Step by step guide to creating a loyalty program for new-age consumer@4x
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A Step By Step Guide To Create A Loyalty Program For The New-Age Consumer

There’s an increased amount of competition across industries in the eCommerce space. Hence, it is important for businesses to create a robust growth strategy.

As stated in The Future of Commerce report by Shopify, this year businesses should focus on customer retention as their growth strategy.

An effective customer retention strategy for online businesses – loyalty programs.

But let’s face the fact – consumer behavior has changed. And so have purchase patterns. So, how should one go about your online store’s loyalty program? How do you make sure your loyalty program appeals to customers?

Here’s your step-by-step guide.

How to create a loyalty program for your Shopify store

Step #1 Research what your competitors are doing

Loyalty programs are one of the fastest growing marketing techniques. There’s fierce competition in every industry. If you want to offer something different in your Shopify customer loyalty program, you’ll have to continually monitor your competition.

What kind of programs are your top competitors running? How do they attract customers to join their program? What kind of content are they creating to promote their loyalty program? The answers to these questions will help you plan your own program.

Here’s what you can do:

  • Look for examples from your competitors
  • Find examples of both product-centered and customer-centered loyalty program approaches
  • Find out which programs worked and which have failed
  • Determine which is the best Shopify loyalty program app competitors use
  • Make note of the strategies they follow
  • Take inspiration from all the features that you like in their programs

How does researching help?

  • When you research what your competitors are offering, you’ll be able to offer better than them
  • You will be able to create a program that stands out from the crowd
  • You’d be able to pick up the best features as inspiration and apply it to your own program

Step #2 Dig into your analytics

For eCommerce companies, data is a blessing. It gives you insights into your customers’ likes, dislikes, behavior, etc. Utilize your site’s data to create and run effective loyalty programs. Once your Shopify customer loyalty program is set and running, gather data from there as well.

Here are some insights you can gain from your website data:

  • The number of customers making repeat purchases
  • How often they make purchases
  • Customer demographics
  • The average order value
  • The kind of exclusive offers customers like

How does the analytics step help?

  • Analytics will help you use data to gain insights into your customers’ behavior
  • It helps to create a relevant loyalty program
  • To create targeted and personalized marketing campaigns
  • Create informed loyalty program offers
  • Your loyalty program will give you first-party data, reducing your dependency on third-party data, for example, from social media channels, etc.

Here’s a short case study to understand how analytics can help

Let’s look at an example to understand how one brand launched a loyalty program following data analysis, and increased their average order value through their program:

Clothing brand Frances Valentine launched a loyalty program in 2019 after noticing their returning customers were spending 67% more than first-time customers. Through three tiers – silver, gold, and platinum – the brand gave store credits for different actions. Points for every purchase, for reviews, for following their social media accounts, etc.

Within a year, their analytics showed their customers who were redeeming points made twice as many purchases as non redeemers. Moreover, the redeeming customers AOV was 55% higher than the non redeemers.

loyalty program example

Step # 3 Conduct surveys of your customers

When you’re trying to understand what you should offer to your customers, there’s no one better to ask than the customers themselves. That’s where customer surveys come in the picture.

You can bring in this step at the beginning when you’re planning and creating your loyalty program, or at any time when you want to gain a deeper understanding of customers.

So what type of questions should you ask in your survey? That would depend on what information you want to collect. Typically, loyalty program surveys help gain information for:

1. Customer retention

2. Net Promoter Score (the likelihood your customer would recommend your brand to others)

3. Purchasing power of your customers

Here are some questions to include:

  • Are you a part of any eCommerce loyalty programs? How many?
  • Do you prefer loyalty points or store credits?
  • Would you be interested if we started a loyalty program?
  • What do you expect from a loyalty program?
  • How can we make your loyalty program experience better?
  • How often do you redeem loyalty points on our site?

Step #4 Identify your value proposition

Your loyalty program needs to offer value to your member base. Otherwise, they’ll fall for newer and better programs of other brands. But what exactly is ‘value proposition’ when it comes to loyalty programs?

Your value proposition depends on a couple of factors – how different you are in your industry, an attractive rate of loyalty points, opportunities to earn points, etc.

The best way to come up with a unique value proposition would be to create a loyalty program from your findings from the above data. The more favorable a program you’re able to create, the better your chances of winning customers’ trust and loyalty.

Some factors to consider to create a dynamic and relevant loyalty program:

  • Make it relevant to your customers
  • Keep it dynamic so that you can reinvent and evolve your program from time to time
  • Make it ubiquitous. Give customers many opportunities to earn points via different actions
  • Give freedom. Enable customers to make use of the points as and when they want
  • Give customers choice and control of their loyalty program membership

Now, there are different types of reward programs: points-based, rewards, store credits, cashback, etc.

But what is the best, loyalty points or store credits? To find the answer, make sure you include this question in your customer survey.

A survey shows that 3 out of 10 people never redeem their loyalty points. Meanwhile, customers prefer store credits to other types of rewards because they have more benefits. Consider these statistics:

  • 69% of consumers choose brands based on where they can earn loyalty points
  • 57.4% of consumers join loyalty programs to save money
  • 37.5% join programs to receive rewards

With store credits, customers can get more benefits. They can buy more at a lesser price. Some eCommerce stores allow customers to share store credits with their friends and family. Dynamic store credits programs keep customers engaged and always give them something to look forward to.

Step #5 Get the best Shopify store credits app

If you want the best loyalty program for your store, you’ll need the best Shopify loyalty program app to help you run it.

One such app is Flits customer account app, which comes with powerful add-on features to boost customer loyalty.

Flits offers Store Credits as an add-on feature, which helps:

  • Set up store credits on your Shopify store
  • Offer store credits when customers make a purchase
  • Offer review credits when customers share reviews
  • Offer subscription credits when customers subscribe to buy a product
  • Offer credits when customers share referrals
  • Increase repeat purchases
  • Keep customer motivated to return to your site and buy more
  • Increase customer engagement

Along with the benefits of store credits, when you install the Flits app, you can ensure a holistic experience for your customers. The customer account page that hosts the Store Credits feature allows customers to view their store credit balance, items added in wishlist, products they recently viewed on the site, etc.

Advanced personalization features ensure your customers keep coming back to your site to earn the benefits of store credits and make more purchases.

Install Flits Store Credits add-on feature on your Shopify Customer Account Page.

Step #6 Set up the loyalty program on your Shopify store

Once you’ve chosen and installed a rewards point app on your Shopify site, it’s time to start the set up. If you go with Flits, installation is a breeze.

Then comes the fun part – decide what kind of opportunities are you going to offer to your customers to earn store credits?

Pro tip: provide as many opportunities to earn credits. From the time customers land on your website, to signing up to referring a friend, there are numerous activities for which you can offer store credits.

Here are some actions for which you can offer store credits:

  • Sign up on your site
  • Subscribing to your newsletter
  • For sharing their birthdate
  • Product reviews
  • For sharing feedback
  • Referring friends
  • Store credits after every purchase
  • Monthly credit
  • Repeat purchase credit
  • Credit for crossing a order value threshold
  • Credit for crossing a monthly order value threshold
  • Credit for buying from sales
  • For purchase on their birthday

Step #7 Promote your loyalty program

No matter how good your loyalty program is, if you don’t promote it well, it might not give you maximum results.

There are many ways in which you can promote your program:

On your website: Give your rewards program a prominent spot in your customer account page. You could also create a separate section dedicated to your rewards program on the home page. The idea is to give it importance and highlight it so that your site visitors and customers don’t miss it.

On social media: After your website, your social media accounts are probably the most vibrant space where your customers engage with your brand. To promote your loyalty program, you could run special campaigns on social media. Another simple thing to do would be to mention your rewards program in all product-related posts. For example, if you’re saying, ‘buy this product’, ensure you also say, ‘earn store credits’ along with it.

Run campaigns on all your communication channels: Use all your marketing channels to promote your rewards program campaigns – email, SMS, WhatsApp, web push, etc.

Online ads: Not many brands do this, but online ads can also be a good way to make your loyalty program known to your customers. If customers aren’t coming to your website or social pages, go behind them where they are – all over on the web.

At physical stores: If your brand has a physical store or a kiosk at some place, make sure you leave pamphlets, danglers, and posters. Also train your staff to tell store visitors about your loyalty program.

Through influencer marketing: Another way to promote your rewards program is through influencers. You’ll have to collaborate with influencers relevant to your industry and come up with creative ways to let people know about your rewards program. But again, the trick is, your rewards program has to have a unique value proposition.

A good customer loyalty program app will help you with all the above.

Let’s look at some examples to see how brands promote their loyalty programs.

Sephora runs paid ads.

Nordstrom promotes its rewards program through email campaigns.

create a loyalty program and promote it

Step #8 Monitor performance and optimize

Once you set your loyalty program rolling, it’s time to continuously monitor it. Here are some metrics to measure:

Enrolment rate: This is the first metric to measure. How many customers are joining your loyalty program and through which channels.

Engagement rate: The enrollment rate might not be enough for you to know how many customers are actually engaging with your program. Customers might have enrolled but if they’re not engaging, it’s not going to give you any results.

Repeat purchase rate: Next, look at how often customers are making purchases. Once you measure the repeat purchase rate, compare it with the conversion/ purchase rate of non-members. You’ll know whether members or non-members are buying more. Moreover, you’ll know which non-members are buying more and target them to join the loyalty program.

Average spend per member: It’s not only important that your members buy often from you, it’s also important to make sure they buy more from you on every purchase.

Lifetime value: This one is an important metric for your Shopify customer loyalty program. It looks at how often members are buying, how much they’re buying, and how long they’re staying in your program. This metric will help you improve your program significantly.

Percentage of sales from your loyalty program: One of the most important metrics is how much of your site’s total sales is coming from your loyalty program members. This is one of the best metrics to measure the success of your loyalty program.

Once you’ve measured these metrics, you’ll know what’s working and what’s not. Based on that, you can tweak and make changes to your program. By optimizing your program, you’d be ensuring your efforts of setting up the running program don’t go to waste.

Pro tip: You must monitor and optimize your rewards program continuously. Customers preferences keep changing, markets keep changing, so why make your rewards program stagnant? Keep changing it with the times. Your Shopify customer loyalty program app will help you monitor and optimize.

Final thoughts on how to create a loyalty program

Your reward program needs to be relevant to your brand. Even if you’ve replicated a program of another brand, it needs to be monitored and optimized consistently.

Follow these steps to make setting up your rewards program and running it super easy.

And to run it smoothly, you know you need to install the Flits app store credits – the Shopify loyalty program app.

Install Flits To Set-Up Your Customer Account page Right-away

Vanhishikha Bhargava
Vanhishikha Bhargava
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