This website uses cookies to better the user experience of its visitors. Where applicable, this website uses a cookie control system, allowing users to allow or disallow the use of cookies on their computer/device on their first visit to the website. This complies with recent legislative requirements for websites to obtain explicit consent from users before leaving behind or reading files such as cookies on a user’s computer/device. To learn more click Cookie Policy.

Privacy preference center

Cookies are small files saved to a user’s computer/device hard drive that track, save, and store information about the user’s interactions and website use. They allow a website, through its server, to provide users with a tailored experience within the site. Users are advised to take necessary steps within their web browser security settings to block all cookies from this website and its external serving vendors if they wish to deny the use and saving of cookies from this website to their computer’s/device’s hard drive. To learn more click Cookie Policy.

Manage consent preferences

These cookies are necessary for the website to function and cannot be switched off in our systems. They are usually only set in response to actions made by you which amount to a request for services, such as setting your privacy preferences, logging in or filling in forms. You can set your browser to block or alert you about these cookies, but some parts of the site will not then work. These cookies do not store any personally identifiable information.
These cookies allow us to count visits and traffic sources so we can measure and improve the performance of our site. They help us to know which pages are the most and least popular and see how visitors move around the site. If you do not allow these cookies we will not know when you have visited our site, and will not be able to monitor its performance.
Cookies list
Name _rg_session
Provider rubygarage.org
Retention period 2 days
Type First party
Category Necessary
Description The website session cookie is set by the server to maintain the user's session state across different pages of the website. This cookie is essential for functionalities such as login persistence, ensuring a seamless and consistent user experience. The session cookie does not store personal data and is typically deleted when the browser is closed, enhancing privacy and security.
Name m
Provider m.stripe.com
Retention period 1 year 1 month
Type Third party
Category Necessary
Description The m cookie is set by Stripe and is used to help assess the risk associated with attempted transactions on the website. This cookie plays a critical role in fraud detection by identifying and analyzing patterns of behavior to distinguish between legitimate users and potentially fraudulent activity. It enhances the security of online transactions, ensuring that only authorized payments are processed while minimizing the risk of fraud.
Name __cf_bm
Provider .pipedrive.com
Retention period 1 hour
Type Third party
Category Necessary
Description The __cf_bm cookie is set by Cloudflare to support Cloudflare Bot Management. This cookie helps to identify and filter requests from bots, enhancing the security and performance of the website. By distinguishing between legitimate users and automated traffic, it ensures that the site remains protected from malicious bots and potential attacks. This functionality is crucial for maintaining the integrity and reliability of the site's operations.
Name _GRECAPTCHA
Provider .recaptcha.net
Retention period 6 months
Type Third party
Category Necessary
Description The _GRECAPTCHA cookie is set by Google reCAPTCHA to ensure that interactions with the website are from legitimate human users and not automated bots. This cookie helps protect forms, login pages, and other interactive elements from spam and abuse by analyzing user behavior. It is essential for the proper functioning of reCAPTCHA, providing a critical layer of security to maintain the integrity and reliability of the site's interactive features.
Name __cf_bm
Provider .calendly.com
Retention period 30 minutes
Type Third party
Category Necessary
Description The __cf_bm cookie is set by Cloudflare to distinguish between humans and bots. This cookie is beneficial for the website as it helps in making valid reports on the use of the website. By identifying and managing automated traffic, it ensures that analytics and performance metrics accurately reflect human user interactions, thereby enhancing site security and performance.
Name __cfruid
Provider .calendly.com
Retention period During session
Type Third party
Category Necessary
Description The __cfruid cookie is associated with websites using Cloudflare services. This cookie is used to identify trusted web traffic and enhance security. It helps Cloudflare manage and filter legitimate traffic from potentially harmful requests, thereby protecting the website from malicious activities such as DDoS attacks and ensuring reliable performance for genuine users.
Name OptanonConsent
Provider .calendly.com
Retention period 1 year
Type Third party
Category Necessary
Description The OptanonConsent cookie determines whether the visitor has accepted the cookie consent box, ensuring that the consent box will not be presented again upon re-entry to the site. This cookie helps maintain the user's consent preferences and compliance with privacy regulations by storing information about the categories of cookies the user has consented to and preventing unnecessary repetition of consent requests.
Name OptanonAlertBoxClosed
Provider .calendly.com
Retention period 1 year
Type Third party
Category Necessary
Description The OptanonAlertBoxClosed cookie is set after visitors have seen a cookie information notice and, in some cases, only when they actively close the notice. It ensures that the cookie consent message is not shown again to the user, enhancing the user experience by preventing repetitive notifications. This cookie helps manage user preferences and ensures compliance with privacy regulations by recording when the notice has been acknowledged.
Name referrer_user_id
Provider .calendly.com
Retention period 14 days
Type Third party
Category Necessary
Description The referrer_user_id cookie is set by Calendly to support the booking functionality on the website. This cookie helps track the source of referrals to the booking page, enabling Calendly to attribute bookings accurately and enhance the user experience by streamlining the scheduling process. It assists in managing user sessions and preferences during the booking workflow, ensuring efficient and reliable operation.
Name _calendly_session
Provider .calendly.com
Retention period 21 days
Type Third party
Category Necessary
Description The _calendly_session cookie is set by Calendly, a meeting scheduling tool, to enable the meeting scheduler to function within the website. This cookie facilitates the scheduling process by maintaining session information, allowing visitors to book meetings and add events to their calendars seamlessly. It ensures that the scheduling workflow operates smoothly, providing a consistent and reliable user experience.
Name _gat_UA-*
Provider rubygarage.org
Retention period 1 minute
Type First party
Category Analytics
Description The _gat_UA-* cookie is a pattern type cookie set by Google Analytics, where the pattern element in the name contains the unique identity number of the Google Analytics account or website it relates to. This cookie is a variation of the _gat cookie and is used to throttle the request rate, limiting the amount of data collected by Google Analytics on high traffic websites. It helps manage the volume of data recorded, ensuring efficient performance and accurate analytics reporting.
Name _ga
Provider rubygarage.org
Retention period 1 year 1 month 4 days
Type First party
Category Analytics
Description The _ga cookie is set by Google Analytics to calculate visitor, session, and campaign data for the site's analytics reports. It helps track how users interact with the website, providing insights into site usage and performance.
Name _ga_*
Provider rubygarage.org
Retention period 1 year 1 month 4 days
Type First party
Category Analytics
Description The _ga_* cookie is set by Google Analytics to store and count page views on the website. This cookie helps track the number of visits and interactions with the website, providing valuable data for performance and user behavior analysis. It belongs to the analytics category and plays a crucial role in generating detailed usage reports for site optimization.
Name _gid
Provider rubygarage.org
Retention period 1 day
Type First party
Category Analytics
Description The _gid cookie is set by Google Analytics to store information about how visitors use a website and to create an analytics report on the website's performance. This cookie collects data on visitor behavior, including pages visited, duration of the visit, and interactions with the website, helping site owners understand and improve user experience. It is part of the analytics category and typically expires after 24 hours.
Name _dc_gtm_UA-*
Provider rubygarage.org
Retention period 1 minute
Type First party
Category Analytics
Description The _dc_gtm_UA-* cookie is set by Google Analytics to help load the Google Analytics script tag via Google Tag Manager. This cookie facilitates the efficient loading of analytics tools, ensuring that data on user behavior and website performance is accurately collected and reported. It is categorized under analytics and assists in the seamless integration and functioning of Google Analytics on the website.

A Guide to Ecommerce Loyalty Programs

  • 16151 views
  • 9 min
  • May 31, 2018
Anastasia D.

Anastasia D.

Copywriter

Vlad V.

Vlad V.

Chief Executive Officer

Share

In today’s highly competitive ecommerce market, loyalty programs are the perfect customer retention tool. More than two million people in America are members of loyalty programs.

For retailers, loyalty programs are an effective way to increase conversions, retain existing customers, and expand the customer base. In this article, we explain what a loyalty program is and provide a roadmap to implementing efficient loyalty programs for ecommerce businesses.

What are loyalty programs?

Loyalty programs are long-term marketing efforts to reward and encourage customers who frequently make purchases from a company. Customer loyalty is a customer’s willingness to stay with a brand due to a positive customer experience and the value they get from the transaction. Ecommerce loyalty programs have the potential to increase customer retention and total revenue and help you stand out from competitors. Let’s take a closer look at the advantages of loyalty programs in ecommerce.

6 key benefits of loyalty programs for ecommerce businesses

Retain existing customers

Loyalty programs aren’t only about rewarding customers with points or discounts. Of course, people are likely to appreciate monetary benefits. But customer recognition is also extremely important. By providing your customers with exclusive personalized offers and rewards, you not only can increase your profit margins but also can improve customer retention.

Attract new customers

Traditional marketing tactics for attracting new clients aren’t cheap. Loyalty programs are a perfect tool to attract newcomers and make them return to your website without spending too much. Loyal customers can then bring new customers to your store through referrals.

Increase conversions

Loyalty programs improve customer retention and attract new customers to your online store, increasing the number of repeat purchases and your total revenue.

Collect relevant customer data

Data about customers’ purchasing behavior is the most important data available to retailers. With a loyalty program, you can conduct special research and find out the sorts of incentives that make your clients purchase your products or use your services. This allows you to create personalized offers and rewards to make your customers even happier.

Increase customer lifetime value

Customer lifetime value (CLV) is the total amount that a customer is worth to your ecommerce business over a certain period of time. Data on CLV includes how often people purchase, how much money they spend, and how long they’ve stayed with your brand. By implementing a loyalty program, you can increase your CLV, which can have a significant impact on your business success. For example, rewarding a customer with points increases the chance that they’ll purchase from you again, extending their lifetime with your store.

Reduce promotional costs

With the help of loyalty programs, retailers can target advertising to each individual program member and measure the response rate to these advertisements.

Why online businesses should embrace loyalty programs

Types of loyalty programs in ecommerce

Now that we've figured out what loyalty programs are and what benefits they can bring to your business, let's discover how exactly you can improve your customer loyalty.

Points programs

Points programs are the most popular type of loyalty program among ecommerce businesses. A points program works in a simple way: customers earn rewards points for each purchase they make. These points can be translated into money, discounts, and other things. The most essential thing with this methodology is to make converting points into benefits simple and intuitive.

For example, Walgreens gives extremely detailed information about customer’s points and rewards for each dollar spent. Their points system illustrates that for every $50 purchase a customer gets 5,000 points which can be redeemed for discounts. So if a customer buys a $40 skin moisturizer, they’re likely to add a $10 lip balm to the cart as well to get these 5,000 points.

Point program
Walgreens succeeds in providing their customer with the detailed information about their loyalty program

Tier systems

Tiered programs motivate customers to earn more points and gain exclusive benefits. With tiered systems, customers don’t lose interest to participate; they not only collect rewards points but also achieve a status that makes them feel acknowledged and unique.

Providing tiers is an excellent approach that provides your customers with a goal to shoot for, gets them addicted to your brand, and makes them feel valued. This system also allows ecommerce stores to be exclusive and stand out from competitors, segment their customers into low, medium, and high spenders, and finally use email personalization based on customer tiers. For example, the Starbucks Rewards program has different levels. The existence of Green and Gold loyalty program levels encourages customers to purchase more frequently to level up.

Tier system
Starbucks's loyalty program consists of green and golden levels that feature different rewards

Subscription programs

According to research by Bond into retail customer loyalty, today’s customers are willing to pay more to get access to enhanced loyalty programs such as Amazon Prime. Subscription-based loyalty programs are gaining popularity rapidly due to their ability to open new horizons for customers. Over the past 12 months, Amazon Prime membership grew by 38%, reaching 90 million members. Statistics show that customers appreciate loyalty programs like Amazon Prime and are interested in broadening their reward opportunities even for an additional fee.

Subscription  program
Amazon is famous for their innovative ideas and their subscription-based loyalty program isn't an exception

Cashback programs

Cashback rewards programs are usually operated by credit card companies. Cardholders typically get back from 0.5 to 2 percent of the amount spent. This system encourages customers to make purchases using their credit cards. For example, with the Amazon Rewards Signature Visa Card, you can earn 3 to 5 percent at Amazon.com and Whole Foods and 2 percent at gas stations, restaurants, and even drugstores. Customers earn cashback rewards as points that can then be applied to eligible purchases during checkout.

Partnership programs

Partnership loyalty programs are also known as coalition programs. They can be extremely effective at retaining existing customers and making your company grow. For example, the Walmart loyalty system consists of a coalition program between Walmart, Mastercard, Sam’s Club, and Murphy USA Gas Stations. Members of this program can save money on purchases made with all of these companies.

Gamification programs

Gamification is the process of taking something that already exists – a website, an enterprise application, an online community – and integrating game mechanics into it to motivate participation, engagement, and loyalty.

Rajat Paharia

Gamification loyalty programs are perfect for motivating your users to stay with your brand. By creating a gamified environment with the help of contests, giveaways, or sweepstakes, you can get your customers engaged with your brand.

Collecting feedback from your customers is also a form of gamification. Reward customers for making suggestions or answering questions like Starbucks does.

Hybrid programs

Hybrid programs combine elements of various loyalty programs. The key here is not to overdo it. For example, you can implement points and tier systems together like Kiehl’s successfully did. Kiehl’s offers its customers both reward points for every purchase and the opportunity to get to a new level of VIP rewards.

Be advised that combining more than two loyalty systems can have a negative effect on your business, however, as it complicates things for your customers. This can lead to customers losing interest because of the complexity of your loyalty program.

Hybrid program
Kiehl's retains its customers with a hybrid loyalty program that features various types of rewards

Loyalty programs: Which metrics to track

To identify key metrics for your ecommerce loyalty program, first consider your goal. Since you’re investing money in a loyalty program, you’re probably interested in customer retention and satisfaction. So your core retention metrics are likely the net promoter score, retention and churn rates, activation rate, and breakage rate.

Net Promoter Score

The Net Promoter Score (NPS) measures a customer’s experience with an overall perception of your brand. It’s a leading indicator of business growth and a core metric for your customer experience management program. Here’s how to calculate NPS:

Net promoter score

Ask your customers how likely they are to recommend your products or services to friends or family.

Promoters are those who are loyal to your brand and keep buying from your store. Passives are clients who are satisfied but don’t purchase frequently. Finally, detractors are those who can damage your brand as they’re unhappy customers. Subtracting the percentage of detractors from the percentage of promoters gives you your NPS.

Retention and churn rates

This metric helps you determine how many customers have left or stuck around during a specific period of time. The customer retention rate (CRR) helps you know how good your business is at keeping customers happy. Calculating CPR helps retailers develop initiatives to improve the customer experience and make their businesses better. To calculate your customer retention rate, simply use the formula below.

Retention rate

Activation rate

The activation rate measure how many visitors are engaging with your website. Even if your rewards program has been running for a long time, it should attract new members regularly. A declining activation rate can indicate that your loyalty program isn’t working anymore.

Breakage rate

The breakage rate shows the percentage of issued but unspent points. To calculate this rate, just divide the total number of unspent points by the total number of issued points. If the breakage rate is higher than 50 percent, that means your customers aren’t engaged in your loyalty program.

 

The way to create a loyalty program

As you can see from our guide, loyalty programs can boost your ecommerce business and increase your customer retention greatly. The most important task is to implement these programs correctly so they’re beneficial to your business.

Subscribe to our blog newsletter to get more insights on this topic!

CONTENTS

Authors:

Anastasia D.

Anastasia D.

Copywriter

Vlad V.

Vlad V.

Chief Executive Officer

Rate this article!

Nay
So-so
Not bad
Good
Wow
1 rating, average 5 out of 5

Share article with

Comments (0)

There are no comments yet

Leave a comment

Subscribe via email and know it all first!