creates truly loyal customers who evangelize your store and drive AOV and return customers, only at a lower rate. Also, the returns you see will be far less immediate.

Sometimes, an online business will lose money on a pay-per-click campaign, but they will continue to run the campaign to raise brand awareness. Even though they lose money, they grow recognition that will ultimately bring them more customers. When making your decision about a rewards program, consider the resources of your store, how badly you wish to grow your brand, and the loyalty your customers have in it.

So the last question you may be asking is, do you really have to choose? Who can say no to higher AOV and return customers? Then again, who can say no to a loyal customer who markets your brand for you? You can do both if you are willing to double up on your costs. Just differentiate the rewards you offer enough so that each leaves a lasting impression.

What True Loyalty Is Made Of

Tough to measure, difficult to grow, and almost impossible to fake

For customers to feel a sense of recognition, there needs to be something to recognize. Maybe customers appreciate that you inject a sense of humor into your site. Maybe they appreciate that, in such a tasteless society, your site maintains a sense of dignity and propriety. Or maybe, you make returns easy by offering free shipping.

In the end, all rewards programs are strategies to foster loyalty, not create it, which is great if you already have a base of loyal followers. If you want to create loyalty, you have to do good business. The confidence your customers have in you from years of positive transactions will drive up loyalty and revenue more than any other tactic. As Josiah Royce once wrote, “The single act of business fidelity is an act of loyalty to that general confidence of man in man upon which the whole fabric of business rests.” A good start is having policies that take away the risk of online shopping and not making mistakes that lose customers.

by Content Manager
Matt began his career in eCommerce at Blue Acorn three years ago as a copywriter. As content manager, Matt looks after our brand by listening to our team and creating engaging content for fellow eCommerce lovers.

DISCUSSION

2 Comments

  1. oisin

    Love the approach of making your rewards program secret. Zappos had free shipping one christmas back before it was the norm for orders but only notified users by email they were getting free shipping. This resulted in creating an amazing experience for customers and made everyone talk how Zappos had chosen them specifically to hook up. Amazing way to create brand advocates.

  2. Rachel Etier

    What a fantastic article!

    Thinkgeek.com uses the Loyalty Points method and they openly advertise what you can get with the number of points you have now or what you can get with additional points. I was delighted by the items I could receive when I realized that I had been accruing points (at the time, the program wasn’t very clearly outlined) but then I took one look at the item you could receive by turning in a MUCH higher number of points and all the other items lost their shine. I didn’t want the keychain, I wanted the drink cooler shaped like R2D2! After doing the math I realized that I would have to add up my points over a year of purchases to reach the cooler.

    I had gone from delighted to disappointed because I could now see what I could not get… Yet. If I chose to continue to purchase and accrue points towards the cooler, I would lose out on the keychain. I felt like I now had lost the keychain even though I never actually had it in the first place.

    If Thinkgeek had, on the other hand, just told me I had earned the keychain by shopping, I would have been delighted and you would have had to tie me down and gag me to shut me up about a silly keychain.

    Again, what a great article and very well written.

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