Beauty, technology, lifestyle; name any niche and you’ll have thousands of brands trying to make a name for themselves. The competition is so intense that it’s become very costly to acquire new customers.

What’s the best solution then? Retain your existing customers.

Research shows that acquiring a new customer is 6 to 7 times more expensive than retaining an existing one.

The best way to retain your customers is to build a loyal community of shoppers–and customer loyalty programs help you do just that. These programs are your chance to separate yourself from the competition by inspiring customer loyalty, and increasing revenue in the process.

According to a survey, when a company achieves a 7% increase in brand loyalty, the LTV (Customer Lifetime Value) of each client shoots up by 85%.

For example, Sephora’s Beauty Insider loyalty program is so popular that it boasts more than 17 million members in North America alone and these members make up almost 80% of Sephora’s annual sales.

But what exactly is customer loyalty?

First purchases are significant, but the lifetime value of a customer is even more important. Customer loyalty centers around that principle and refers to a customer’s willingness to purchase from a brand repeatedly and choose that company’s offerings over competitor offerings.

Brands have now introduced many customer loyalty programs that entice customers to return for more purchases. These are designed to raise the bar for your customer experience. Some of these rewards include:

• Discounts
• Free shipping
• Birthday gifts
• Early access to products
• Special bundle pricing
• Access to unreleased products

Why is Customer Loyalty Important for Ecommerce Brands?

Your ecommerce store benefits from customer loyalty for the following reasons:

• More selling opportunities: The chance of selling to an existing customer is 60-70% while the probability of selling to a new prospect is just 5-20%. You can even cross-sell or up-sell different products through these loyalty programs to increase the Average Order Value (AOV).‍
• Increased referrals and recommendations: If you have good experience with a company, would you recommend that brand to your friends or family? Most of us will. Statistics prove the same. 86% of loyal customers will recommend that company to their friends and family with 66% likely to even share a positive review of the company online.‍
• Lower acquisition costs: With positive referrals coming your way, guess what will go down? Your marketing costs. Your loyal customers do the marketing for your brand, which naturally improves customer retention and builds better customer relationships. And it’s far more effective than a company advertising themselves. Add to that the increase in LTV because of brand loyalty, and you get a higher ROI on customer acquisition costs.‍
• Build an emotional connection: You’re not building a loyalty program, you’re building a community. For example, Nike’s NikePlus loyalty program gives members access to birthday rewards, offline event invitations, member-exclusive products and content, thus connecting them emotionally to the brand. Happy customers = repeat customers.

5 Must-Have Customer Loyalty Apps

You can use ads, product page content, landing page content, emails, and SMS to convert one-time purchasers into recurring customers. Here are some apps that can help you create your own loyalty program:

1. Loyalty Lion

Loyalty Lion is a customer loyalty software built specifically for ecommerce companies. Here’s how you can leverage this tool:

• Allot award points to customers for any activity performed on-site.
• Allow customers to access rewards based on their points.
• Trigger on-site loyalty notifications.
• Deliver a fully-customized experience for building customer loyalty.
• Make it easy for customers to refer your brand.
• Perform A/B testing to evaluate your loyalty program before launching.
• Identify at-risk customers and get more detailed customer data to reduce churn.

100% Pure, a cosmetics brand, made use of Loyalty Lion’s ‘multi-link’ to connect their multiple Shopify POS accounts. They launched one single loyalty program across 12 Shopify POS locations. All of their shopper purchases were now recorded in one place.

The result?

Customers who were a part of the loyalty program spent 72% more than non-members and they saw a 3x increase in purchase frequency.

2. Yotpo

Yotpo integrates with Shopify to help you launch your ecommerce loyalty programs in a number of ways:

• Sync customer orders with Yotpo and reward accurate points as incentives for each purchase.
• Boost loyalty engagement by adding on-site loyalty modules that are highly customizable.
• Implement on-site widgets to track engagement.

The Turmeric Co., a food manufacturer, used Yotpo to launch a loyalty program “Turmeric Tokens”, with 11 different campaigns and paired this up with Yotpo reviews to turn one-time customers into recurring shoppers and brand advocates.

With these two strategies, they ended up seeing a 600% increase in revenue within 24 months, and their retention rate touched 60%, which is double the industry standard.

3. Growave

Integrate Growave with your Shopify store to make use of these loyalty features:

• Reward shoppers for leaving reviews, making a purchase, and other custom actions.
• Let your loyal customers redeem their points with rewards like discounts, gift cards, in-store cash, and free shipping.
• Create VIP Tier ranks to keep your best customers feel appreciated and engaged.
• Send personalized emails to keep customers engaged with loyalty program activities.
• Track inactive users and remind them about their points expiry, motivating them to purchase.
• Get comprehensive analytics and measure the effectiveness of your loyalty program initiatives.

Amirisu Shop, a yarn and knitting supply shop, based out of Japan used Growave to translate everything for their loyalty program on the front end in Japanese. They ended up generating more than $600k in revenue with 68% redemption rate.

4. Stamped

Create your customer loyalty programs with Stamped’s many features like:

• Drive customer engagement with points-based loyalty campaigns.
• Incentivize customers to refer your brand.
• Create different VIP tiers with custom requirements and thresholds needed to retain, enter, and re-enter each tier.
• Create customized landing pages and loyalty experience.
• Choose from a variety of rewards.

Georgiemane, a hair care product company, launched its rewards program for the first time with Stamped, and in the first two months itself, 2300 accounts were created, 250 people redeemed their points, and they received 83 referrals.

5. Smile.io

Smile.io easily integrates with Shopify to bring you the following benefits:

• Reward your loyal shoppers with Shopify coupons.
• Create a unified loyalty program for both your online stores and retail locations.
• Use in-built email notifications to nudge customers to use their rewards.
• Make use of different program types to create your perfect loyalty program.
• Customize the program using actionable conditions and specific rules for certain customer groups.

Run Gum, an energy gum manufacturer, made its customer reward program so easy to engage by enforcing highly achievable redemption thresholds that customers could earn rewards after just one purchase.

With this, they saw a 200% repeat purchase rate and over 20% increase in their annual revenue.

Analyzing Customer Loyalty in Peel

A customer loyalty strategy has so many different customer segments and tiers that tracking data for such an expansive program is almost impossible.

Peel helps you analyze and understand the efficacy of your customer loyalty efforts by doing the heavy-lifting of data analysis. It’s about connecting the dots between your loyalty offerings and your customer needs.

By tagging customers who have already subscribed to your loyalty program, you can have easy segmentation and take a look at various metrics such as retention rate, repurchase rate, LTV, AOV (by customer and by different segments in your loyalty program).

It’s one thing to have a customer loyalty program. It’s another to have one that effectively drives revenue. With Peel, you can refine your programs by testing out different offers, rewards, and initiatives and seeing which ones have a better impact along the key metrics mentioned above.

Activate your free trial period to measure and refine your loyalty program initiatives and come up with a perfect customer loyalty program.