Steps to Build an Ecommerce Loyalty Programs

The fast pace of growth in the Indian eCommerce industry, coupled with the fiercely competitive market, makes customer loyalty the basis for long-term sustainability. According to Forbes, the e-commerce market in India is projected to increase at an annual pace of 11.45% to reach INR 7,591.94 billion by 2029 from INR 4,416.68 billion in 2024. 

As customers are increasingly moving towards online shopping, businesses must be innovative in customer retention and winning repeat purchases.

One of the most effective ways to do this is by implementing an eCommerce loyalty program. Such loyalty programs do not aim at rewards alone but underline an emotional brand attachment with their audience. Here, in this guide, we will talk about how you can build an effective eCommerce Loyalty Program, tailored for the Indian market, to help your business succeed in this dynamic landscape.

What are Ecommerce Loyalty Programs?

An eCommerce loyalty program is one of the strategic marketing activities aimed at rewarding customers for their continuous interaction with your online store. These can take the form of discounts, points, exclusive offers, or even special access to sales. Since price sensitivity and value for money are very potent drivers of consumer behavior in India, a well-structured eCommerce rewards program would have a big effect on customer retention. By offering tangible benefits, a business can generate repeat customers, hence ultimately leading to higher revenue and brand loyalty.

Moreover, eCommerce loyalty programs leverage cultural relationships and trust in India. By implementing a program that identifies customer loyalty and appreciates it, the business fosters the feeling of belonging. All of these actions not only make customers more satisfied but also strengthen the emotional bonding between a brand and its customers, making them more likely to choose your store over your competitors.

Also read: ECommerce Loyalty Program: 4 Successful Examples 2024

Benefits of an Ecommerce Loyalty Program

:- Higher Customer Retention: eCommerce loyalty programs are an incentive for repeat purchases, so customers will remain engaged with your brand.

:- Personalized Customer Experience: eCommerce loyalty programs provide a better shopping experience, hence making customers feel more valued.

:- Higher Average Order Value: Due to the fact that customers would want to earn rewards, loyalty program participants can spend more on each transaction.

:- Word-of-Mouth Marketing: Satisfied customers generally talk about their good experiences and bring new customers through referrals.

:- Valuable Customer Insights: eCommerce loyalty programs allow for insight into customer preferences and purchasing behavior, thus allowing the implementation of more targeted marketing efforts.

Types of Ecommerce Loyalty Programs

1. Point-Based Programs: Point-based loyalty programs are extremely well-known in India due to their simplicity and transparency. Customers get points for every purchase, which they can add up and redeem for discounts, free products, or other rewards. The nature of this kind of program drives frequent purchases since the customer will try by all means to collect the points needed to unlock the rewards. Business flexibilities to design eCommerce loyalty programs on different segments in the points-based model give broad appeal.

2. Tiered Programs: Tiered loyalty programs rank customers in terms of their spending or other parameters. Each tier includes progressively better rewards, such as higher earning rates of points, exclusive discounts, or early access to sales. Because Indian consumers appreciate being recognized and accorded some form of status, tiered programs could be highly motivating. They provide incentives for long-term engagement and a clear, defined way for customers to be able to earn more valuable rewards, thus feeling special and valued.

3. Paid Programs: In paid-loyalty programs, also called VIP programs, customers are charged a subscription fee for the benefit of special benefits. These can include free shipping, priority customer service, or premium content. In India, where membership is on its way to gaining popularity, paid programs create a sense of exclusivity and are perceived to offer higher value against the membership fee. Businesses can charge subscription fees to generate further income and give the best rewards in return to those customers who prove themselves to be very loyal.

4. Referral Programs: These reward customers for getting new customers. For any successful referral, the person who referred gets some kind of reward, such as discounts or bonus points. In a country like India, where word-of-mouth and community influence on purchasing decisions come into play, referral programs can be very useful. Here also, it leverages the power of personal recommendations that come out from a satisfied customer and turns them into brand ambassadors.

5. Cashback Programs: These programs return some percentage of the purchased amount in cash to the customer for future purchases. Offers like these are in special demand in a country like India, where people simply love cashback offers. Cashback gives an immediate and tangible incentive to customers for spending more and earning back the maximum reward. Businesses can set conditions, such as minimum spending thresholds, to drive higher sales.

How to Start an Ecommerce Loyalty Program

Before diving into the steps to build a loyalty program, some groundwork needs to be laid.

:- Understand Your Audience: Customers’ likings, behaviors, and motivations need to be researched in detail. This information is critical for the design of an eCommerce loyalty program that would be meaningful to the target audience. 

:- Setting clear goals: Define specific, measurable, achievable objectives for your loyalty program. Whether this involves customer retention, increasing average order value, or brand loyalty, the clarity of the goals will guide the way through design and implementation of the eCommerce loyalty program. 

:- Choose the Right Platform: Go for an eCommerce reward software that best fits your business needs and which is well integrated into your online store. Among many other features, such a platform should have custom reward structures, be easy to use at the front and back ends, and have strong analytics.

Step-By-Step Guide to Building an Ecommerce Loyalty Program

Designing a loyalty program for your eCommerce requires the following steps. Each step plays an important part in assurance of the program’s success and actualization of your business objectives. The following are the detailed steps: 

1. Analyzing Success Rate

Start by taking measurements from key performance indicators that could inform you how your eCommerce loyalty program has succeeded. These could be the customer retention rate, average order value, or a percentage of repeat purchases. These should often be repeated and measured against the program’s efficacy following any necessary adjustments. 

2. Loyalty Killers and Risk Management

Identify potential risks that could derail your eCommerce loyalty program, such as overly complicated reward structures or lack of customer engagement. Simplify the process, ensuring that customers can easily understand how to earn and redeem rewards. Address any issues promptly to prevent customer dissatisfaction. 

3. Marketing and Branding of Loyalty Programs

Successfully market your eCommerce loyalty program by infusing it with your general branding strategy. Highlight benefits from membership in the program all over your website and social media platforms, even through email campaigns. Use elements of branding across the board for a more coherent, collective experience that helps drive brand identity. 

4. Utilize the Social Media Space

Utilize social media to engage with the market audience and gradually inculcate briefs of the reward program. Develop engaging content that both educates the customers on the perks they can enjoy, making them feel VIP, or the value they stand to gain by joining such a program. It further will be used to undertake market surveys and digital adaptations—mainly driven by consumer recommendations. 

5. Commission Followers and Audience

Those in your customer list or following you are potential candidates for your eCommerce loyalty program, so have a button put on their app that offers to enroll the customers into the loyalty program by giving an incentive for the action such as bonus points or a discount on their following in-store shopping trip. Invite followers and the audience via targeted email campaigns and be personal when sending an invitation by allowing the customers to design the message. 

6. In-App or On-site Advertising

Showcase the program on your homepage and app homepage using banners, pop-ups, and landing pages. Never let any visitor leave your website or app without discovering the existence of this program and why and how they should join to continuously earn rewards. You can also set up retargeting ads for these visitors, as they have already shown interest in the offer.

7. Frequent and Timely Communication

Keep your clients updated on their status with you through regular communication about their loyalty and upcoming rewards or exclusive offers. Remind them of their current reward balances with personalized messages while encouraging them at the same time to make purchases. All the time, you have to communicate in a consistent manner and with information that is relevant in further edifying the value realized from the eCommerce loyalty program and, at the same time, maintaining customer interest.

8. Design Programs that are Simple and Understandable

Avoid burdening customers with complex loyalty program rules; the process of redeeming or earning rewards should be easy and clear. Lean toward simplicity with fewer complications, and your customers will be encouraged to come back. Be prepared to engage customers, though, and answer their questions or reassure them.

9. Collaborate Reward Plans with Customers’ Buying Activities

Align reward plans with the sequence of your customers’ purchase behavior or buying cycle. Reward those customers whose points correspond to their buying window, either by giving discounts on product categories frequently bought by customers or bonus points for trial products. This will make your loyalty program relevant and personalized for the customer. 

10. Make Reward Plans Time-bound

Add time-bound rewards and offers to create a sense of urgency, driving immediate action. The fact that it’s now or never encourages the customers to carry out these calls to action in order to get the rewards. Since most time-bound rewards need to be achieved within a definite time, they will have the customers take action immediately rather than postponing it and risk forgetting what they intended to purchase. 

11. Create Reward Tiers

Design tiered rewards for incentivizing higher spending and long-term engagement. For example, reach a certain spend, and they unlock a special set of perks—be it free shipping, early access to sales, or higher earning rates. Such reward tiering shall gamify the process of encouraging customers to reach a tier of higher value. Identify and reward those customers who have reached higher tiers with perhaps personalized messages or special offers.

12. Encourage Shared Experiences and Reviews

Give your customers a sense of belonging to your organization by encouraging shared experiences and eliciting reviews. Offer incentives for customers to write reviews, social shares, and friend referrals to your eCommerce loyalty program. Word of mouth is one of the strongest ways to propagate the program and encourage active participation.

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Ending Note

Designing an eCommerce loyalty program in India requires a plan, strategies, and optimizations. By understanding your audience and setting goals for yourself, you will be able to take action on the steps that this guide will present to help you establish a program for customer loyalty that will not just retain customers but propel your business forward in the long run. An intelligent, well-designed loyalty program can make all the difference in the competitive Indian eCommerce marketplace to stand you apart from your competitors or to get you to an even bigger and more effective and sustainable success.

Avail your businesses a perfect opportunity to establish a fully-fledged eCommerce loyalty program with innovative e-commerce reward solutions at LoyaltyXpert. Starting from scratch or taking up from where our level of expertise will leave you, the design of your loyalty system will bring you results. Schedule a free trial and demo with us today!

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