It’s common knowledge in the business arena that repeat customers are cheaper to acquire than new ones and better still, they generate more income than first-time buyers. Studies show that in many ecommerce businesses, 65% of a company’s business comes from returning customers. A mere 5% increase in customer retention can result in up to a whopping 95% increase in profit.
If that’s the case, it could be a mistake for so many businesses to focus the majority of their efforts on marketing to attract new customers. Their money would be much better spent on working to retain existing customers. And the even better news is that campaigns aimed at retaining existing customers are often cheaper than those aimed at attracting new ones. So, if you aren’t dedicating any time or effort to retaining your existing customer base, now is the time to start. A loyalty program which provides incentives to keep customers coming back to your store, is one of the most powerful weapons in the ecommerce merchant’s armory.
If you’ve built your online presence with Shopify, it’s simple to onboard a loyalty program app – like Loyalty Dog’s – and use it to boost brand loyalty and keep your customers engaged and ready to buy. This blog explains everything you need to know in order to be ready to set up your Shopify loyalty program.
5 Steps to Creating a Shopify Loyalty Program
Enticing customers with various rewards and other benefits is a proven way to keep them loyal to your brand. A successful loyalty program focuses on customer retention and will encourage customers to keep coming back to your store instead of going to your competitors.
Following are 5 steps to follow to make sure that you set up a loyalty program that will best suit your business’ needs and will work for you to grow a loyal and engaged cadre of customers.
Step 1: Determine Goals
As with most business decisions, the first step is to determine what exactly your goals are in establishing a loyalty program. In order to set achievable goals, you must first gain a thorough understanding of who your customers are, how they shop, what their interests are, and more. Having a complete picture of your customers and their behaviors will help you anticipate what types of offers and rewards they will most likely respond to and then you can set your goals accordingly.
You’ll want to define your goals in specific and measurable terms that will depend on the particular nature of your business. Some possible examples of goals for your loyalty program may include:
- Encouraging a certain number of repeat purchases
- Building a loyal customer base who spend a particular amount of money
- Increasing the frequency at which customers return for additional purchases.
Step 2: Choose Reward Activities
Once you know what the goals of the loyalty program are, it’s time to decide what activities customers must complete in order to gain points or be rewarded. The sky’s the limit when it comes to deciding what actions you will reward – it just depends on what you’ve learned about your customers and what you think is most likely to motivate them. It’s important to remember that nothing is set in stone, and you can always test different options and adjust as necessary based on customer response.
Possible actions that customers can take that you can reward include:
- Setting up an account – it’s fairly standard practice to offer customers a signing bonus of a certain number of points in order to encourage them to sign up to a loyalty program.
- Birthdays – if you ask customers to provide their birthdate, you can then send them a birthday gift of reward points that they are required to use during their birthday month. Free points that can be translated into money to spend at your store are a win-win for both you and your customers.
- Social media actions – one way to increase your visibility and number of followers on social media is to offer reward points for customers who share certain posts or encourage their friends to follow you.
- Referrals – a great way to acquire new customers is through referrals from other happy customers. Why not reward those who give the greatest compliment by bringing in their friends and family? And, of course, those rewards will encourage them to continue purchasing from you as well.
If you prefer to keep things simpler and don’t want to get involved in assigning points and creating a multi-tiered system, you can offer a simpler “punch card” loyalty program. In this type of program, customers simply need to spend a certain amount or make a predetermined number of purchases in order to gain rewards.
Step 3: Assign Value to Points and Rewards
Should you go with the “punch card” method, you just need to decide at what spending amount or number of purchases a reward is earned. For example, you might want to say that once someone buys 5 items, the 6th one is free. Or, for every £50 spent you get £5 off your next purchase.
If you choose the points method, it becomes slightly more complicated as you need to decide how much each point is worth monetarily. In making this decision, you need to consider how to ensure that customers can accrue points at a pace that will enable them to be redeemed quickly. The sooner customers can reap the rewards of their loyalty, the more they will enjoy shopping at your site and will keep coming back for more. The more they spend, the more reward points they can earn – and the cycle continues.
You can assign whatever monetary value you choose to the points that you offer, but it is most important to keep both your price points and customer behaviors in mind. On average, most loyalty programs assign a point value of 3-10% of the amount spent.
Best practices include:
- Ensuring that customers are not able to earn enough points to redeem a reward before they make their first purchase. For example, don’t offer a “sign-up bonus” of enough points that would allow the customer to get something for free.
- Try to create a situation in which customers must revisit the site 1-3 times before being able to redeem their first reward. Let them know how close they are to redeeming their reward so they will be motivated to keep spending!
- Analyze customer behavior to understand how much they tend to spend and then create rewards to leverage that information. If the average purchase is £10, perhaps offer points for every £12 spent – it’s not hard for someone to add another £2 to a purchase and those small amounts can add up fast to impact your bottom line.
Step 4: Decide How Many Points Each Action Earns
Once you have decided what points are worth, you next have to decide how many points you will offer for each action that customers complete that earns points towards a reward. Again, this decision should be based on how long you want it to take for customers to earn rewards and use their points.
Based on the examples given above of particular actions that might be worthy of rewards, here are some suggested point values:
- Setting up an account – creating an account within the loyalty program could earn ½ the amount of points needed to achieve the first reward. Let’s say that the first reward is £5 off. If you offer a 250 point sign-up bonus then your customers are already halfway to their first reward. They will realize that they don’t have too far to go and will be incentivized to spend money to earn the rest of what’s needed to get the reward.
- Birthdays – as a once-a-year event, this could be a higher value. You could consider making this the full amount (or very close to it) needed to earn a reward as a birthday gift designed to build good will and loyalty.
- Referrals – it’s important to reward both the person who made the referral as well as the one who was referred – this is the best way to keep both of them as loyal customers. The reward should be equal for both and can be a certain number of points that will put them on their way to achieving a reward.
Step 5: Choose Your Shopify Loyalty App
Now that you’ve chosen the main elements of the loyalty program that you wish to create, your next step is to choose the tool you will use to actually create it. There are endless Shopify loyalty program apps to choose from in the Shopify app store. It’s important to pick the one that has all the features you need and is also easy to use.
Key features to look for include:
- Design options – make sure you can apply your branding to the loyalty program so that customers will get the same look and feel that they are used to when they visit your site.
- Flexibility – whether you choose to offer a “punch card” reward system or a multi-tiered points program, you’ll want to choose a solution that gives you the flexibility to create the type of loyalty program that works for your customers.
- Analytics – being able to track how your customers are interacting with the loyalty program – how often they check it, how many points they accumulate over various time periods, etc. – will help you make better business decisions to ensure that you are leveraging the loyalty program as much as possible.
- Integrations – as most businesses use more than one system, you will want your loyalty app to easily integrate with other platforms that you use.
- Communication – being able to communicate with your customers directly via the loyalty program app is key to growing and developing your relationship with them. This feature will enable you to provide customized offers and remind customers of their point balances, for example.
- Customer service – as much as you want to provide your customers with a good user experience, you should also be able to get personalized attention and support as you build and implement your loyalty program.
Ready to Create a Shopify Loyalty Program Now?
If you’re currently using Shopify to power your ecommerce site and you don’t have a loyalty program, you’re missing out on valuable opportunities to retain customers. A Shopify loyalty program will immediately give you a way to incentivize your customers to keep coming back to your store again and again – and to spend lots of money as they do so!
With LoyaltyDog it takes very little time, effort and expense on your part! LoyaltyDog is fast becoming one of the most popular Shopify loyalty programs and for very good reason. It’s simple to set up and you can have it up-and-running within minutes. Should you have any questions or problems, you’ll get immediate and personalized attention from our customer service team.
Get LoyaltyDog and easily create a customizable loyalty program that works for you and your customers.