In times when the competition for consumer attention is increasing by the day, it’s becoming important for businesses to focus on customer retention as much as acquisition to grow in a sustainable manner.
Think about the last time you wanted to buy a pair of dresses for a vacation and went back to the same brand you bought from months ago.
While there are chances you might visit the same brand, there are also chances that you explore the collection from all the new brands you have discovered on social media lately.
As a consumer, you now have more choices available to you. But as a business, you have become more prone to losing a customer to all those available options!
That’s where loyalty programs come in for better customer retention.
- The importance of customer retention
- Loyalty programs for customer retention
- Best customer loyalty programs in India
The importance of customer retention
Customer retention is an indirect measure of how successful your business is at acquiring new customers and a direct measure of how successful you have been at keeping them satisfied as your existing customers.
Simply put, it is a measure of how many customers will continue to buy from your brand despite the increasing number of options available to them.
Here’s why customer retention is becoming increasingly important for ecommerce businesses:
Increasing competition for consumer attention
- Indian ecommerce sector is expected to reach US$ 111.40 billion by 2025 owing to the rise of digitisation across all industries; this indicates an increase in competition across all industries
- The average internet user sees upto 10,000 ads per day, combining promotions on both search engines and social media; this indicates an increase in competition for consumer attention through paid campaigns
- Customer acquisition costs have increased by approximately 60% in the last six years; the number is only projected to increase owing to the expanse of the digital landscape and increasing competition
Impact of customer retention on business
- It was found that it’s 6 to 7 times more expensive to acquire a new customer than it is to retain an existing customer
- Studies have found that a 5% increase in customer retention can increase company revenue by a whopping 25-95%
- Retained customers buy more often and spend more than newer customers; they've learned the value of a product or service and keep coming back, again and again
- Satisfied, loyal customers are more likely to sing a company's praises and refer their friends and family — bringing in new customers, free of charge
If you go by numbers, it’s easy to see that having a customer retention strategy in place alongside your acquisition campaigns is not just a smart move, but a cost-effective one.
Loyalty programs for customer retention
In the retailer's marketing toolkit, loyalty programs have proven themselves as one of the most effective tactics for customer retention.
In fact, as many as 84% of consumers say they’re more likely to stick with a brand that offers a loyalty program. And 66% of customers say the ability to earn rewards actually changes their spending behavior.
While 90% of companies have some type of loyalty program in place, not all of them go on to be as successful as Sephora!
Most ecommerce brands struggle to get sign ups on their loyalty programs, followed by the challenge of getting customers to proactively engage with it.
So in this article, we’re going to give you some of the best customer loyalty program examples from Indian brands and what you can learn from them.
Did you know that loyalty programs are also one of the ecommerce trends for 2022?
Best customer loyalty program examples in India
- The Man Company: Gamify your loyalty program for engagement
- Heads Up For Tails: Associate your program with key milestones
- Shumee: Keep your loyalty program simple and on-brand
- Bummer: Establish a friendly connect
- The Wishing Chair: Make your program sound like a win
- Bath & Body Works: Create a sense of exclusivity
- Chumbak: Leverage tiered rewards
- Nykaa: Offer varied perks and rewards
- Arata: Use curiosity to get sign ups
- Lenskart: Offer flexible rewards
1. The Man Company: Gamify your loyalty program for better engagement
The Man Company is one of its kinds of beauty and wellness brands for men. Their loyalty program is focused on tapping into gamification to keep their members engaged. The reward programs included vary at different levels of the membership, nudging participants to interact more proactively with the brand.
2. Heads Up For Tails: Associate your program with key (celebratory) milestones
To bring the pet families together and create a community, Heads Up For Tails, a pet supplies brand, has created a club of its own. They have given their loyalty program an emotional milestone by tying it to the birthday of our furr buddies, keeping the rewards simple and straight.
3. Shumee: Keep your loyalty program simple and on-brand
Shumee, an online brand for ethical and handcrafted toys, uses its loyalty program to get more visitor sign ups. They have kept the process of signing up for the program and earning rewards as simple as possible. Members earn rewards on sign up, making purchases and referring friends - all simple to complete tasks.
4. Bummer: Establish a friendly connect through your program
Bummer, a brand making waves for its range of underwear for men and women, has an interesting loyalty program too. Signing up for Bummer Buddy gets the member access to free garments, additional discounts, and more. But what we love the most is how they’ve added an element of sharing to the program to get their members to recommend products to their friends and family.
5. The Wishing Chair: Make your program sound like a win for consumers
The Wishing Chair, a lifestyle brand for home decor and more, launched TWC Perks to keep their customers engaged. Their loyalty program focuses on keeping things simple, giving their customers ample opportunities to earn rewards - signing up for an account, making a purchase, reviewing a product and so on. But what we like is the variety of rewards one can redeem - free shipping, amount off, percentage off and more, appealing to different types of online shoppers.
6. Bath & Body Works: Create a sense of exclusivity in your program
A popular brand for body care and wellness products, Bath & Body Works makes it to our list of best customer loyalty programs as well for its simplicity and well-defined rewards. Their loyalty program is easy to sign up for and promises rewards at different milestones of a buyer’s journey. The highlight of their program is the ‘member-exclusive’ access to events, products and more, making people want to become a part of it.
7. Chumbak: Leverage tiered rewards for customer engagement
Chumbak, a popular home and lifestyle brand has also created a tiered loyalty program to keep their customers engaged. The gamification here focuses on increasing the earning of rewards based on the amount of purchase made, which is tied to the actual bill value that customers can calculate for themselves as well!
8. Nykaa: Offer varied perks and rewards to suit all customer segments
Nykaa, a beauty and cosmetics brand launched Nykaa Prive to boost customer loyalty by keeping them engaged with various rewards. From birthday gifts to special discounts and perks like free shipping, the loyalty program offers various types of rewards to keep different customer segments motivated to engage with the program.
9. Arata.in: Use curiosity to get loyalty program sign ups
Arata, a beauty and cosmetics brand has a really simple and effective customer loyalty program too. Their loyalty program is focused on offering ‘exclusivity’ to members instead of upfront points, store credits or cashbacks, and requires signing up to be able to see them, breaking the explore-to-sign up barrier faster.
10. Lenskart: Offer flexible rewards for your loyalty program
Lenskart, a popular online optics store has a customer loyalty program that refers to rewards as ‘benefits’. Since optical products aren’t regular purchases, their loyalty program is pretty flexible in terms of how the rewards are earned or spent. They also include rewards to shop more and refer friends to their brand, to keep the program going.
There are a number of other brands that are running loyalty programs.
While some are running them under unique names and branding, there are others that have tied rewards to basic actions like completing a purchase and creating an account, sharing a purchase and so on.
Note: We will keep updating this list of customer loyalty program examples in India. So don’t forget to bookmark this piece!
Every successful loyalty program is tailored to address the target audience of the brand and how they choose to engage. This means what works for one may not work as well for another, and that’s why we’ve gathered some tips and tricks to create a loyalty program that actually works.
Best practices for customer loyalty programs
A good loyalty program isn’t one that offers the best of rewards. It is one that continually adapts to consumer needs and aligns them to your business goals.
Here are some tips and tricks we recommend following:
1. Define your goals
Before you even set up a loyalty program, make sure you have clearly defined the objective behind it. Are you looking at increasing customer retention? Do you want to improve customer engagement? Or are you looking at learning more about your customers through the loyalty program?
Make sure your goals are clearly laid out, as this impacts what you offer in the loyalty program and how you get people to engage with it.
2. Focus on the customer
Once you have your goals aligned, go back to looking into who your target audience is and who your ideal customers are. This will help you segment customers based on demographics, purchase behavior and what is more likely to motivate them to become a member.
3. Utilize customer data
If you’ve been selling online through a storefront or even social media, go back to your data. Take a look at the type of customers you have been getting, the purchases they make and when, the offers that got redeemed the most and the perks that seem to be a hit. Try to identify patterns across various segments of your customer data!
4. Make the program easily accessible
Most of the time a loyalty program sees low participation rate simply because it’s not visible enough. To get your visitors to learn more about your loyalty program, you need to keep it up, front and center at all times. This also has an impact on how frequently an existing member engages with the program.
A few good practices here include:
- Adding your rewards program to the main navigation menu
- Add a link to the rewards program in the footer of the website
- Include it in all your communication to subscribers and customers
- Integrate it with commonly used pages such as a customer account page
- Target returning visitors with popups to encourage sign up
5. Keep your rewards simple
Online shoppers hate lengthy processes and the more complex a thing looks, the more likely they become to drop off. This is applicable on your loyalty program as well, right from the point of sign up.
Here are some tips to keep in mind:
- Create a well-documented rewards policy
- Make your rewards easy to earn
- Make them even easier to spend
- Offer a way to keep track of rewards
- Ensure existing rewards are visible
6. Offer choices
Not every online shopper is looking for a discount. There are others that’d rather prefer perks like exclusive access to limited edition products or free/ discounted shipping.
Make sure that you use your target audience and customer data to identify purchase motivators, and shortlist the type of rewards you can offer. The more choices you give, the more likely people are to engage with the program.
7. Communicate proactively
Think about how you step into Marks and Spencer, and at the point of billing, you get reminded of their membership. A loyalty program only works when it stays on top of a member’s mind and it’s your job to keep it fresh in their memory.
Make sure you have set up automations that remind them of the rewards available, how they can earn more points and the value of using them in their future purchases. Leverage emails, web push notifications, SMS, WhatsApp and even Facebook Messenger, based on who your target audience is to communicate proactively.
8. Address concerns
Similar to making online purchases, participating in loyalty programs comes with its own set of questions. Sometimes it’s as simple as how a consumer can earn rewards and sometimes, it can get as complex as when a consumer can redeem those rewards.
Even if you have a well-defined rewards system, make sure you don’t hold back from addressing concerns. This may include creating a separate FAQ section around your loyalty program or answering queries through traditional support channels.
9. Integrate your referral program
Your loyalty program isn’t going to grow on its own. Apart from keeping members engaged, you also need to focus on being able to grow your member base, and that’s where referrals come in.
Tie your rewards to referrals, nudging your members to invite friends and family to join your loyalty program. This will help you reach a more qualified audience as well!
10. Focus on emotional relationships
Remember, there are thousands of other online businesses with a loyalty program in place. If you really want consumers to remember yours and engage with it actively, you need to strike an emotional chord with them.
This is where building a community comes into play. Give your rewards program a twist by making it more than a campaign, and a group or a club people become a part of!
Take for instance The Man Company. Their loyalty program is called The Man Club to create a sense of community for its members.
11. Ensure a great customer experience
No matter who you’re targeting and what your loyalty program offers, make sure you always offer a great customer experience.
The look and feel, and usability of your loyalty program page is as important as that of your website. So make sure it’s almost intuitive for a member to navigate through the program and engage with it.
Additionally, if you also run offline operations, you should ensure that your loyalty program is applicable to both online and offline shoppers. You need a loyalty program tool that integrates customer interactions on both fronts to offer a seamless shopping experience with your brand.
12. Measure and optimize
Similar to other marketing and advertising efforts you make, you need to continually measure the performance of your loyalty programs. Unless you’re keeping a close watch on how customers engage with the program, it will become a redundant piece on your website.
A few metrics we recommend keeping watch on include:
- Customer retention rate
- Redemption rate
- Participation rate
- Repeat purchase rate
- Loyal customer rate
- Active engagement rate
TLDR; let your customer data guide the way when setting up a loyalty program and you’re sure to win the game of customer retention!
Set up your loyalty program today!
Over the last decade, loyalty and customer rewards programs have proven they’re an effective way to drive customer retention, boost customer lifetime value, and inspire loyalty.
While the low-key punch card has its place for some businesses, a truly innovative approach to customer loyalty programs can create huge value for retailers. That’s why you need to do a thorough research on what truly motivates your customers to stay loyal to a brand in times when the choices available to them are endless!
Once you have the basics ready, you need to look for a loyalty program that will help you further understand the nuances of setting up a loyalty program and help you follow all the best practices as well.
Some of the apps we recommend using if your store is on Shopify, include:
People also asked
What is customer loyalty in ecommerce?
Customer loyalty describes an ongoing relationship between your ecommerce business and a customer. This is when a consumer chooses to interact with and buy from your brand time and again when seeking specific products or services, despite the other options available to them. Loyalty is often a byproduct of a customer’s positive experience with a brand.
Who has the best customer loyalty program?
Some of the popular customer loyalty programs include that of Starbucks and Sephora. Both the loyalty programs offer a seamless experience of earning and spending rewards no matter where or how the consumer chooses to engage with the brands.
Are loyalty programs successful?
Today, more than 90% of businesses have a loyalty program in place. This has increased the competition in terms of the rewards and perks you can offer to keep a customer engaged with the brand, lowering the effectiveness of the program unless you have a strategy in place. Similar to marketing campaigns, your loyalty program is only successful when you’re making consistent efforts to promote it and keep customers coming back to it.
How do you know if a loyalty program is effective?
The number one indicator of how successful your loyalty program is the participation rate of members. You need to look past the number of people that sign up for your program to see how many of them really engage with it thereafter - this includes both earning and spending rewards. Another indicator of success is your customer retention rate after implementing a loyalty program.