How eCommerce Brands Are Innovating Rewards Programs

If you’re engaged in eCommerce in any serious way, a loyalty program is a must-have component of your overall customer experience. A quick glance at these statistics reveals why.

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If you’re engaged in eCommerce in any serious way, a loyalty program is a must-have component of your overall customer experience. A quick glance at these statistics reveals why:

  • Increasing customer retention rates by 5 percent boosts profits by 25 to 95 percent, according to research from Bain & Company
  • Returning customers spend 67 percent more than new customers (Bain)
  • 66 percent of consumers say they modify their spending behavior in order to maximize their rewards, according to the 2016 Bond Loyalty Report.
  • 81 percent of customers are more likely to continue shopping from a brand with a loyalty program (Bond)
  • 15 percent of a business’s most loyal customers account for 55 to 70 percent of the business’s total sales, according to research from The Center for Retail Management at Northwestern University

These numbers speak for themselves. So if retention marketing is a necessity, what are eCommerce brands doing to keep these programs highly relevant and interesting? Here are some of the top innovations in eCommerce loyalty programs.

Making A Mobile-First Experience

As consumers get more comfortable buying with their phones, it only makes sense that online retailers are now creating rewards programs that are designed entirely for the mobile environment. A key part of this strategy is creating a mobile app that does more than just merely enable customers to collect loyalty points. You need to integrate the rewards program seamlessly into the customer journey.

No one does this better than Starbucks. While its mobile app began as a loyalty card, it’s now matured into its own rich experience, allowing customers to pay with their phones, order drinks, receive marketing messages, and of course, track the stars that they’re earning. Today, one in four transactions originates from its app.

Kohl’s is another retailer innovating deeply with mobile. The company’s smartphone app not only allows customers to browse and shop its virtual store, they can also manage and redeem their loyalty points. Additionally, in-store shoppers can use the app to enter coupons or promo codes, and get their savings at the cash register. It’s a perfect example of integrating the offline and online store into a seamless omni-channel experience.

In another exciting innovation, Samsung recently unveiled the first mobile pay loyalty program. The company operates one of the world’s largest mobile payment systems. Now, users can get rewarded for using Samsung mobile pay, giving customers one more reason to use it instead of a competitor like Apple Pay.

An increasingly number of eCommerce retailers such as Subway, FreshDirect, and Cheesecake Factory see chatbots as the future of loyalty programs. They’re exploring using chatbots to drive customer engagement and retention as artificial intelligence reaches new levels of sophistication.

The promise is that these bots will be able to use natural language to help customers quickly find and buy whatever they want from your site, simulating the experience that they’re getting in physical stores. Developments in conversational commerce is expected to explode over the next decade. So far, Amazon’s voice-enabled Alexa and Facebook’s Messenger app seem to be leading the charge.

Building Loyalty Beyond Purchases

Retailers create rewards programs to ultimately increase sales and revenue. But more brands are realizing that there are a lot of other important consumer actions to encourage through loyalty programs. One of the biggest gains can be made in the frequency and level of customer engagement with your brand, mainly through social media. You could give loyalty points to customers who follow your social media accounts, retweet or repost your content, or subscribe to your newsletter.

Take advantage of free user generated content (UGC). For example, you could run an Instagram promotion with a branded hashtag and reward every customer who contributes to it. If your Instagram account has a large and passionate following already, just the promise of getting promoted by the brand could be reward enough for many customers. Lululemon recently ran a hugely successful UGC campaign asking its 2 million Instagram followers to post using the hashtag “thesweatlife.” To date, the campaign has generated more than a half million posts.

Lancôme USA’s Elite Rewards program has fully embraced the potential of social media. In fact, customers can earn more by interacting with the brand on social than for making a purchase. Rewards members can earn 10 points for every dollar spent, but up to 50 points for every time they connect with the cosmetic brand on Facebook, Instagram, Twitter or Foursquare.

Going Beyond Discounts

Loyalty programs have been around for more than a century. These days, offering customers a 10 percent coupon off their next purchase just doesn’t seem very exciting. That’s why some brands are creating highly elaborate loyalty programs that go way beyond discounts or free shipping.

They’re offering exclusive VIP experiences for their very best customers that can’t be bought anywhere, such as a private dinner with a celebrity or luxury vacations. Premium credit card companies are at the forefront of this type of high-end rewards program. For example, American Express has a “By Invitation Only” program that offers a full-day experience with Rene Redzepi, the renowned chef of Noma, or a private visit with Keanu Reeves at Arch Motorcycle Company, the custom luxury motorcycle brand he co-founded. Other VIP programs offer “insider” content, allowing premium members early access to upgraded features, early access to company news, private sales, trade show tickets, and more.

In eCommerce, Amazon has vaulted into the leadership position with its Prime membership program, which not only offers free two-day shipping on most items, but also free movies, music, books, and photo storage, among other benefits. This kind of value generates deep loyalty; a whopping 91 percent of Prime members renew for a second year and 96 percent of those subscribers pay for a third year. But you don’t need to be a multi-billion-dollar brand to do something similar with your loyalty program. Partner up with another brand, a restaurant or a local business that can offer your customers a unique experience, and build those offerings into your rewards program.

Explore The Scalefast Solution

Along with our full suite of best-in-class digital commerce capabilities, we offer loyalty programs customized for your brand and online store. Request a demo of our eCommerce platform today.

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