Top 3 eCommerce Loyalty Programs Reshaped!

With the unprecedented shift to the online space in recent years, the eCommerce landscape hasn’t had this many opportunities, nor has it had this much competition ever. The soaring digital advertisement costs and diminishing return on spend are causing brands to shift their mindset toward investing in brand loyalty and customer lifetime value over prioritizing acquisition. With that being said, trust, transparency, recognition, customer support, and consistency are becoming the main currency for online transactions in a world where brands are challenged by abundant distractions, compounded competition, and higher customer expectations. 

According to Yotpo’s State of Brand Loyalty 2022 report, 83% of global shoppers say belonging to a loyalty program influences their decision to buy again from a brand. That goes well beyond transactional loyalty programs that solely focus on allotting points and moving shoppers up VIP tiers with every purchase; emotional loyalty programs built off genuine brand-customer connection are certainly the way forward. 

To set themselves up for success in 2022, online brands should capitalize on traditional loyalty paradigms and tweak them to meet customers’ increased thirst for personalized experiences. The question is, how so? 

1- Point-Based Loyalty Program

For the longest time, merchants have built their loyalty programs based on rewarding customers with “points” for every completed purchase. These points can then be used to redeem cashback, freebies, and perks. While this approach to loyalty persists to our day, it is taking a side-turn towards becoming more personalized. By using insight from customer data and past purchases, brands are tying up personalized offers to point-redemption opportunities to increase their relevance to the consumer. 

Also, in an increased effort to build an online community and shift the brand-customer relationship from being purely transactional to becoming more emotional, brands are rewarding points on personal occasions, through gamification, and in exchange for social shares and reviews; not solely upon completed purchase. 

2. Tiered Loyalty programs

It is no surprise that there is a positive correlation between customer loyalty and average order value; according to findings by Adobe, the top 10% of a brand’s customers are spending x3 as much as the average customers, while the top 1% are spending x5 more. Therefore, brands have expanded opportunities to increase loyalty, engagement, and revenue with customers who have already proven their willingness to spend more. Tiered loyalty programs stress the factors of exclusivity and human’s emotional need to belong; progress bars, milestones, and other gamification techniques help keep customers engaged on a personal level.

One interesting loyalty program that combines both point-based and tier-based approaches to loyalty is Vitality’s, which Avex designed and built on Shopify Plus. Vitality, an inspired athleisure brand, invites customers to become ‘part of the family” and rewards points not only for every 2$ spent, but also for account setup, social media following and tagging, mailing list signup, reviews, and birthdays. The loyalty tiers are divided into “Friend”, “Fam” and “Very Important Fam (VIF)” where VIFs get free shipping, exclusive access, and holiday gifts. 

 3. Paid Loyalty Program

Simply put, paid loyalty programs resemble traditional loyalty programs with just one single differentiator which makes them better suited for certain online industries than others: an upfront participation fee or a recurring subscription cost. Again, the success of such programs stems from balancing monetary rewards with experiential offerings. 

While Amazon prime and the entertainment industry are the first to come to mind when considering paid loyalty programs, retailers and fashion brands are starting to adopt this strategy and reap unprecedented levels of engagement and brand affinity. One example would be Lululemon’s paid programs that offer members gifts, exclusive digital content, and access to virtual exercise classes in exchange for a $128 yearly subscription fee. 

Building and managing an effective eCommerce loyalty and referrals program that yields benefits for both the merchants and customers are oftentimes a hard nut to crack for online businesses. Finding the right balance between monetary rewards and emotional connection is where most brands fall short. In cases like those, Avex recommends utilizing platforms such as Yotpo which catalyzes the program's growth by equipping brands with the necessary tools to segment their customers properly, diversify their reward offerings and campaigns, and provide granular performance metrics, and customer-level insights.

Inveterate also makes its way to Avex’s list of top recommended loyalty platforms specifically for brands that are looking to invest in paid loyalty programs. Inveterate supercharges merchants’ online presence and redefines customer loyalty through membership-driven, experience-based loyalty programs that are built on people science. Not only does Inveterate design membership programs around early access to new products, store credit, free shipping, and priority customer support benefits, but it also equips merchants with tools that study the performance of those member-only benefits and compares behavioral data from members and non-members. This allows merchants to make marketing decisions that deliver on their brand promise. 

At Avex, we have extensive experience creating loyalty programs for fashion, apparel, and lifestyle brands. We have provided creative direction, custom iconography, user-experience design, and program ideation for TomboyX, O’Neill, Vitality, PSD Underwear, and Metal Umbrella.