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The most common loyalty questions answered

We had such a great time at our 2024 Loyalty Connect event, and our favorite part was seeing so many great questions from all of you! 

Didn’t make it to Loyalty Connect? Don’t worry – you can catch up on all the sessions you missed here. You can also keep reading to find the answers to the most common loyalty questions we received throughout the event. 

Let’s dig in! 

What should I think about when I first start a loyalty program? 

Starting a loyalty program can be daunting and there are lots of things to think about. However, we believe there are three priorities to consider above all else. 

Firstly, who is going to run your program? It will need an appointed owner who is accountable for its success if it is going to be profitable. Make sure you know who that person will be, and ensure that they have the time to go through onboarding training. 

Secondly, how is it going to integrate with your existing marketing channels and tools? A loyalty program can provide great power to other marketing activities such as social media or email, but only if it is integrated. Stop and identify the opportunities for integration before getting started.

Thirdly, what does success look like for your brand? What are the key problems you are looking to solve with a loyalty program? Whether it’s securing more second purchases, acquiring more customers via referrals or simply rewarding returning customers, it’s important to be very clear what your objectives are, and how they tie into your wider business objectives. 

Then, it’s time to start thinking about what your loyalty program will look like! Find out how to launch a loyalty program quickly and efficiently. 

How do you calculate the anticipated ROI of a loyalty program? 

Try out our loyalty revenue calculator! Our forecasts take into account the results that our current customers see from their loyalty programs, and factor in the discounts that you will give to customers through your loyalty program. You could also complete a customer retention analysis – full instructions can be found here.

What are the most common loyalty challenges for small brands and how can they be overcome?

Three main challenges come to mind when it comes to loyalty programs for small businesses – all of which can be overcome. 

Firstly, finding the time to invest in loyalty. In a small business you typically wear many hats, and retention marketer is often a new one that you may not have much experience with. However, there is no reason to let this stop you from launching a loyalty program. The right provider will take you through a thorough onboarding and set up process to ensure that you’re set up for success from the outset. As the program becomes more established you can find more time to improve and iterate, again with the advice and support of your loyalty platform. 

The second challenge to launching a loyalty program for a small business can be securing buy in. The focus is typically on fast growth and acquisition, and it can be difficlut to persuade stakeholders that focusing on retention may also be lucrative. Again, this problem is solvable with the right loyalty platform that offers detailed insights and analytics that allow you to report on the revenue impact your loyalty program is delivering. Of course, you still need to get stakeholders over the line in order to secure the initial investment – this blog will help you with building a successful loyalty proposal

The third challenge for small brands is integrating techology. Systems and tools need to talk to each other if you’re going to run an integrated and impactful program. Again this is imminently solvable if you choose a loyalty program with strong integrations. Ideally, you would start by integrating your loyalty program with your ESP and SMS provider, your reviews platform and your helpdesk. This should be simple with the right platform, leaving you in a position to use loyalty data effectively to enhance your other activities. 

What are best practices when it comes to determining the perks of a loyalty program? 

The perks of each loyalty program should be unique and specific to the brand, however there are some general rules of thumb to abide by. 

First of all, start simple and then build over time. Your members will appreciate a clear and easy-to-understand structure to begin with as they get to know the program, and as you build up your member base you can then ask for their feedback in terms of future rewards they would like to see. 

The second rule is to keep the perks easy to earn. If customers have to make several purchases to unlock a reward they are likely to lose interest. However, if they can unlock a reward soon after joining the program, or earn points through other activities outside purchases, they are more likely to persevere. 

Thirdly, include experiential perks that add value for your customers. For example, content that helps them to use the products they’ve purchased or events that provide opportunities for them to engage more with others that share their passions. Experience-based rewards make your loyalty program more unique and differentiate your brand from others. 

Finally, it’s best practice to keep the perks of your program aligned to your brand and the values that you and your customer base stand for. If you are an ethical or sustainable brand, then you might offer rewards in the form of planting trees for example. 

Every loyalty program should have its own set of perks based on the customers enrolling, but the best way to find out what your customers want is to ask them. 

How do you see the loyalty space innovating when most points programs are cookie-cutter? 

To ensure that your points program doesn’t look like everyone else’s, we recommend considering adding more ways for customers to earn points. Don’t only reward members for purchases. Incentivize them to engage with your brand in a myriad of other ways including points in exchange for birthdays, reviews, social follows and even social tags. This makes your program more exciting and gives them more reasons to engage with it, but it also helps them unlock rewards they return and spend sooner. 

We also encourage you to bring your brand to life through your loyalty program. Whether that’s incorporating founder-led marketing and messages into your member experiences, or allowing members to impact causes they care about by being a member of your program. 

Points programs can appear cookie-cutter, but they don’t have to be. There are many different ways to make your program stand out from the crowd – our Loyalty Hall of Fame has some great examples of exciting and innovative programs.

How do you improve the stickiness of a loyalty program? 

The most effective way to improve the stickiness of your loyalty program is to implement tiers. As customers engage more with your program, they earn more points, spend more, and progress through the program tiers unlocking more perks as they go. 

Tiers are a great way to introduce exclusive experiential rewards for your most valuable customers, while simultaneously giving them more and more reasons to return and engage with your program. The more aspirational the rewards in your top tier, the stickier your program will be. 

Check out our favorite tiered loyalty programs here

How do you drive loyalty and retention without discounts? 

It’s unlikely that as an ecommerce brand you’ll ever be able to move away from discounts entirely. However a loyalty program can be a powerful vehicle to help reduce your reliance on them. 

Loyalty rewards that are perceived to be of high value can be just as effective in driving a sale as discounts – we’re thinking free returns, early access to sales or new product launches, double or triple promotions. 

Your loyalty program also gives you a more structured way of deploying your discounts. Offer money off to new customers that you are trying to get through the idea, but as customers return and shop more, start to offer them valuable alternatives instead. This helps you to discount less, while still securing more repeat purchases. 

Want to find out more? Read our Discounting Playbook

Can you build loyalty into the unboxing experience with packaging and inserts? 

Absolutely you can. Why not include an insert that shows how many points they missed out on if they didn’t create an account with their purchase? Or a flyer showing all the easy ways that members can earn points, plus the rewards they can redeem them for. 

If possible, we highly recommend including some testimionials from other loyalty program members who are loving their rewards to make these inserts even more impactful. 

What are the best metrics to define retention and loyalty program success? 

There are a wide range of metrics that can help you to understand and loyalty program success, all of which are outlined in this article. 

However, we’d like to take this opportunity to highlight a few metrics we believe to be the most important. 

The first, is your program enrollment rate. What proportion of your customers are you successfully enroling into your loyalty program? This number typically shows you how effectively you are promoting your program, and helps you understand whether it’s going to drive ROI or if you need to work on it a little more. 

The second, is your redeeming customer rate. How many of your members are earning points, unlocking rewards and then redeeming them? This is a key metric as redeeming members typically purchase more frequently, and spend more with each transaction. This metric helps you to understand whether the rewards you are offering are compelling, as well as giving an indication as to how engaged members are with your program. 

The third is customer lifetime value (LTV). The lifetime value of a redeeming loyalty program member is considerably higher than that of a non-member. By tracking the LTV of all your customer segments you will be better able to report on the ROI and revenue being driven by your loyalty program. 

See the metrics available within LoyaltyLion’s Dashboards.

How do we educate customers on loyalty without bombarding them? 

A great question – it can be difficult to see how you can update customers on your loyalty program without filling up their inboxes. We have three key pieces of advice here. 

Firstly, don’t just rely on email to promote your loyalty program. Use your website too. Include your program in your navigation, and use onsite notifications to educate visitors on what they could gain from the program. 

Secondly, make the most of the emails you’re already sending. Don’t just rely on standalone emails promoting your loyalty program. Include your loyalty program in all the day to day comms already going out. Whether it’s promotions or products you’re launching, post-purchase emails or brand newsletters, include a section on the loyalty program and how customers can benefit by joining. 

Finally, your brand is most likely already using social media, so why not include your loyalty program in your social strategy. Use posts and stories to share your loyalty program, and wherever possible use user-generated content from your existing members to educate others on your program and why they should join. 

Check out more top tips on how to market your loyalty program. 

How do you attract and retain customers in an over-saturated market? 

Competition is one of the major reasons that we see ecommerce stores looking to launch loyalty programs. Where a market is over-saturated it can be difficult to compete without increasing ad spend or decreasing prices. 

The right loyalty earning opportunities and rewards can play a big part in helping you stand out in a crowded marketplace, giving members more reasons to return to you for their next purchase rather than defaulting to another brand that sells the same product. Communicating the benefit and value of your program is key. 

A loyalty program also gives you a key way to differentiate your brand, particualrly if you use it to share the story of your brand and connect with your customers on causes they care about. Use your brand history and heritage within your loyalty program and its rewards and you’ll be able to attract and retain customers more efficiently than if you simply pour more money into a paid ad strategy. 

Should customers be able to redeem points alongside other promotions? 

Whether or not you should allow customers to redeem rewards alongside other promotions likely depends on the loyalty status of that customer. If someone is new to the program and has only purchased once or twice, then it’s unlikely that you want to allow them to use both a reward and a discount within the same transaction as this may leave you in an unprofitable position. 

Once a member has returned and repeat purchased multiple times – perhaps even reached your top loyalty program tour – then their lifetime value may be high enough for you to feel comfortable with them using both. 

However, we would encourage you to consider how you could combine your approaches so that you don’t have to give away both a reward and a promotional discount. Instead, tailor your promotions so that they include money-off discounts for non-members, and double or bonus points promotions for members. This ensures that all customers are benefitting from a promotion, and helps you drive a successful marketing campaign, but it also ensures that loyalty program members are building up their points balances faster and more effectively along the way. 

What does the transition between loyalty platforms look like? 

The answer to what the transition between loyalty platforms looks like depends very much on which platform you are moving from or two. However, we’d like to reassure you that it doesn’t have to be a stressful or complicated process. 

The most important thing to consider is how you are going to provide continuity and consistency for customers, and communicate any changes clearly. It’s then a question of how you will display your new program on site with a new provider, ensuring all integrations continue to work seamlessly, and ensuring a new platform provides a thorough onboarding process to help you understand the differences between providers. 

Find out more about loyalty program migration

About the author

Fiona Stevens

Fiona Stevens is the Head of Marketing at LoyaltyLion, a data-driven loyalty and engagement platform for fast-growth ecommerce merchants. LoyaltyLion helps thousands of retailers worldwide to build fully customized loyalty programs, proven to increase customer engagement, retention and spend. Fiona has almost 15 years experience in Marketing, having worked in-house and agency side across functions including PR, SEO and content. She has specialized in loyalty for retail and ecommerce brands for the past eight years.

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