From time to time, every e-commerce business is challenged to attract and retain customers. And, sometimes it could be difficult to acquire new customers to your online store, so you try your best to assure them to stay. A loyalty program can be a great tool to achieve this goal because it helps your customers feel rewarded and valued.
Loyalty programs are so popular these days that some customers are looking forward to this offer. It should be understood that many customers are likely to give up with a business that does not have a loyalty program. Luckily, it's not that hard to create a loyalty program with reward points that will keep your customers coming back for more.
Types of loyalty programs
There are various types of loyalty programs that you can use to increase customer loyalty and repeat purchases. Let’s consider the most popular loyalty program.
- Multilevel Loyalty Programs.
These customer loyalty programs are a type of membership where customers receive different benefits based on their rank. Companies usually classify membership into groups based on certain metrics such as sales or engagement.
These customer reward programs give customers a purpose. The higher their level, the more exclusive and better rewards they will receive.
- Fee-based loyalty program.
These are paid loyalty programs that give customers immediate and permanent benefits in exchange for a membership fee. These fees may be recurring or one-time.
Paid programs may require validation of value to sign up, but the business may receive higher customer value from members. According to recent statistics, customers are 58% more likely to spend more on a brand after joining a paid loyalty program.
Let's take a look at common elements of successful paid loyalty programs:
- The benefits clearly outweigh the fees that promoted registration;
- Members stay to enjoy additional practical benefits such as personalized experiences and member-only content;
- A high level of engagement. Good paid programs have ongoing engagement, which increases the value of the program.
- Value-based loyalty programs.
The idea of a value-based loyalty program is to establish relationships with customers on a sensitive level. It includes donating a percentage of purchases to a charity or welfare program. You can offer different options for any type of charities organizations, or choose one that truly meets with your customers' values.
In fact, this program does not reward customers. But it occupies a special place in customers' hearts since rewards are used for the benefit of society. Using this model brands frequently create a mixed loyalty program.
One of the best examples of this type of loyalty program is Apple's special product line (RED). Apple-supported grants have provided over 10.8 million people with care and support services, helped with distribution of more than 167 million HIV tests, and provided 13.8 million people with ongoing access to life-saving antiretroviral (ARV) treatment.
- Points-based loyalty programs.
This is the most common type of bonus program. They allow customers to earn reward points that they can redeem for free gifts, cashback, benefits, etc. Customers don't just earn points for purchases. They can also earn points by sharing information on social networks, leaving reviews, celebrating birthdays or playing games.
As you can see, there are different types of loyalty programs and only you can decide which one is the best for your business. But today we’ll discuss the most common and popular of them - reward points loyalty program that can be implemented in your Magento 2 store.
What is a reward points system?
he reward points system is a loyalty program where customers can earn points by making purchases. Later, they can exchange the earned points for rewards. The reward itself may vary depending on the business offering the points. Rewards points are offered by retailers in all types of industries. One of the most famous examples is the banking system. They usually have reward systems for credit card holders (usually in the form of "cash back").
In ecommerce stores, reward points are assigned a certain monetary value (each company has its own system). These points can be used as a discount on the next purchase, or the customer can pay for the purchase directly with their points (depending on company policy).
The purpose of reward points is to encourage customers to make repeat purchases. This makes reward points a key part of loyalty programs. The main idea of the reward points system is that the customers will receive the rewards that they can earn by accumulating points in their account. This will encourage them to buy more from you in order to accumulate more points and thus spend them in your store.
Using Reward Points as a Magento 2 store currency is a great tool for attracting new customers and increasing ecommerce customer retention. Any business looking to increase revenue and expand its customer base should consider reward points systems.
Despite Magento 2 providing many useful built-in features, to implement a comprehensive rewards program you need to integrate a useful Magento 2 Reward points extension. Here it is important to choose the most suitable module. We recommend trying the AheadWorks Reward Points for Magento 2 extension which is sure to bring a positive experience to your store and improve ecommerce customer retention.
5 reasons to offer Reward Points program on your Magento 2 store
There are a bunch of successful Magento 2 stores that have implemented a Reward points program. They help you to improve customer loyalty, increase total number of purchases, encourage repeat purchases, etc. Let's go deeper into this.
- Increasing customer engagement.
Customer engagement is a very powerful aspect that directly affects brand sustainability, especially in the long term perspective. A brand that is not connected to its audience has low recall and has difficulty creating a credible brand image. The reward points system is a great way to increase customer engagement. Customers are more open to receiving emails or other marketing content from brands when they are members of reward programs. The program itself provides a complete customer experience and helps to strengthen the connection between the brand and its customers.
- Improves Customer Experience.
Customer experience is the cumulative experience that customer has with a brand, from the pre-order through the post-order process. Nowadays, the majority of brands are trying to create an exclusive experience for their customers, and one of the best ways to achieve this is through the use of a reward points program. The expectation of receiving reward points creates anticipation and excitement, and receiving reward points greatly increases customer satisfaction, thereby creating a valuable and positive customer experience.
- Increasing customer retention.
According to statistics, 82% of customers argue they are more likely to stick with a brand that offers a loyalty program, and 58% of customers say that the opportunity to earn rewards actually changes their buying behavior. One of the key benefits of the Rewards Points program is that it has a direct and visible impact on customer retention. A retained customer is an asset to any brand as they generate more profit, are more likely to become a brand supporter, and represent the brand as a real brand loyalist.
Additionally, it is well known that the cost of attracting customers exceeds the cost of retaining them. Retained customers will bring more profit to your company at a lower expenses and help increase sales and revenues.
- Increased Customer Lifetime Value (CLV).
Any loyalty program directly affects CLV and greatly prolongs the relationship between brand and customer. This gives the customer a reason, beyond the brand's products and services, to remain associated with the brand. What's more, if your reward points program is attractive and offers meaningful rewards for purchases, it also helps increase CLV, which in turn ensures repeat purchases over a longer period of time.
- Stop competition.
It's fairly easy for today's exacting buyer to compare hundreds of prices across multiple stores with just a few clicks. If customers only think about the products you sell and not about your brand as a whole, then you will be in a price race to the bottom. Large stores usually win these races.
Another of the biggest benefits of customer loyalty programs is that they can save you from having to compete on price alone. By connecting with the emotions of your customers, it gives you the opportunity to make your store and your brand stand out, offering a much more enhanced (and personal) customer experience.
Every time you reward a customer, you are dealing with their emotions. This is how you start building special relationships. As it develops, customers see you as more than a retailer, you take a specific space in their hearts. In turn, this strengthens their loyalty by encouraging repeat purchases that increase your bottom line.
Creating a reward points system is one of the most important and at the same time easiest steps in your customer loyalty strategy. And if you're willing to invest the time and effort into creating an effective rewards points program, you can convert and encourage consumers to generate revenue for your store.
And if you are a Magento 2 store owner, it is worth trying our Reward Points extension which will help you to create a unique loyalty system and achieve the highest results.