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Loyalty Metrics: How to Ramp Up Your Shopify Store Loyalty Program?

Is your loyalty program really effective? Learn about the loyalty metrics in this article. 

If you’re a Shopify store owner/marketer, you probably already know how important a customer loyalty program is to brands. Almost all online stores have some sort of loyalty program.

That’s great! You’d think.

But…

77% of these loyalty programs fail in the first two years.

Why? Some Shopify loyalty programs fail to engage customers, some find it hard to consistently compete with competitors. And yet, most brands continue to run their loyalty program. That is a big no-no.

So, what should brands do when their loyalty program numbers are in the red?

If you’re sailing in that boat, you need to go back to the whiteboard and look into whether or not your loyalty program is adding any value to your brand.

So, let’s get started with the loyalty metrics that your online store should be measuring.

Customer loyalty metrics – Analytics you should be paying attention to

Customer repeat rate

Customer repeat rate can be measured by dividing the number of repeat customers to your site by the number of total customers. Why is this metric important? Well, even though it’s simple, it gives significant insights into customer loyalty – when customers buy from your brand repeatedly, it reflects on their loyalty to your brand. Hence, to improve loyalty, increase your site’s customer repeat rate.

Customer retention rate

The average retention rate for eCommerce is 30%. This means 30% of customers stick to brands year-after-year. You can calculate your customer retention rate with a simple formula: Determine a specific period. Use this formula:

No. of customers at the end – no. of new customers / no. of customers you had at the start.

eCommerce churn rate

The churn rate is the number of people that do not return to your website. How do you calculate it? Determine a window. Count the number of unique visitors and visitors who came to your site multiple times. Now, divide the number of unique visitors with the total number of visitors. You’ll find the churn rate.

There can be many reasons why shoppers don’t return to your store – slow loading speed of your site, unsatisfactory products, bad customer service experience, design, user experience, etc. And hence, in order to reduce your churn rate, you have to pay attention to all the factors that contribute to a good customer experience.

Customer Lifetime Value

Customer lifetime value (CLV) is the total revenue a customer generates for your business minus the costs of acquiring that customer. It helps evaluate the effectiveness of your loyalty program as you can assess how often customers purchase from you and stay with your brand.

Net Promoter Score (NPS)

To calculate NPS, you’ll have to survey customers; ask them this question: ‘On a scale of 0 to 10, how likely are you to recommend us to friends?’ You can then divide the customers into three categories based on their responses:

  • 9-10 score – promoters
  • 7-8 score – passive
  • 6 and less – detractors

Now you know which customers are more likely to become or stay loyal to your brand. Conversely, which customers may or may not come back to you. And where you need to put efforts to turn passive and detractors into promoters.

Active Engagement Rate (AER)

By measuring AER, you can know the percentage of customers that actively engage with your loyalty program. AER can be measured by the way customers earn and spend points within a specific time period – monthly or yearly. This helps evaluate the effectiveness of your loyalty program.

Monetary bonuses

Studies show that customers that actively participate in loyalty programs tend to make 90% more purchases and spend 60% more on each transaction compared to the others. You have to measure how many of your customers have started making more purchases from you after joining your loyalty program. By measuring this metric, you can decide where you need to put more marketing efforts and what you should be doing to boost customer loyalty.

Return on Investment (ROI)

This metric is common and simple to measure. Just like how you measure your entire business’s return on investment, calculate the amount you earn compared to what you spend on your loyalty program.

Customer Satisfaction

Customer satisfaction can have a direct correlation to customer loyalty and to your loyalty program. When customers are satisfied with brands, they tend to stay loyal to them. It works on the premise that if something is not broken, why fix it? If your customers are getting all that they need from you, why would they go to another brand? By measuring this metric, you can plan the ways in which you can keep these customers satisfied.

Average Order Value (AOV)

AOV can be calculated by dividing the total amount of revenue earned from a customer by the number of orders placed. This metric can give you insights into the customers’ spending habits and help you plan targeted marketing campaigns for upselling, cross-selling, etc.

Store credits earned

The more store credits earned by a customer means the more actively engaged they are with your store credits or loyalty program. By determining which customers are buying more from you and earning more credits, you can find opportunities to engage them through marketing strategies.

Read how The Man Company tracks store credits on their Flits customer account page here.

Store credits spent (IMP loyalty metric)

Customers earning store credits is one metric. The other metric to measure is store credits spent. Are your customers actively spending the credits they earned? Crunch the numbers and get this data. Then, plan marketing strategies so they can make the most of their store credits.

Time to purchases

Have you ever tried to gauge how long it takes a customer to make a purchase from your site? By measuring this metric, you can know the behaviors of different customers and use the data to target them with remarketing, upselling and other marketing strategies. The best way to measure this metric is to have a tool on your site to show you the data.

How to improve your loyalty metrics – The growth hack we found!

Integrate loyalty program into customer account page

The customer account page is the most frequently visited page by your customers. It holds all the important information such as your customer’s personal details, delivery addresses, return & exchange info, shipping, etc.

By making the loyalty program a part of the customer account page, you’re making the customers’ experience easier and more enjoyable. Every time they visit your site, they’ll know they have a chance to earn something or spend something.

They can get a complete overview of their loyalty points from the customer account page. You can use a good app such as Flits that offers a comprehensive customer account page with add-on features. It can help you integrate your loyalty program into your customer account page.

Make it easy for shoppers to sign up

Customers have different preferences for everything, including the channel through which they want to sign up. Not all customers use email frequently. Some might be using other channels more, such as social media platforms.

Social login has many benefits. Use them to boost loyalty:

  • It makes sign-up and login quicker
  • It increases the number of sign-ups
  • It reduces cart abandonment because the purchase process becomes much easier
  • It reduces bounce rate because shoppers don’t have to fill long sign-up forms
  • Logins become easier because customers don’t have to remember new passwords
  • It helps brands with targeted marketing campaigns
  • It makes it easy for customers to participate in loyalty programs

Swap loyalty points with store credits

Loyalty reward points are tied to the brand’s loyalty program. For example, Starbucks gives points when customers buy things from them. These points can be redeemed against items once the points reach a certain threshold.

Store credits are credits or an amount that is restored to the customer’s account when they return an item. This credit amount can be used to make other purchases from the store. Different brands have different store credit rules.

For example, Walmart and Amazon offer cashback in the form of store credits. Customers can use these credit points to make purchases.

To integrate store credits into your customer account page, you can use the Flits app, which offers the store credit feature as an add-on. It’s one of the most preferred Shopify store credit apps.

Integrate reminders in your communication

As a brand, it is your responsibility to communicate with your customers regularly. For example, when you’re launching a new collection, when you have a sale offer, to wish them on festivals, when you make changes to your policies, etc.

Similarly, to make your loyalty program a success, you have to keep sending reminders to your customers about your loyalty program. For example, you can send them a reminder about the store credits they already have, how much more they’d need to reach a certain milestone to avail benefits if store credits are expiring, a reminder to use it up, etc.

To send reminders, you can use the customers’ preferred channels such as web push notifications, SMS, Facebook messenger, email, etc.

Ask for feedback

Today, most customers don’t base their loyalty on pricing. Rather, they tend to be loyal to brands that give them a good experience. For eCommerce brands, asking for customer feedback is one of the few ways to interact with customers and make them feel like they’re an important part of your brand. You can address customers’ issues and better their future experiences on your site by asking for their feedback. In turn, improve their loyalty towards your brand.

Experiment with your loyalty program

Customers are spoilt for choice and they’re always looking for novelty. As a Shopify store, how can you ensure you’re keeping them interested? One way to do so is to continually experiment with your Shopify loyalty program.

Some ways to engage them with new things:

  • Offer them the feature of creating wish lists of items they like
  • Request them to write a review in exchange for loyalty points
  • Ask them to refer a friend to earn more store credits
  • Add some loyalty points when they complete a year with you

Have you set up your Shopify loyalty program?

If you have already set up a loyalty program or store credits program for your Shopify store, well done! Loyalty programs are more important than you thought, as seen in the below graph by McKinsey.

But wait…

Setting up a loyalty program is just the start. Most brands simply set up loyalty programs and forget about it. The brands that earn good returns from loyalty programs are those that keep their customers at the center of it – learn from customers and keep improving, and most importantly, make them easily visible.

This is why we recommend Shopify stores to leverage their customer account pages for loyalty programs. With Flits, we offer them an add-on called ‘store credits’ that can set up a smart loyalty program within the one page that online shoppers tend to use the most – customer account page.

Do you want to see how we do it? Install the Flits app today or request a demo.

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

Vanhishikha Bhargava
Vanhishikha Bhargava
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