Considering an eCommerce loyalty program app? You're not alone.
As we mentioned in our related eCommerce inbound marketing guide, establishing and maintaining customer loyalty has become an essential strategy for online and offline retailers.
According to BigCommerce, it costs 5x less to convert existing customers than it does acquire new ones. Additionally, loyal customers spend up to 67% more than new customers.
Brands are better positioned than ever to capitalize on this opportunity for growth. However, they need technology to and thoughtful strategy to gain traction. This is where customer loyalty programs come into play.
Understanding Loyalty Program Apps
What is a Customer Loyalty App?
Customer loyalty apps enable online retailers to reward customers based on predetermined criteria. These programs are designed to encourage repeat purchases, increase customer satisfaction and lifetime purchase value.
What is Smile.io?
Although there is never a one-size-fits-all solution, we frequently recommend Smile.io (formerly Sweet Tooth) as a customer rewards tool. We have implemented this tool for many clients and believe in its power to help businesses grow.
Smile.io currently powers approximately 25,000 active merchants using their software to increase customer loyalty. As a company, they work to help brands increase retention while decreasing dependence on ads and promotion.
Differing from other solutions in the space, Smile.io focuses its platform around three unique systems:
- Points - Motivate valuable customer actions, like joining a program
- VIP - Engage your top customers by increasing rewards and status
- Referrals - Turn engaged members into brand advocates
For this post, we sat down with the loyalty experts at Smile.io to get their insights about what makes a program successful. We hope you enjoy their commentary below!
Insights from Smile.io's Steve Deckert
How Would You Describe Smile.io?
Smile.io gives retailers the ability to run their own loyalty programs that reward customers for their purchases and behaviors. As a result, Smile.io stores keep customers engaged and see an increase in orders.
We focus on fostering customer-company relationships that generate great experiences. Smile.io works with all types of companies from local stores to billion dollar businesses.
How Was the Idea of Smile.io Born?
Prior to creating Smile.io, we (founders of Sweet Tooth) did custom eCommerce software development. We noticed that a lot of our clients were focusing on acquiring new customers, but weren’t able to retain their customers beyond a single purchase (this group usually checked out as a guest).
After talking to a few dozen retailers, we determined that there was a huge need for retention in the eCommerce space. So, we developed Smile.io and brought it to the eCommerce community. It was so successful that it is now our only focus.
Why Do You Feel Loyalty Programs Are So Important in eCommerce?
I think that loyalty programs - and customer retention programs in general - are an under-utilized strategy, especially in eCommerce. Online retailers tend to focus most, if not all, of their budgets on customer acquisition.
With a loyalty program, the customers you acquire will spend more per order, will purchase more frequently, and will be engaged with your brand over a greater time period.
They will have a higher “customer lifetime value.” This means that a loyalty program actually increases the ROI of customer acquisition spending.
Without a loyalty program, you have less sustainable revenue because you have to keep spending more to generate sales. A loyalty program increases profit and decreases the variance in revenue.
What is Your Typical Merchant Profile?
Our typical client is a medium-sized retailer who wants to increase revenue and improve customer experience. Some clients have “brick & mortar” retail operations, some are online-only.
They are usually frustrated with increasing costs to acquire a customer, especially on paid search. Our clients’ customers are usually capable of making repeat purchases over their lifetime but aren’t, or they are purchasing at a competitor’s store instead. Their customers are capable of referring their friends, but aren’t.
All of our clients want to have happy, loyal customers who love their brand and spend more - but who doesn’t want this?!
Who is the Right Fit for a Customer Loyalty Program?
Retailers Who Generate Consistent Orders
eCommerce loyalty programs work best when your customers already purchase at regular intervals. We liken this to the coffee shop loyalty punch card you might have in your wallet.
If you don't regularly visit the shop, the program doesn't offer much value. If you are not generating a steady stream of orders yet, you may want to bolster other marketing tactics to increase awareness and demand for your products.
Retailers With Price-Sensitive Customers
Price sensitive customers respond better to rewards than big spenders. However, that's not to say that brands with high average order values can't implement loyalty programs.
Ultimately, your brand should determine if customers will see value from the program you create. If your discounts or incentives motivate customers who otherwise wouldn't have purchased, we'd consider that a win.
Retailers With Several Competitors
Loyalty programs give your company the extra edge against your competitors. Specifically, they will help you stand out from your competition and give your customers a reason to remain loyal rather than shop with your competitors.
As the online marketplace becomes more crowded, brands should strive to differentiate themselves by offering added value. We often recommend loyalty programs because they offer clear incentives to remain engaged.
Do You Receive Any Common Push Back From Companies Starting a Rewards Campaign?
The number one objection that we receive from companies starting a rewards campaign is that they simply don’t have time to do this. It is a matter of prioritization.
Most retailers will agree that they want to have loyal customers that buy more often and bring their friends to buy. Most retailers will agree that a loyalty program can be successful.
The problem is that they focus on short-term revenue goals instead of thinking about how their brand is going to be successful over a longer period of time.
Have any questions? Looking to explore how a loyalty program could fit in with your store's marketing strategy?
Feel free to drop us a line through the form below! We are happy to walk you through additional examples, set up a demo and get you started on the path to increasing customer loyalty.
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