Loyalty programs are all the buzz in 2024 - with the loyalty management market being worth $6.47 billion, Shopify merchants everywhere are looking for creative, effective, and cost-efficient Shopify loyalty programs to retain customers and keep them coming back for more.
Customer loyalty programs have become an essential, and they’ve evolved to be more than just redeemable points and discounts.
Shopify business owners can find themselves overwhelmed with how to create a loyalty program on Shopify, and how to use a customer rewards program to boost sales. That’s why in this article, we’ll go through X tactics on driving more sales through shopify loyalty programs.
A loyalty program is a marketing strategy designed to encourage customers to continue shopping by offering them rewards or incentives for their repeat business.
Loyalty Programs are typically structured to reward customers based on their spending or engagement with the brand, often through a points-based system, discounts, or exclusive offers.
The goal of a loyalty program is to build a long-term relationship with customers, increase customer retention, and ultimately drive more revenue for the business.
So basically, loyalty programs solve one of the biggest challenges (and frankly, it could be a nightmare) Shopify store owners face: losing customers - and spending too much money on bringing them back with advertising. In this article, we’ll go through exactly how to prevent losing customers and how to use a Shopify loyalty program to keep them coming back for good and to drive more sales.
Shopify loyalty programs have been growing the past few years, so it’s a good idea to take a look at what some of the leading world brands are doing, along with some Shopify-grown examples, and how they implement their loyalty program to drive more sales in order to stay ahead of the competition and stay inspired.
Arguably the most popular coffee brand in the world, Starbucks is not only an iconic coffee trademark - they’re also one of the most successful brands to have implemented a loyalty program, ever. With over 31 million active members, Starbucks illustrates the success of customer loyalty with a 15% year-on-year increase in active membership in the United States in 2023.
One of the more surprising statistics about the Starbucks rewards program is that it actually contributes between 40-50% of the Starbucks total revenue, making it one of the most valuable loyalty programs in the world.
But how did they do it?
The Starbucks Rewards Program does not provide any groundbreaking new features - but its the concepts behind them that make them undefeatable. Like most loyalty and rewards programs, Starbucks:
So what’s so special about these features that make them work as well as they do? The answer is in three main concepts:
Through understanding their customers and with the use of valuable customer data, Starbucks managed to provide a seamless, personal experience that makes customers feel like they’re friends with the brand, instead of just going through a bunch of meaningless transactions.
Needless to say, their strategies work. Starbucks has a higher customer retention rate of 44% than the industry average of 25% - and their loyalty members spend 3X more than non-members and visit more often.
The most valuable sports brand in the world, Nike is valued at over $15 Billion USD, but in additional to being an iconic trademark, the “Just Do It” brand also has one of the most successful fashion brands in the world. In 2017, the program had over 100 million members who spend 3x more than guest customers on the website.
The Nike Loyalty Program encompasses four different “sub-brands”, so also four different mobile apps. Nike Run Club (Running App), SNKRS (Sneakers), Nike App (Sportswear), and Nike Training Club (Fitness). What makes this cool is that the loyalty program is applicable across all four apps and in-store, making it one of the world’s most successful loyalty programs.
What Makes The Nike Loyalty Program Special:
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Probably the most popular beauty brand and beauty loyalty program out there is Sephora’s Beauty Insider.What makes the Sephora loyalty program so innovative is that it doesn’t just tap into freebies and discounts - but also community-building, personalization, and adapting to changing times. Since 2023, they’ve incorporated gamification into their loyalty program, enabling “challenges” or fun quests members can engage with to earn even more points, including both online and offline purchases and challenges beyond purchases (e.g: engaging social media and referrals).
The Sephora Beauty Program is also a great example of VIP tiers and leveling. As shown above, the program is divided into three loyalty tiers, INSIDER (which is the basic or free tier), VIB (which stands for Very Important Beauty), and lastly ROUGE, which is for Sephora’s highest-spending and most loyal customers.
Mary MacLeod is a Canada-based shortbread store that uses their loyalty program with a goal that every store owner knows too well: to create buzz.
This cookie business utilizes gamification mechanics as a crucial part of their loyalty program, with challenges that encourage customers to:
And it worked - Mary MacLeod has had Gameball, a leading Shopify loyalty app, installed since April 2022 - and saw an 85% increase in Average Revenue Per User (ARPU) in the first six months alone.
Another powerful challenges-based loyalty program - Wargames Delivered is another Shopify store that utilizes loyalty to get customers to fulfill meaningful actions.
Loyalty programs are especially effective in niche markets. When you don’t have large market potential, you want to maximize the potential of your existing one - which is exactly what Wargames Delivered achieved with their loyalty program.
Using Gameball, they were able to customize their reward widget in order to match their brand (the artwork does look pretty cool if you ask us) and to celebrate their customers’ repeat purchases, social media engagement, and more.
Customers can gain points (called loots by Wargames Delivery) by signing up for the loyalty program, sharing on social media, breaking personal records with order amounts, completing their first order, and their second, and their third…you get the idea.
(If you like what WarGames Delivery created here, you can do the same for your store - sign up for Gameball today and get your loyalty program up and running!)
We've looked at successful loyalty program examples and how leading companies use them to boost their revenue.
The remaining question is, how can you apply these tactics to your business to increase sales through repeat purchases?
To make this easier to follow, let’s imagine we’re running a family-run bakery and we’re having trouble getting customers to make a second order.
Seems like everyone loves buying our cupcakes - we get great reviews. But they’re not coming back to buy them again. So how can we incentivize them to do so?
The goal here is to increase repeat purchases by at least 2x this month - so not solely doubling sales, but doubling sales per customer.
To make this happen, we’re going to use the lessons learnt from the examples above. Including Nike’s omnichannel experience and Starbuck’s personalization techniques… and apply them to our bakery.
The Shopify App Store has a lot of options for tools that provide loyalty and retention features. Start by figuring out exactly what you want from your loyalty program:
You’ll find that each loyalty program has its edge over the other, so answering these questions is a great first step.For our example, we’ll opt for Gameball as our loyalty app as it’s built for Shopify and it gives us the following options we need:
In this step, we’re taking all the customer data we have from previous online orders on our Shopify store and customers who previously left their contact info in-store (e.g: feedback forms and surveys) to Gameball.
Whatever loyalty app you end up using, you always want to avoid starting from scratch. Instead, import all your customer data from whatever CRM you currently use. That way, your existing customers can instantly benefit from your loyalty program, without any technical headaches for you.
In a survey conducted in 2022 among global consumers who made online purchases in the last six months, 62 percent expressed that they would abandon brand loyalty if they encountered a non-personalized experience. This means, if you’re risking personalization (that can only actually happen with customer data) - you’re risking 62% of your customer base leaving.Another value you get is the ability to immediately leverage personalization.
For example, when sending out targeted campaigns and challenges instead of random, generic messages, your customers can get messages that feel personal to them, like this:
Pro-tip: If you enable users to create accounts within your loyalty program, they’ll be able to track their progress and rewards - as seen below.
As we mentioned, the goal is to motivate customers to make a second order. As we learned from Starbucks’ example, one of their best-performing loyalty tactics is rewarding customers after their purchases.We want to do the same. So when someone buys one of our pastries, we want to encourage them to either buy it again or try something else in a specific time window. In the Gameball dashboard, this falls under “Retain” and is very simply set as “Second Order.”
So in our case, this is our challenge setup:
From the user’s perspective, they will automatically get a message we set that shows them the reward they’ve unlocked (in our case, a free cookie!) In their account, everything is synced instantly.
Launch this challenge for free, no card required
With our “Second Order” challenge set, it’s time to level up and create more rewards. Here’s where it gets a bit more exciting, especially for your customers. 😉
It’s important to choose the right reward to make sure it excites the customers enough to get them to convert without sacrificing too much revenue. They need to feel like it’s a win for them.
With that said, let’s take a look at the next rewards to launch:
1. Redeemable Points: Offering points as a reward allows customers to accumulate points with each purchase, which they can later redeem from a range of rewards (free products, discounts, free shipping, etc.) This gives the customer a sense of flexibility where they can decide their own reward, which ultimately makes them more excited to spend their points!
2. Free Product: Offering a free product as a reward incentivizes customers to make purchases, potentially increasing the average order value as customers aim to qualify for the free item. This strategy not only boosts sales but also encourages customers to try new products, potentially leading to future purchases.
3. Free Shipping: Providing free shipping as a reward removes a common barrier to purchase, especially for online shoppers who may abandon their carts due to shipping costs. This is a super smart way to increase conversion rates as customers are more excited to complete their purchase with no hesitation.
4. Percentage-Based Discount: Perfect for price-sensitive customers, offering a percentage-based discount incentivizes customers to make purchases by reducing the overall cost of their order, which makes them feel like they just made a bargain 👀
If no one knows you’re offering rewards for second purchases, then all the setup was probably for nothing.
Once the loyalty program is ready, we aim to announce it to all our customers via email, hung up a poster at the store, create a pop-up banner on our website, and brag all about it on our Instagram. You need to create buzz around your own promotion so your customers are just as excited about it as you are!
It’s important to make it incredibly obvious to your customers that you’re rewarding them for actions and get them to sign up immediately.
I love what Mary MacLeod did here t o announce their new promotion ( 3x points on products) during their once a year event - so probably going to use the same IG post as inspo 😇. Delicious looking cookies, clear copy, and letting the customers know exactly what they’re getting out of it: the perfect recipe!)
In conclusion, loyalty programs are a crucial part of your shopify marketing strategy and retention strategy in 2024.
A Shopify Loyalty Program is not only a means of rewarding customers for their repeat business but also a way to build long-term relationships, increase customer retention, and ultimately drive more sales.
Most importantly, satisfied customers who are part of your loyalty program may be more likely to recommend your Shopify store to friends and family, leading to increased sales through word-of-mouth marketing.
To sum things up,loyalty programs solve one of the biggest challenges Shopify store owners face: losing customers and not knowing how to bring them back. By implementing a loyalty program, Shopify businesses can keep customers coming back for good and drive more sales.
