A good e-commerce loyalty model adds value and supports the synergy of brick-and-mortar and online retail. However, since everyone has one, even the neighbour, it is worthwhile to focus on refining quality. How are the needs and resources for the right loyalty model mapped, and how do you know what suits you?

Every retailer's dream situation is that customers concentrate their purchases and customer loyalty is long-lasting and robust. There are many routes to reach this point, one of which is loyalty membership.

In previous years, cards were issued to customers until wallets were full. Now, the trinity of e-commerce, brick-and-mortar, and digital services is at the centre. This is not just a formality but a significant investment where it is crucial to know what, why, and how.

This is why we present three different levels of loyalty models that adapt according to the size, aims, and operational conditions of a business. We also suggest other ways to achieve the retailer's dream. But first, let's talk about money.

Loyalty programme: What remains at the bottom line?

A loyalty model initially requires thorough consideration. What are the objectives, what kind of technological solution is needed, what are the available resources, and most importantly, how does the investment make financial sense?

Profitability calculations for loyalty vary by industry - a restaurant has different variables than a car dealership. 

Regardless of industry, ensure at least three things are considered in your calculations: 

1. The number of customers committing to the programme

2. The time spent on operations

3. The budget available

It's also good to gauge how much the average purchase of a loyalty member is. Is a high average purchase the only goal, or are there other metrics?

Now, turn your attention from the wallet to options, as we next reveal the three models of a loyalty programme. All are designed to engage customers within the limits and conditions of your business.

Scale the loyalty model according to needs and resources

Loyalty programmes do not require a large apparatus behind them to provide benefits for both the customer and the company. 

At their lightest, an old-fashioned stamp card is enough to engage a customer. More advanced programmes offer added value across a wide spectrum, from themed nights to personalised service and, for instance, insurance or a sense of community. 

When considering a loyalty programme, think about your customer base and product portfolio. Is there a need to try and engage customers by rewarding them for concentrating their purchases? Or would it suffice for customers to register online and give marketing permission?

In addition to technical matters, consider the development of the rest of the industry, competitors, customers' growing demands, and your available resources.

In marketing, provide customers with enough information to aid comparison and decision-making, and ensure terms and conditions are fair and clear for consumers.

1. Loyalty model without a loyalty programme

Suitable for: A startup or a business with low revenue.

Gain a connection with the customer and an opportunity to offer them added value when they register online and grant marketing permission. Even with this solution, you can gather a lot of information about your customers' buying behaviour and target marketing, such as discount codes, according to their interests. 

Registration offers the customer a quicker purchasing process and order history. Store purchases can be linked to the customer profile using a phone number or email address. You can motivate customers to provide their information by offering an electronic receipt.

💡 Note: Commitment occurs more through customer experience and everyday marketing.

2. Loyalty programme with a ready package

Suitable for: A growing company with an already established customer base.

If the previous model is not enough and you want a loyalty programme, a solution might be found in loyalty add-ons offered by the e-commerce platform.

Typically, add-ons provide points collection, loyalty levels, and the definition of benefits available for points. Some add-ons allow rewarding customers for activities such as sharing and liking social media content, which can boost the visibility of your shop. 

💡 Note: Customers always expect a seamless customer experience, regardless of the place of purchase. Ensure at least that purchases made online and in-store are seamlessly registered in the loyalty programme and that web services are user-friendly and accessible.

3. Loyalty programme with deep engagement

Suitable for: Premium brands, higher-priced products, or brands aiming to be associated with phenomena such as lifestyle or culture.

If you want the most engaging loyalty programme possible and have the necessary resources (sufficient staff and budget), you can leverage a broad toolkit. This can include, in addition to accumulating bonus points, a mobile app tailored for your shop, loyalty events, and benefits from partner services. 

This model is like a marriage: prepare for a long and fulfilling relationship where monotony and grey everyday life do not fit. Remember anniversaries and occasionally make everyday life a celebration.

💡 Note: Know your customer and captivate them! At its best, a loyalty model can create a phenomenon that broadly and diversely benefits your business. You can, for example, offer additional products and services with a one-time purchase, increasing your cash flow from various sources.

Loyalty is only part of a good customer experience

Ideally, a loyalty model provides more value to the customer than the just purchased product. It creates status, meaningfulness, and the important feeling of belonging to something. 

There is an intrinsic need to feel part of a larger phenomenon, where people are united by the same interest. This need is already being utilised, especially by premium brands, where products are expensive, and the individual purchase is high. On the other hand, brands related to home and living also strive to evoke the same feeling. 

A returning customer is the best customer. A loyalty model is an excellent way to engage, but it is by no means the only one. We have previously highlighted, for example, the importance of understanding customer experience and introduced the three levels of customer experience, which make it easy to understand the current state of your online shop and offer concrete advice on how to elevate the level. 

Do you want to grow your online business? Crasman is a digital business expert, for whom nothing in e-commerce is unfamiliar. We help you develop your online business and are happy to discuss more with you.