Offering a loyalty or rewards program to customers can help your ecommerce business acquire, engage and retain customers.  Offline, traditional retailers have offered these types of rewards programs to boost sales by encouraging repeat business.  More importantly, the back-end management of a loyalty program allows you to discover who a customer is, and to track and build demographic profile of that customer.

When considering a rewards program for your ecommerce business, Peter Oxley, CEO and co-founder of RewardStream,  says that a rewards program is used differently between retail stores and ecommerce businesses.   When you don’t have an ecommerce business, he added, “The big challenge is that a store just doesn’t know who their customer is when they go through the check-out.”

A retail store owner would consider a loyalty program simply because it is difficult for a retailer to have loyalty with someone they don’t know.  In contrast, an ecommerce business owner would already have some profiling and tracking in place, but the reward program would help you to further profile customers who use “guest” check-out or those who purchase using different credit cards, and also give you an advantage over your online competitors. 

A big benefit of rewards programs is the data you collect that will help you identify profile and segment your customers.  Once you discover who your customer is through demographic profiling, Oxley says that you are then able to build a relationship with that person and meet other customer relationship management (CRM) objectives, such as customer acquisition, engagement, retention, and advocacy.

Affordable Rewards Programs for Small Business Ecommerce

Until recently, rewards programs, were largely seen as something only the mega big-box retailers could afford.  After all, who other than the “big boys” could spend upwards of $300,000 a year to discover who their customers are and reward that loyalty?

The cost of offering rewards programs has decreased as cloud computing, software-as-a-service (SaaS), hosted ecommerce platforms, and IT outsourcing have become more pervasive.

Oxley said that the cost of offering a sophisticated loyalty program to your customers is around one- quarter to one-fifth the price it used to be -- making loyalty programs a more affordable investment for smaller retailers and ecommerce businesses.

While the cost of earning customer loyalty has changed, one thing that hasn’t changed is how to plan and deliver a rewards program that is appealing to customers and also meets your business objectives.

Decide on Your Loyalty Rewards Program Objectives

Ecommerce businesses that are considering a rewards program first need to decide what specific behaviors they want to obtain with the program. If your objective were only to acquire new customers, the type of program you would offer would be different than if your goal were to gain repeat business from your customers.

Oxley said that planning a successful loyalty program starts with deciding which behavior is the most important to your business. Once you have that figured out, he then recommends that you plan your rewards program around the behavior you are most looking to get from your customers.  

Before you launch a program, first decide the objective:  are you trying to acquire more customers, are you having a problem with retaining customers, or do you want to encourage brand advocacy? Once you decide on the behavior, then you can then create a program to meet that objective.

Ecommerce Loyalty Rewards Trends

One of the most common ecommerce rewards we see online is coupons, or coupon codes. Consumers love to search for discount codes to obtain an instant reward when they make an online purchase.  One reason it is so popular is because it is easy to get and it's a reward that a customer obtains immediately.

Oxley says that this type of reward is very transactional in nature, and if your objective is mass acquisition, then this would a type of rewards program to consider, but if you are looking to capture another consumer behavior, you may need to go a little deeper.

Here, Oxley suggests that even a coupon program -- if the right tactics are applied -- can help you to acquire new customers in addition to those one-time coupon shoppers.  One suggestion is to offer the coupon codes to the masses, but then move towards a more deeply targeted loyalty-based rewards program. This will help a small business ecommerce site convert that one-time coupon shopper into a repeat customer that it can profile, and have a loyal relationship with.

Tips for Starting a Small Business Ecommerce Rewards Program

When looking to incorporate a loyalty rewards program in to your ecommerce business, it is important to remember that many of the popular rewards programs that work well in retail stores may not be a good fit for an ecommerce business.

 Oxley offers the following tips for ecommerce business owners who are planning to incorporate a loyalty program:

• There are a lot of marketing incentives, such as online coupons, available to ecommerce businesses to get a consumer to your Web site. Plan a rewards program that will convert those one-and-done coupon shoppers to be loyal customers.
• Small business ecommerce site owners can work with manufacturers to help fund a reward program that is based on product sales.  For example you can reach out to your vendors and offer product-specific promotions and have the vendor pay or co-pay for the reward.
• Use available technology to create a real-time (occurring immediately) online rewards program. The rewards and points should be earned in real time and redemption should also be in real time.
• It is important to give consumers choice. Your reward program should allow customers to choose different ways to redeem their rewards. If you are using a points-based reward program, let customers do different things, like store the points to obtain a free product or redeem for immediate cash off when they make a purchase.  Choice-driven reward programs are very much in demand by today’s consumers. 
• Make it easy for your consumer to join the program and redeem rewards when they choose. For example, if you offer a vendor rebate for a specific product, ensure the reward is obtainable immediately at the check-out and not as a future purchase or a mail-in rebate.  Customers should not have to “jump through hoops” to obtain their loyalty reward.

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