How to start an ecommerce loyalty program

Building a community of loyal customers who return for repeat purchases and creating “wow” moments for customers is a foundational step in fostering customer loyalty. 

It’s estimated that 35% of an ecommerce store’s revenue is generated by the top 5% of customers, meaning your most loyal customers drive most of your revenue. 

Why a loyalty program is essential for Shopify brands 

One way to build your base of loyal customers is through a retention strategy, like a loyalty program. The sole purpose of a loyalty program is to turn one-time customers into repeat customers — which will help you lower your customer acquisition costs in the long run. 

Loyalty and rewards programs are important because they can bring customers back to your store, increase customer lifetime value (CLV), and boost repeat purchase rates. Your loyalty program can be a point, referral, or multi-tiered VIP program. 

Loyalty translates into a brand community through other avenues, such as social media, positive reviews, user-generated content, and a revenue increase. Olive My Pickle provides a great example of fully incorporating a loyalty program into an ecommerce strategy, from the rewards it offers to its branded program. 

How to start an ecommerce loyalty program 

Don’t know where to start with a loyalty program? 

There are four essential steps involved: 

1. Knowing when to implement and launch one
2. Defining your rewards and the incentives you will offer customers
3. Building and branding your program 
4. Launching your loyalty program and getting customers to engage with it 

1. Establish when it’s time to launch a loyalty program 

Ask yourself several questions to determine the right time to launch a loyalty program: 

• Are your customers asking for a loyalty program?
• Do you see that customers are not returning to shop? 
• Are you ready to grow your business?

Ultimately, you need to understand your customers and analyze what they seek in a brand. What motivates them? 

Your loyalty program should be an extension of your ecommerce brand. This will help you craft a strong strategy when setting the foundation of your loyalty program, whether it’s a referral, points, or VIP program. 

2. Define rewards and ways to earn

Ecommerce loyalty programs only work if they provide value to your customers. You have to offer meaningful rewards that customers want to earn and redeem. 

Based on data from loyalty platform Smile.io, shoppers who use rewards coupons have a 16.5% higher average order value than those who don’t. Customers who participate in loyalty programs spend more on each purchase, increasing your bottom line. 

After all, if customers don’t view your rewards as valuable, they won’t be incentivized to continue shopping with you. Whether it’s free shipping, dollars off, or exclusive products, customers are always eager to redeem their rewards for something with clear, easy-to-measure, and tangible value.

VIP programs are another way to incentivize customers to unlock tiers for more valuable rewards. By rewarding customers with entry-tier rewards, special event invites, or access to product-testing panels, you create an experience they can’t get with a competitor. 

Skincare brand Lumin uses a VIP program to engage customers at different stages of their buying journey. 

3. Name your loyalty program 

The best and largest loyalty programs are just as recognizable as the brand they are a part of. Naming your loyalty program and branding it to align with your ecommerce business is crucial. A name is your first impression and helps convey what you offer. 

Your loyalty program name should be: 

• Creative 
• Simple and easy to understand
• Memorable

What do you want your customers to think of when hearing your loyalty program name? A simple and easy-to-recognize name will help them perceive what your loyalty program offers.

One great example is Rule Breaker Snacks, a plant-based baked goods company that offers a variety of healthy options. Its “Brownie Points” is a fun play on what it sells and creative enough that customers can remember it. Brownie Points also clearly communicates the program’s purpose: earning points.

4. Promote your program 

Once you have defined how customers can earn and redeem rewards and established a creative and unique name for your loyalty program, you’re ready for customers to sign up. 

Ecommerce brands promote their loyalty programs through many creative and unique ways, such as Facebook groups, SMS, social content, and “in real life” events. The key is determining what aligns with your customers.

When starting your loyalty program, it’s best practice to promote through different channels, such as social media and email marketing. Email marketing can be part of the two-way communication that bridges a connection between you and your customers. Be sure to:

• Humanize the emails you send
• Show and tell in your email campaigns
• Share your milestones with your community

We have seen successful brands utilize Instagram Reels and Stories to show how their loyalty program works in real-time while offering a behind-the-scenes look into the benefits members can earn. Here are some ideas for leveraging Instagram: 

• Post how your loyalty program works to your Instagram highlights 
• Post Instagram Reels to show users redeeming their points, either online or in-store
• Provide additional loyalty points for shopping in-store 

Whether an Instagram post, TikTok video, multiple emails, or ads, digital touchpoints are essential to building a brand community and instilling trust in your business.

Loyalty programs are a touchpoint

Ecommerce loyalty programs provide an opportunity to build a community that supports you through every stage of your business. 

A loyalty program's foundation begins with offering your customers the best experience. It’s a way of thanking them for choosing to spend their hard-earned money with your brand. Your business benefits by generating repeat purchases and revenue.  

Simply put, loyalty programs and ecommerce businesses go hand in hand. 

Jonathan Roque is the Content Marketing Manager at Smile.io. Jonathan is an expert on ecommerce and passionate about helping small and medium-sized businesses grow and maximize their potential.‍