10 min read

ECommerce Loyalty Programs: Why They Matter And How To Set One Up

Alex Selwitz

Last updated:

Having loyal customers is a dream come true for many. 

Brand advocates could mean a significant increase in repeat purchases, as well as your businesses’ profits. Also, increasing your customer base means achieving long-term financial stability for your eCommerce store. 

How to leverage this sales strategy? In this article, we’ll discuss the perks of getting a loyalty program and how you could start one yourself. 

What is an eCommerce loyalty program?

An eCommerce loyalty program rewards customers for making repeat purchases in your online shop. These rewards may range from freebies, discounts, coupons, or cashback. 

For example, the Starbucks Rewards Program lets customers earn stars. For every dollar spent customers can earn one star. At 60 stars, they can snag a free drink or get a free slice of cake.  

Source: https://www.starbucks.com.sg/members-benefits

Why do you need an eCommerce loyalty program?

An eCommerce loyalty program can bring significant advantages to your eCommerce store. 

Let’s take a look at the perks to consider. 

Boost customer retention

Existing customers love to be rewarded for buying more. 

In fact, 81% of shoppers remain loyal to businesses with a loyalty program. Furthermore, 69% of shoppers state that they choose retailers based on the customer loyalty or rewards which they can earn. 

These numbers prove that loyalty programs may lead them to convert often because they love the possibility of receiving rewards. As customers earn points or reach a higher tier, they’re likely to stay with your business and avoid switching to a competitor. 

Boost sales 

Will you purchase from a new business? Or will you opt to stick around to retailers or eCommerce stores that you’ve tried and tested? Of course, the average customer prefers to stick around to businesses that they previously purchased from. 

The Pareto Principle states that 20% of a businesses’ existing customers contribute to 80% of its profits. Meaning brand advocates have a big impact on the success of your business. 

The good news is, increasing customer loyalty doesn’t take rocket science. With a customer loyalty program, you can reward your lifelong customers for staying loyal to your business. 

The more customers you keep, the more your business grows. An interesting study found that a 5% increase in customer retention can increase a business’s profits by 25% to 125%. What is more, one report has found that 81% of customers believe that loyalty programs make them more likely to continue buying from a brand and 62% of U.S. mobile shoppers say that loyalty programs increase store visits.

Cost-effective sales and marketing strategy

Customer acquisition is around 5x more expensive than retaining the customers that you already have. With a loyalty program, eCommerce businesses can instantly appeal to their existing customers. It’s also fairly easy to manage with the right loyalty rewards software as well as optimized content

How to set up an eCommerce loyalty program

Starting a loyalty program seems to be a complicated process. 

On the bright side, as long as you follow these steps, you can easily launch one yourself. 

1. Choose loyalty rewards

Think about the reward that will incentivize customers to remain loyal to your brand. Try rewarding them with a discount, exclusive product, free shipping, and other tempting perks. 

To ensure you’ll breakeven, you can implement a point-based rewards system. This will help you identify the cost of your reward and assess whether you’ll remain profitable by giving it en masse. 

Bokksu rewards – an online candy subscription box store – lets you earn points so you can avail of discounts. 

Don’t forget the importance of building out a proper email marketing workflow program that can not only up-sell but also keep your customers up to speed with their rewards.

Source: https://reallygoodemails.com/emails/we-give-you-a-reason-to-stick-around-promise

2. Determine your reward system

Loyalty programs usually stick to a specific reward system. A point-based reward system lets shoppers earn credits or points by buying from their store.

For example, the Taco Bell rewards program lets users earn points to earn rewards. 

Source: https://reallygoodemails.com/emails/lets-see-what-your-points-are-up-to-

In contrast, a tier-based loyalty program gives loyalty members perks based on the tier where they belong. Reaching a higher tier means access to more valuable or exclusive perks. 

For example, the Moosejaw rewards program follows a tier based system which lets customers access private promotions, free shipping and additional discounts in higher tiers. 

Source: https://www.moosejaw.com/content/moosejaw-rewards-program#high-alt

3. Use loyalty rewards software

ECommerce stores can easily set up their own loyalty program using loyalty rewards software. 

These tools can help you build and launch a referral program within minutes. An added bonus is it can automate the loyalty reward process and provide rich data on your customers’ purchasing behavior, browsing behavior, and the number of loyal customers. 

4. Market your loyalty program 

No one will join your loyalty program if they don’t know it exists. Launching marketing initiatives will increase loyalty program awareness and potentially encourage new customers to try your product too.  While one of the most important steps to creating a loyalty program is site design and creating landing pages that encourage people to join, you’ll need to use marketing to make them aware of the program you’ve created.

Personalization is one of the more important aspects to marketing your loyalty program. It can help you double engagement rates by ensuring that all customers are engaged and feel like they have become a part of your company. With personalization in emails and website landing pages, it will be easier for people to engage with their products or services on an individual level which ultimately leads them back into real-life stores!

Here are some ideas to consider for your marketing plan:


Build an email marketing campaign to introduce customers to your rewards program and include steps for availing these perks. Highlight the rewards that they can get through compelling product photos and beautiful email designs. 

Zoe’s Kitchen has a high-quality image of the treats customers can get such as classic hummus and pita.   

Source: https://reallygoodemails.com/emails/just-for-you-free-hummus-to-say-hello

Highlight rewards on the main website 

The main draw of loyalty programs are the rewards and incentives. That’s precisely why Sephora’s main website includes a section of Beauty Insider Rewards and the number of points shoppers need to get it. This unconsciously reminds viewers to join the loyalty program. 

Source: https://www.sephora.com/

Social media marketing 

Create social media posts to promote among your followers. 

Online vintage shop The Little Burlap Barn announced their loyalty program on Instagram. The photo includes pictures of authentic vintage items which shoppers can find in their store. 

Source: https://www.instagram.com/p/CKxFKv3nj12/?utm_source=ig_web_copy_link

eCommerce Loyalty Program FAQ

What is an ecommerce loyalty program?

An eCommerce loyalty program is an online loyalty program that rewards customers for making repeat purchases from your eCommerce store. eCommerce loyalty rewards may include: 

  • discounts
  • cashback
  • coupons
  • free products 

For example, one of the best online loyalty programs is the Starbucks Rewards program, which is an online loyalty program rewarding loyal shoppers with stars. Stars can be used to purchase Starbucks’ products, such as cake or coffee.

How do you create a loyalty program in eCommerce?

Creating a loyalty program is a matter of first understanding how your customers value your brand, and what precisely inspires them to be loyal. It is also important to understand the obstacles to shopper loyalty. Once the fundamentals are figured out, devising a loyalty program that offers customers rewards that will create loyalty and repeat purchases is the next step. Simple discounts may be easy to implement and can be created in as little as a few days, whereas a sophisticated loyalty program such as what Starbucks does with stars may take months, and require significant investment to build the technology to support and manage the program. 

How do you maintain customer loyalty in eCommerce?

To maintain customer loyalty in eCommerce it is important to realize that eCommerce shoppers are a finicky bunch. Raise the prices a little and you lose loyalty. If the service or product quality declines, customers are lost. So, maintaining loyalty is a matter of doing good business first and foremost, but it’s also important to make sure the online shopping experience is seamless and works across all devices. On top of the basics, most shoppers are expecting some sort of loyalty rewards programs to be in place. Ultimately, the best way to maintain the highest degree of customer loyalty is striving to be superior to the competition, and serving customers well so they continue to come back. Conducting surveys and other research is a good way to understand why your customers may not be satisfied and how the experience can be improved. 

Ready to start your own loyalty program?

ECommerce loyalty programs provide eCommerce business owners with an opportunity to retain existing customers. 

As long as you know the right steps, you can easily launch and automate the loyalty program process. Just choose your rewards, determine your rewards system, choose a referral program software—and you’re good to go. Afterward, focus on marketing to boost membership. 

Author’s bio:
Raul Galera is the Partner Manager at ReferralCandy and CandyBar, two tools helping small and medium businesses run customer referral and loyalty programs. He’s been working in the tech sector for the past seven years and regularly writes about marketing, eCommerce, and tech.

RSF herd

Red Stag is a 3PL with ecommerce DNA

Talk With Us
RSF logo icon

Subscribe for more articles like this!

Red Stag Fulfillment is a 3PL founded by ecommerce operators, and built for scaling businesses.

A team of fulfillment fanatics who care about our clients’ businesses like their own. We see things from our customers’ perspective, and have the guarantees to prove it.

Talk with us
3PL founded by ecommerce operators, and built for scaling businesses
RSF logo icon
RSF logo

You might also like…