Every eCommerce company is trying to crack the code on sustainable growth. Except for Fiona Stevens, Head Of Marketing @LoyaltyLion, because she’s already figured it out 💡

🐉While everyone is raving about social media, email marketing, and personalization (all good things!), Fiona’s over here slaying dragons with loyalty programs, especially for e-commerce.

Loyalty programs are one of the most effective ways to increase the value of your customers, so don’t miss this rare chance to become an expert in it!

🗣️: What is a loyalty program and how do customer loyalty programs work in more?

💬 Fiona: A loyalty program is a way to connect with existing customers and drive more revenue from them by increasing their lifetime value, encouraging them to purchase more regularly from your brand, rather than getting distracted by competitors. It can be as simple as offering members financial incentives to repeat purchase, or it can be more aspirational, offering members the opportunity to become part of a community, and access rewards and experiences that align with causes they care about - for example, allowing members to redeem their rewards in the form of charitable donations.

A loyalty program is also a very cost-effective acquisition channel - you can use loyalty points to incentivise shoppers to refer their friends or family, or leave reviews, which will drive a high rate of conversion to new customers. Essentially a loyalty program provides the opportunity to increase the lifetime value of customers you've already paid to acquire, increasing the ROI of marketing spend you've already made.

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🗣️: We have a lot of variant of the path in using loyalty program but what program really work? what are the more relevant types of rewards programs for customers now?

💬 Fiona: There's no easy answer there -  it really depends on the type of products you're selling and who you're selling them to. However, what does apply to all brands, is that the rewards you offer within your program have to be relevant and achievable. Customers shouldn't have to wait months and months to build up a big enough points balance to access a reward. The best programs are the ones that offer points for more than just purchases - if you reward engagement (for example social media follows, newsletter signups, birthdays etc) then a customer can build up enough points for a reward faster, which in turn means they return to redeem that reward with a next purchase sooner! So the most relevant programs are the ones that are aligned to customer behaviors, and offering opportunities to benefit that don't require the customer to always spend.

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🗣️: Are loyalty programs profitable?

💬 Fiona: Yes - they absolutely can be. But it won't happen overnight. We often compare loyalty to Marketing activities like SEO. You have to invest in them for a while (for at least as long as your customer's repeat purchase cycle) for them to drive the best results. However, loyalty programs can deliver fantastic ROI because a) you're spending less on acquisition if you're reconverting customers you've already acquired in the past, b) you're consistently driving up the average spend and the purchase frequency of those customers, and c) you can use loyalty data to drive greater ROI from other channels you're using like email and SMS.

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🗣️: What do you think are the usual challenges in loyalty programs that cause them to fail?

💬 Fiona: The most common reasons that loyalty programs fail are either because the communication of the program wasn't good enough and customers weren't aware that the program existed or that they should join it, OR lack of time and resource invested. A good loyalty program must have a dedicated owner who is passionate about it's success.

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🗣️: What are other non-monetary benefits that are enticing to customers and promote brand loyalty?

💬 Fiona: Where to even start! There are so many ways to look outside of monetary rewards. A few of my favorite examples are:

• Stores who offer exclusive content to their most loyal customers that non-members can't access, such as how-to guides or exclusive podcasts
• Stores who allow customers to redeem their points in return for charitable donations - for example, a jewelry store who offers points in return for silver recycling
• Stores who offer their members experiences such as early access to sales, or first look/queue jump to new products or collections

These are all great ways to build customer loyalty by delivering experiences rather than financial rewards - and they really work!

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🗣️: How much using emotional connect is important to Loyalty Programs?

💬 Fiona: Emotional connections are extremely important when it comes to winning customer loyalty. Competition has never been greater and consumers have never been more fickle, so finding ways to make your brand stand out is super important. The more you can align your loyalty program with causes, values and products your customers care about, the more you will emotionally connect with them - and if they feel a strong enough connection, they will choose you every time, even if they could get the same item cheaper from another brand that they don't know and love.

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🗣️: Should a Loyalty Program provide different or a variety of awards? or we can stick to one type?

💬 Fiona: The more opportunities customers have to engage with your program the better, so in an ideal world you would have a selection of rewards they can choose from, ensuring they get a more tailored and personalized experience. For example, some of LoyaltyLion's merchants allow members to choose from either a selection of free products or a range of shipping options as rewards. However, building up a program that is varied and personalized takes time - there is nothing wrong with starting simple and only offering money-off rewards or percentage discounts at the start!

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🗣️: I've listened to a lot of podcasts with the LoyaltyLions team, and I'm very impressed with your work.  Regarding the question, we all know what works for the customer, but we talk so little about tools and techniques that should NOT be used. So tell please what factors or tools cause loyalty programs to fail?

💬 Fiona: Great to hear you've enjoyed some of the podcasts! I'm not sure there are tools that shouldn't be used, but there are definitely ways to use tools together more effectively. Many people look at loyalty as a standalone thing, or a loyalty platform as a standalone tool, but actually there are so many opportunities to integrate loyalty program data into other tools you're using like helpdesks, email providers, review platforms - so the mistake isn't necessarily using the wrong tool, it's failing to get your tools talking to each other, so that you can pass loyalty data between them all and use it to personalise every marketing message and channel

In terms of factors that cause failure - I think there are a few to watch out for, but the first is not understanding what success looks like before you launch a program. If you don't know what you're trying to achieve, then you can't know whether things are going well or not, so making sure your loyalty activity aligns with wider business goals and metrics is key to success.

The second would be not having a defined owner for your loyalty program or tools - you need someone at the helm who is passionate about the program, and can dedicate time and energy to running it really well. And the third thing would be communication with customers. Too often, brands set up a program and expect all their customers to enrol, but they haven't done enough to promote it. Just as you'd promote any new product or brand event, you should be promoting your loyalty program via every marketing activity and channel. Hope that helps!

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🗣️: Describe one successful case of a loyalty program from your experience.

💬 Fiona: Absolutely - my favourite example is a long-term LoyaltyLion client, Astrid & Miyu. They sell jewelry and we've been working with them for around 4 years. Their program is so successful because it uses tiers - customers move up the aspirational tiers and unlock more rewards and benefits as they interact more with the program and the brand. They also place a large focus on building community and using content to build better customer relationships. They regularly use their loyalty program to tell their brand story and connect with customers - even their Founder is involved in content creation. You can read more here.

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🗣️: How do we start implementing a Loyalty program? Is it better to define first to whom we are going to offer it to? (Like based on how much revenue we already got from the client, etc) or is it better to offer to all. (Existing and prospect clients)?

💬 Fiona: Segmentation is always super important in loyalty and there are two segments in particular that I would always prioritise first.

Firstly - exactly as you say - your most loyal customers. The more you can keep them happy and engaged, the more they will act as advocates and generate more revenue for you. And secondly, your "at risk" customers - those people who haven't come back and interacted with you within the timeframe you expected. There are undoubtedly other groups, but these are where you can drive the most change, fastest.

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🗣️: What I think when I hear Loyalty programs are offering like discounts on services or promos. How do we approach this if our margins on our current services are "just right"? 😆 Do we now account for these future loyalty programs on our margins?

💬 Fiona: I would think as much as possible about what value you can add outside of financial or transactional - so if you're selling IT services, can you be offering exclusive access to really great content, or perhaps special access to a podcast with a great speaker who's an expert in your space, or perhaps the opportunity to enroll in courses or training that non-members aren't able to access. Or could you be facilitating events that only members are invited to - providing a space for people to interact with each other and learn from their peers? These are the kinds of experiences that will drive people to connect with your brand on a longer-term basis, without financial incentives.

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🗣️: Shooting my shot here, do you think you can give an example of a simple Loyalty Program Model that's easy to implement?

💬 Fiona: I can't think of a service example off the top of my head - but one example that stands out in my memory is Starbucks. There was a point where they were at high risk of failing because other coffee providers like Mcdonald's were selling coffee at a cheaper price. They launched a program called "my Starbucks idea" where they asked customers to create profiles, contribute ideas and tell them what they want from their coffee shop experience. This helped them to show customers they valued them - and we know where Starbucks is today! So I think my point is - to build a model based on what your customers tell you they want!

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🗣️: How do Loyalty programs attract new customers?

💬 Fiona: There are a few ways, but the most obvious and most effective is incentivizing members to refer their friends and family. You can reward the existing customer for the referral but also offer the person being referred an incentive to make a first purchase. That way both parties see immediate benefit and you acquire a customer that already has a slightly increased trust of your brand because they've heard about it from a friend.

Beyond referrals, we would also encourage brands to incentivize members with loyalty points to leave reviews and mention you across various social channels - this kind of user-generated content gets you in front of more potential customers, but it also helps you convert them more effectively.

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🗣️: If I start to implement a loyalty program, what’s an effective Loyalty program participation rate?

💬 Fiona: To be honest this depends on multiple factors. You would need to consider a range of things such as the repeat purchase potential of the product you're selling, the demographic you're selling to, and how big your addressable market is. For example, if you are selling a high-priced item that someone is only going to replenish once every ten years, and you're selling it to an older demographic who aren't as social media or internet savvy, then you might expect lower participation than if you are selling something like pet food that is low cost, replenished really regularly and sold to people of all ages.

The best thing to do would be to make sure you have benchmarks for your own business before you start - what does your repeat purchase rate, your average order value, and your lifetime value look like right now. You can then see whether your participation rate is high enough by checking how much the needle moves on those KPIs.

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🗣️: From your experience, what makes an effective loyalty program?

💬 Fiona: In my experience, the most effective loyalty programs are ones that provide immediate value to customers. It should be extremely easy for any member to understand how many points they have, how far away from a reward they are, and how they can go about redeeming that reward. The best programs are simple and really well communicated so that it's super easy for customers to use and benefit from it. FAQs and onsite chat are really powerful and effective tools here Hope that helps!

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🗣️: I'm interested in how do Loyalty programs attract new customers and how do affect on them?

💬 Fiona: There are a few ways a loyalty program can help you with acquisition but the most obvious and most effective is incentivizing members to refer their friends and family. You can reward the existing customer for the referral, but also offer the person being referred an incentive to make a first purchase. That way both parties see immediate benefit and you acquire a customer that already has a slightly increased trust of your brand because they've heard about it from a friend.

Beyond referrals, we would also encourage brands to incentivize members with loyalty points to leave reviews and mention you across various social channels - this kind of user-generated content gets you in front of more potential customers, but it also helps you convert them more effectively.

I also think brands could do more to promote their loyalty programs instead of their products in some of their social advertising - if customers could see that there is an active and thriving community that they could be part of, they may be more inclined to join the program and/or purchase from the brand! It can help customers to feel a greater affinity with a brand before they've even looked at a product.