Loyalty Programs In Online Shopping

If you run a retail business, you should consider having a customer loyalty program. But is it going to make a difference? And which type is the right one for your brand? Don’t worry. We’re here to discuss the 3 most popular loyalty programs in online shopping and determine what they brought to the table. 

What is a loyalty program?

A loyalty program is a customer retention tool whose goal is to help businesses engage more with customers, ultimately increasing sales and brand awareness. Specifically for businesses that have both online and offline stores, loyalty programs are an effective way to attract customers in both places.

Different types of loyalty programs

Below are the most popular loyalty programs for retailers. These are commonly integrated into their retail systems, especially the POS software.

Point-based program

This is the most popular and familiar program for everyone. Customers earn points by completing desired actions such as buying items, subscribing to a program, or sharing on SNS, then they use those points to redeem a discount/gift card. 

For example, Starbucks rewards 2 points with every $1 spent, 25 points will get you a free drink.

Point-based loyalty programs are low-risk as they offer free membership sign-up. It’s also able to attract more customers than a fee-based program. However, it has a rather low engagement rate since it’s pretty simple and boring.

Tier – based program

The tiered program offers various rewards based on the milestones that customers reach. The more they spend, the higher tier they achieve. 

With point programs, everyone gets the same reward, but with tier programs, each level comes with different benefits. 

For example, Uber has 4 levels of tiers, the first tier offers almost nothing, the second tier, Gold, has the benefit of flexible cancellation, and the highest tier, Diamond, rewards customers with free UberEats delivery and priority airport pickup.

Advantages of tier-based program are it focuses on higher-value customers and encourages them for additional purchase. Furthermore, high tier customers aren’t likely to cancel their memberships. Since a higher tier means better benefits, customers would feel more valuable and exclusive with the tier-based program. They would get competitive and keep going for the higher level, knowing they would get VIP rewards and unique experiences from the brand.

On the other hand, tier-based loyalty programs aren’t attractive to customers that don’t usually spend much. 

Gift cards

This kind of program provides customers with gift cards as a token of loyalty. By using gift cards, customers have the flexibility to get creative. They make great presents for families and friends, which is also a fantastic way to promote your brand. Gift cards have been the number 1 choice when it comes to holidays. People on average spend about $150 on presents and ¾ of them are on gift cards. Some gift card brands with high prestige that are retailers’ favourite here. 

To summarize

So if you want to keep your customers, e-commerce loyalty programs are essential tools to maintain customer engagement. Because loyalty programs are highly important, retailers are always looking to integrate them into their POS systems – which can support both platforms. It allows using points both in physical and e-stores, removing the boundary between online and offline purchases and creating a seamless experience for customers.

And if you are searching for a POS with a loyalty feature, why not consider ConnectPOS? ConnectPOS is a cloud-based POS software compatible with multiple platforms that offer cutting-edge technology. ConnectPOS also assists with loyalty programs such as using gift cards/ points to pay, creating discounts right on – the – spot, and many more, so your customers can have a better experience. Contact us for your free trial.