← Back to Blog

7 Powerful Customer Loyalty Programs for E-Commerce

  • Growth Marketing

Turning customers into brand loyalists isn’t always easy.

You need a scalable strategy for incentivizing customers to buy from you over and over again…

And that’s where customer loyalty programs come in.

With the right initiative, you can turn one-time buyers into repeat customers, and keep your brand top of mind.

In this post, I’ll show you how top e-commerce companies are using different types of loyalty programs to drive more sales, improve customer retention, and build stronger relationships with customers.

Let’s dive in.

Free Downloadable Bonus

Want More Growth Marketing Strategies?

Get access to our free growth marketing toolkit and skyrocket your website traffic today (includes resources not found in the blog post).

1. The Points Program (The North Face)

The points system is based on a simple principle: the more you spend, the more points you get in return.

Every time a customer makes a purchase on your website (or in your brick and mortar store, if you have one), they get a certain amount of points depending on how much they spent.

The North Face use this type of system for their cleverly named “VIPeak” rewards program:

They make it easy for customers to understand how the rewards program works:

Customers earn 10 points for every $1 they spend online and in retail stores, and five points for every $1 they spend in their outlets. Then, customers can put these point towards future purchases.

To increase customer engagement even further, The North Face has also developed an app where users can manage their account, buy new products, check their point status, and redeem rewards.

By rewarding customers with points that they can redeem for rewards, you not only increase your customer’s average order value; you also encouraging them to invest in your brand which reduces the likelihood they’ll switch to a competitor.

Remember: keep your points system simple so it’s easy for customers to determine the value of their points.

Takeaway: If you want to set up a points system for your online store, make sure you implement it both online and offline if you have physical stores. You can use software such as Smile.io to set up your points system (and other rewards).

Your points system should be easy for customers to understand and calculate. For instance, $1 could be one point. That way, customers can see the value straight away and don’t need to calculate the number of points each purchase gives them.

2. The Paid Program (Barnes & Noble)

Paid programs involve inviting customers to pay a monthly or annual fee to join your VIP member’s club.

For this type of loyalty program to be effective, you need a solid customer base.

It’s unlikely new customers will pay to join a rewards program, so use this type of program to retain existing customers and frequent buyers.

Your paid program must include benefits that are exclusive to members or it will lose its value.

Here’s an example from Barnes & Noble:

Their VIP program costs $25 a year, and it offers discounts, free shipping, and other benefits.

But how do you get people to pay $25 to join a loyalty program?

By showing the value of your program compared to the cost as Barnes & Noble do:

When the value of your loyalty program outweighs the cost, people will join.

And to give them that final nudge, you can use customer testimonials from existing members for social proof:

Takeaway: When offering a paid program, show customers the value of the program is worth more than the cost. It also helps to use social proof from existing members to emphasize that value.

3. The Charity Program (The Body Shop)

A loyalty program doesn’t have to include discounts.

Instead, you can incorporate your business values into your program to build a stronger relationship with your customers. In fact, if you structure a loyalty program around mutual values, customers are more likely to become brand loyalists.

The Body Shop has nailed this approach by making animal welfare part of their program.

Besides earning rewards and getting VIP benefits, members have another unique benefit:

They can choose to donate their rewards to Born Free USA (a charity for animal welfare).

This is not a random decision.

Similarly, a core value of The Body Shop is environmental responsibility:

The Body Shop’s customers share these values, which makes the donation option even more valuable to customers.

This type of program creates a unique opportunity to connect with your customers on a deeper level which strengthens the relationship with them.

Takeaway: When you offer exclusive membership benefits, make sure these benefits align with your brand values. When you create shared values and use your VIP benefits to communicate and strengthen these values, your customers will stay loyal to your business.

4. The Tier Program (e.l.f.)

The tier system is based on levels of loyalty.

Put another way, the more loyal your customers are to your brand (read: the more they buy from you), the greater the rewards they’ll receive.

Offering tiers in a loyalty program is a great way to engage customers and keep your brand top of mind. Furthermore, It focuses on aspects of gamification where members reach higher levels the more they “play.”

Just take this example from e.l.f.:

Their Beauty Squad loyalty club has three levels:

  1. Glow Getter;
  2. Rising Star; and
  3. A-Lister.

The more points a member has, the more exclusive the rewards they can get. The exclusivity of the highest level is a great incentive to get customers to buy more.

If you want to motivate members to reach higher levels, include percentages for each tier, indicating how many members have reached each level.

This drives members to reach a higher level to gain social status among members that belong to that tier.

Takeaway: Create a program that allows members to ascend based on customer loyalty. You can base your tiered program on points, how often people buy, or other important engagement metrics. Make sure the exclusivity and value of the benefits increase for each level to encourage members to ascend.

5. The Partner Program (Nike)

With the increased popularity of loyalty programs, customers are looking for greater flexibility in rewards.

By partnering up with other businesses, you can create a loyalty program that not only gives more opportunities to customers but also facilitate the building of new business relationships.

One study found that 68% of millennials remain loyal to a program that offers them the most rewards.

Partnering with other businesses gives you that possibility.

If we take a look at Nike’s loyalty program, you’ll see that they offer exclusive membership benefits that include partnerships with Apple, Classpass, and Headspace.

These apps were not chosen by coincidence; they’re all relevant to Nike’s mission statement, which is to inspire athlete’s around the world.

Nike also has several different training apps to help members reach their training goals.

Nike knows that the more success their customers have with their training, the more loyal their customers will be.

Why?

Because people always link their success to the someone or something that made the difference.

For example, if you want to learn to speak a new language and you use software like Duolingo to do so, you’ll attribute your success (or failure) to Duolingo.

The same goes for Nike. They help their customers get better training results, and their customers attribute these results to Nike and their partners.

Takeaway: Partner with other businesses that offer flexibility in benefits to help your members reach their goals or overcome their challenges. It’s important that you position your product as a key “ingredient” in reaching these goals. When your product helps your members with their goals or challenges, they’ll buy more from you.

6. The Community Program (Sephora)

When talking about customer loyalty programs, we can’t leave out Sephora.

Sephora has a comprehensive loyalty program (Beauty Insider) that offers many different benefits:

Besides using both a point system and a tiered program, Sephora’s loyalty program also gives members exclusive access to a community of like-minded people.

In this community, members can connect with each other, find inspiration, sign up for exclusive events, and more.

Sephora has used their loyalty club to build a brand community where users can interact with each other and Sephora.

By creating a platform like this, Sephora has access to a lot of consumer insights that they can use for product development and other aspects of optimization.

Takeaway: Create a platform where your members can interact with others to share ideas, get inspiration and feedback, and more. This type of program will work for any brand as long as you encourage conversations that are relevant to your brand and products.

7. The Subscription Program (Bean Box)

There’s a new type of loyalty program in town…

…it’s the subscription program.

This is not your traditional loyalty program where you offer rewards and benefits.

Rather, you offer your products on subscription.

Take Bean Box, for example:

To increase customer loyalty, Bean Box offer different types of coffee beans as subscriptions and customers don’t have to worry about running out of coffee. (I’ve seen what happens when the coffee machine at the Sleeknote office breaks down. It’s NOT a pretty sight.)

By selling coffee as a subscription, Bean Box increases the lifetime value of their customers. And as of writing, they use a “Save 20%” incentive to get customers to choose the 6-month plan over the one-month plan.

After all, inviting customers to commit for 6-months has more value to Bean Box than if customers only shop once.

Takeaway: If your product is suitable, you should try offering it on subscription. Consumers are looking for convenience above all. And the quicker and easier they can get their hands on what they need, the better. You can incentivize prospects to choose a subscription over a one-time purchase by offering a discount on your subscriptions.

Free Downloadable Bonus

Want More Growth Marketing Strategies?

Get access to our free growth marketing toolkit and skyrocket your website traffic today (includes resources not found in the blog post).

Conclusion

Offering customer loyalty programs is a great way to get more loyal customers and keep your brand top of mind.

The key to making it work is understanding your customers and improving how you provide value to them.

If your value proposition aligns with your business, you’ll generate more sales and increase brand loyalty.

What type of loyalty program are you using? Have you seen other amazing examples of loyalty programs? Leave a comment below.

Like what you read? Leave a comment