Everything You Need to Know About Starting an Ecommerce Rewards Program
Looking for the perfect addition to your ecommerce store that will help with things like customer retention, customer acquisition, average order value, and more? An ecommerce rewards program can get you there.
By rewarding your customers, they are likely to purchase from you more frequently, brag about you on social media, recommend you to all their friends and family, and more. What’s not to love about that?
As ecommerce competition only continues to grow (at the time of writing this article estimates say there are anywhere from 12-24 million ecommerce sites out there), you need to think about how to position your brand best. How can you stand out from your competition? More importantly, how do you keep your customers from switching over to your competition?
While there is a lot to consider, today is all about rewards programs. If you were looking for one update to your ecommerce store that will have a big impact, implementing a rewards program is a logical decision to make. Let’s get into why that is, different types of programs, how to get started, and most importantly, how to be successful!
What are the most common ecommerce rewards programs?
One of the first things you need to decide when getting started with a rewards program is what type of program you want to have. There are several different types of programs to consider, and what will work best for your brand won’t work as well for another. Based on your industry, your products (or services), your target demographic, and more, you can start to form an idea of what will work best.
For example, if you sell large ticket items, your customers will likely find much more value from a spend based program (for example, get 1 point for every dollar spent) vs. a purchase based program (after 5 purchases, get a free gift).
Here are the main types of rewards programs to consider:
1. Points program
This first type is our recommended choice because of how flexible it is. You aren’t limited here to money spent, or actions taken, or friends referred. You can have all of that with a points program! With this type of program, users get points based on whatever actions you set up in your program. This can include money spent, as well as various engagement items like following you on social media, leaving a review, and more.
Example points program: Sol de Janeiro Sol Passport
Sol de Janeiro gives their customers tons of ways to get points, including “bonus” points just for signing up as well as points each year on the customer’s birthday. They also offer subscription options for their products and incentivize that by allowing customers to get extra points after 3 and 6 consecutive subscription renewals.
Subscription programs have exploded in popularity lately. If you offer this as an option for your products, consider adding it as part of your rewards program to push more customers to enroll.
2. Spend program
If you set up a spend program, customers are rewarded for the amount of money that they spend with you. The more you spend, the more points you accrue. This is an excellent model for a couple of reasons. For one, it’s very easy to set up and easy for the customer to understand. It is also a sure way to increase your average order value and to boost repeat customers.
If you have a lot of competition and want to lock down loyal customers for your brand, a spend based rewards program can help. Customers will be less likely to shop around at other sites if they know they can build up rewards points that can be used for future purchases at your store.
Example spend program: Starbucks Rewards
While you can earn stars in some other ways, the primary way you earn stars is by making a purchase. The more you spend, the more stars you earn. It’s a perfect, simple model that works incredibly well for Starbucks. While Starbucks used to have a simpler, purchase program (which we will discuss next), they switched over to a spend program that incentivizes spending more.
Starbucks makes it incredibly easy for users to earn stars and see how many stars they already have. These stars can be used for either free products or for free upgrades (like having coconut milk in your latte instead of regular milk). By incorporating their program in with their app, users are constantly reminded of their star balance, encouraging them to both use their stars and place more orders to earn even more.
3. Purchase program
Like we mentioned earlier, you earn a reward with this type of program after making so many purchases. This used to be an incredibly popular rewards system, especially back before the days of ecommerce. In fact, your wallet probably used to be filled with punch cards that you would get stamped every time you’d make a purchase at your favorite sandwich store or coffee shop. This has all pretty much gone digital and many stores have moved away from this more ‘old school’ type of program, but you still see some brands opting for this model.
Example purchase program: Hotels.com Rewards
Hotels.com is a great example of a big brand sticking with the purchase or punch program for rewards. In this case, it’s a great way to ensure loyalty to hotels.com instead of switching to another booking platform, as the reward of a free night is a wonderful value.
In general, we think this is a great reward model for companies who want to boost purchase frequency. It’s also one of the easier types of rewards programs to get set up and is very easy for customers to understand. Instead of calculating how many points they will get for every dollar they spend, they can easily keep track of how many purchases they have made and how many they have left before their reward. Simple, easy, effective!
4. Tiered program
Tiered programs are gaining a lot of popularity these days and are great at rewarding your most loyal customers. Best of all, you can incorporate a tiered program into pretty much any rewards program. Have a spend program? Great- turn it into a tiered program by having different levels that a customer gains access to based on how much they spend with you in a calendar year.
With a tiered program, there is something for everyone. You can enjoy some rewards as a first time customer, but you get even better rewards the more you shop. It’s a great way to reward top customers and encourage higher order value and higher order frequency. It also gamifies the rewards system, a popular technique to keep people engaged.
Example tiered program: Sephora Beauty Insider
Sephora has a classic tiered system that gives customers at all levels something to enjoy. You can enroll in the program for free and get instant access to perks like seasonal savings, free shipping at a certain threshold, and points earned for every dollar spent. The more you spend, the better the perks become. For example, the lowest tier gets you free shipping after spending $50, whereas the top tier gives you free shipping on every purchase with no minimum.
There is great value in this program and it encourages customers to spend enough money to gain access to the best perks. If you are looking to focus on increasing your average order value, a tiered system like this is one to consider.
5. Referral program
While referrals can certainly be part of some of the other types of rewards programs, they are also commonly seen on their own. If you are a new ecommerce business looking to spread the word about your business and get a lot of new customers, a referral program is a great option for you.
With referral programs, users get rewarded for their friends or family members shopping at your store. The key here is to have a program that benefits both the existing customer and the new customer. This works wonders at boosting both repeat and new customers at the same time.
Seeing as acquiring new customers is on average 6-7 times more expensive than keeping existing ones, you should seriously consider either a standalone referral program or incorporating referrals into a broader rewards program.
Example referral program: Ritual
Ritual keeps it simple with their referral program. When you refer a friend to Ritual and they sign up for a subscription, they get $15 off their first month, and you get $30 off your next month. The simplicity of their program makes it incredibly successful, in addition to the value it has, as $15 is around a 50% discount and $30 equates to a month free or almost free.
6. Paid program
You might not think that a paid program would be effective but to that we only have one word for you: Amazon. Their Prime program is a perfect example of a paid membership program that is easily one of the most popular programs in the world.
The key here? You have to provide a lot of value that people are willing to pay for. With Prime, you get tons of perks, including free and fast shipping, access to their video streaming platform, music, exclusive deals, and a lot more.
Example paid program: Amazon Prime
There is no better example of a paid program than Amazon Prime. Users are happy to spend the money to enroll in the program because there are so many incredibly valuable features.
If you are considering a paid program, make sure you’ve got the perks to back up whatever the cost of the program is. Just because you offer a lot of perks doesn’t mean that they are valuable. Make sure what you offer is valuable to your target customer and can be used easily and frequently.
In the world of ecommerce, getting your shipping paid for is a common perk that people will pay for, especially if you sell a lot of products at a lower price point. Make sure the shipping is fast, too.
Are rewards programs effective?
In short: Yes. But you probably already knew that. But just how effective are they? 75% of US companies have reported that their loyalty programs have resulted in a positive ROI. And over 80% of customers agree that they are more likely to continue shopping at brands that do have some type of loyalty or rewards program.
The average spend also tends to be higher for customers who are enrolled in a loyalty program compared to those who are not. One research study from Forrester found that, over three months, users enrolled in a rewards program spent on average $183.50, compared to those who were not who spent on average $141.20. They also found that people in the US are enrolled in 14 programs on average. These programs are popular and effective. And you should be getting in on it too!
Looking for some real-life examples? Jewelry brand Pura Vida Bracelets was able to increase their referral sales by 300%. Clothing brand Evy’s Tree was able to boost return customers by 58%. Check out more case studies for more proof on just how effective rewards programs have ended up being for ecommerce brands in just about every industry. No matter your industry, you can find success with a rewards program.
Options for starting an ecommerce rewards program
As you can imagine, setting up and running an ecommerce rewards program takes a lot of work. To manage that on your own would be a major undertaking. Don’t do that. Thankfully, there are several companies that you can utilize instead that will help you create and manage your custom rewards program.
Whether you decide to go with just a referral program, or need to monitor social media activity, reviews, tier levels, purchases, and more, you can find what you need.
Here are some top examples to consider as you start building your perfect rewards program:
If you want a lot of flexibility and options with your rewards program, Smile.io is a company to consider. They offer options for pretty much all of the types of reward programs- including points for purchases, social shares, a referral reward, and a tiered system.
In addition to the various ways for earning rewards, Smile.io also provides a variety of options for the rewards themselves, which can be in the form of a free product, a percentage discount, free shipping, and more.
Smile.io integrates with Shopify, BigCommerce, and Wix, as well as several marketing tools like Mailchimp, HubSpot, Stamped, and a lot more. Whatever your current system is, it is likely that Smile.io can integrate fairly easily.
Cost: Free plans are available for Shopify and BigCommerce users, and paid plans start at $49/month
If a referral program seems like the right fit for your business, ReferralCandy is a great option to consider. All they handle is referral programs, and they do it incredibly well. They easily integrate with other marketing tools you’re likely already using like Mailchimp, Klaviyo, Shopify, or WooCommerce, making it an easy experience to layer in a referral program into your existing ecommerce business.
You’ve got several options to choose from when getting set up, including what type of reward you want to offer to new and existing customers when a new referral is made. Once you set your options, the program pretty much runs itself, which is a major plus. If you know you want a rewards program but don’t feel you have the time to run it, using a tool like ReferralCandy can give you exactly what you need with minimal time required to be up and running.
For those of you who have more than an ecommerce store, Kangaroo Rewards can help you build a full rewards program that includes offers for customers at any brick and mortar stores you may have. This is also a great option if you run something like a gym or a hair salon- users can get rewards for each time they visit, as well as for any activity they make at your website.
Kangaroo Rewards allows you to set up one cohesive system across numerous store locations as well as numerous websites. If you just run one ecommerce website you likely don’t need Kangaroo, but if you do have a more complicated business that involves online and offline locations, you should seriously consider giving them a try.
With a focus on reviews and customer loyalty, Yotpo is a great option for any ecommerce brand with a strong visual component that wants to capitalize on customers showing off their great products to score rewards and inspire new customers to shop.
User-generated content (or UGC) is some of the best content you can share with your audience to help inspire new sales. By incentivizing the creation of this content as part of your rewards program, you are simultaneously getting crucial reviews and content you need for your business, rewarding your top brand advocates, and pulling in new customers who see the UGC and are inspired to buy.
Yotpo will help you streamline this process by creating the perfect rewards system that works for your brand. They also integrate with plenty of other marketing tools and social media platforms like Facebook and Instagram, making it easy to get started no matter what stage your business is in. Whether you are a new brand, or an established one, you can benefit from using Yotpo at your website.
Cost: Free starter plan available with custom options available based on your needs
How to guarantee success for your rewards program
Here’s the final piece of the puzzle. You’ve decided on the type of rewards program you want, you’ve selected the perfect platform to help you create it, and now it’s time to go live. While there are a lot of features built into these platforms that will help them be successful, it still helps to know what will give you the most success. Here are some top tips to keep in mind to get the most out of your ecommerce rewards program.
1. Make it easy
The easier it is for your customers to sign up for rewards, earn rewards, and most importantly, use their rewards, the more success you will have. A recent study from COLLOQUY found that two of the top three reasons why loyalty programs succeed have to do with how easy they are to understand and use.
A complicated sign-up or enrollment process or a system for earning rewards that is too complicated is not going to gain a lot of interest. Instead, keep it as simple as possible and clearly explain how customers can redeem their rewards.
2. Spend some time on branding
Just like you spent plenty of time working on your brand for your overall ecommerce business, you should put in some time on branding your rewards program. Sure, you can just call it your rewards program, but if you think about popular programs that already exist, you’ll realize they oftentimes have their own name and provide a great user experience that fits in perfectly with their brand’s existing appearance. Make it exciting and fun and get your customers interested in signing up.
PetSmart did a great job with this, recently launching its program called Treats. Every aspect of the program matches their existing brand identity perfectly. Who says treats just have to be for pets? Now their owners can get in on the fun too!
Spend some time with this upfront so that when you launch you can immediately get people excited. Also, keep in mind that a unique name can make your program more memorable. Remember what we said earlier? Rewards programs are popular, and people are enrolled in a lot of them. A unique name can help you stand out and will help your customers remember you.
3. Check your wording
As with any part of your business, your goal is to serve your customers and provide them with products or services that make their life better in some way. Sure, the ultimate goal is to make money, but the way you get there is by putting your customers first and not just focusing on the numbers.
The same goes for your rewards program. As we’ve already discussed, rewards programs are incredibly effective for ecommerce brands. However, they are also beneficial for your customers, and that is what needs to shine through. Your rewards program is all about rewarding your customers and thanking them for their business. Make sure the way you word your program underscores that point.
Even if you have a spend based program, the messaging shouldn’t be to spend more money. The above example from Kohl’s is a great example of this. They have a spend based program, but look at the title of their program- “Yes2You.” Right away they are spreading the message that the program is about you, the customer, and how they can reward you for your business.
The emphasis is on the reward, not on spending money. If you do that, you risk looking like all you care about is generating more revenue. While that is what you want, you should also genuinely want to thank your customers and reward them for their loyalty. After all, without them, you wouldn’t be in business.
4. Reminders are important
Even if you have a spectacular rewards program, don’t assume that your customers will remember it all the time! This goes for both earning and using rewards. For earning, we recommend adding an option to your checkout process that reminds users about your program. Whether they have to input their phone number, log into their account, or provide any other type of info, be sure to put a reminder for anyone- including a call to action for new customers to enroll!
For users who have earned rewards points, a simple notification alerting them to use them can be incredibly helpful. A quick web push notification is a great way to instantly show a reminder. Be sure to include a call to action and some action buttons to inspire the click.
As we mentioned earlier, keep your wording in mind here as well. The headline above reads ‘Hey Tom, You’ve Earned It” instead of something more salesy or pushy. There is also a perfect call to action that instills a sense of urgency- use your points before they expire!
While you don’t want to bombard your customers with messages, a friendly reminder can help keep them engaged with you, your rewards, and your products.
An ecommerce rewards program is an excellent way to boost customer loyalty, repeat purchases, average order value, customer acquisitions, and a lot more. Whether you go with a simple system that focuses on one goal, such as referrals, or go for a more robust system that rewards more actions, you are sure to find success if you keep these tips in mind and go with one of the tools listed here to help you get set up.
Don’t forget to also put on your consumer hat and think about what motivates you to enroll in a program. What features do you look for? What might turn you away? Approaching your rewards program from the perspective of your customers is a great way to ensure ultimate success.
If you are new to web push and want to give it a try, you can get started for free with Aimtell. Still need more information? No problem. You can always check out our Beginner’s Guide to learn more.