5 step to build a loyalty program for your Shopify store

In today’s competitive eCommerce landscape, customer loyalty is the key to sustainable growth. Acquiring a new customer can be up to five times more expensive than retaining an existing one, making customer retention a crucial factor in long-term success. For long term growth, businesses cannot only rely on acquiring new customers, but also have to make their customers do other purchases.

If you’re looking to increase customer retention and maximize revenue, implementing a strategic loyalty program for your Shopify store is a game-changer. Here’s a step-by-step guide, complete with real-world case studies, to help you get your customer back.

What is a Customer Loyalty Program

A customer loyalty program is a reward system designed to encourage repeat purchases by offering incentives such as points, discounts, and exclusive perks like points, discounts, and special offers. With a Shopify loyalty program, customers can use their past purchases to earn rewards such as coupons, exclusive deals, free shipping, and other benefits.

Perks of a Loyalty Program

A well-structured loyalty program offers numerous benefits to both businesses and customers:

• Increased Customer Retention: Loyalty program members are 47% more likely to make a second purchase than non-members. (Source: Smile.io) Retaining customers through a loyalty program can increase profitability and strengthen long-term brand relationships.

• Higher Average Order Value: Customers enrolled in a loyalty program spend 12-18% more than those who are not. (Source: Accenture) This leads to greater revenue generation without the high cost of acquiring new customers.

• Enhanced Brand Advocacy: 81% of consumers say that being part of a loyalty program makes them more likely to refer friends and family. (Source: Bond Brand Loyalty) Word-of-mouth referrals can drive organic customer acquisition and brand trust.

• Valuable Customer Insights: Loyalty programs provide businesses with rich customer data that can be used for personalized marketing and improved customer experiences. Understanding purchase behavior helps brands tailor offers and promotions effectively. (Source: McKinsey & Company)

• Emotional Connection with Customers: A well-executed loyalty program fosters an emotional bond between the brand and customers, leading to long-term engagement and reduced churn rates. (Source: Forrester)

By leveraging these perks, businesses can foster stronger relationships with customers and drive long-term growth.

How To Build Your Own Customer Loyalty Program

To build your own customer loyalty program, you can follow these 5 steps:

1. Understand Your Customers

Begin by analyzing your customer base to identify their preferences and shopping behaviors. You should segment your current customer base into multiple groups, as each group has different behaviors on your e-commerce stores.

The sooner you do it, the better the outcome. Here are some automation tools for customer segment for your shopify store:

2. Define Clear Objectives and Rewards

Establish what you aim to achieve with your loyalty program. Whether it's increasing average order value, boosting customer retention, or encouraging social media engagement, clear objectives will guide your program's structure. Decide on the rewards you will offer, such as discounts, free products, or exclusive access to new collections, ensuring they align with your business goals and customer desires.

3. Choose the Right Loyalty Program Structure

Select a program format that suits your brand and appeals to your customers. Common structures include:

• Points-Based System:  Customers earn points for purchases, reviews, social media engagement, and referrals. These points can be redeemed for discounts, free products, or special perks. Example: The North Face XPLR Pass rewards customers for purchases and engagement, offering exclusive discounts and early access to sales.

• Tiered Programs: A structured system where customers unlock different reward levels based on their spending or engagement. This encourages repeat purchases to reach higher tiers. Example: Ulta Beauty’s Ultamate Rewards, which has three tiers offering increasing benefits, such as birthday gifts, points multipliers, and free shipping.

• Paid Memberships: Customers pay a recurring fee to receive exclusive perks, such as discounts, free shipping, or early product access. Example: Amazon Prime, which offers free shipping, streaming services, and member-only deals for an annual fee.

4. Integrate a Suitable Loyalty App

Utilize Shopify-compatible apps to manage your loyalty program efficiently. Apps like Smile.io and Growave offer features such as customizable reward systems, seamless integration with your store, and analytics to track program performance. These tools can simplify the implementation and management of your loyalty program.

Check-out for top 10 customer loyalty app on Shopify here

5. Promote and Continuously Optimize Your Program

Once your loyalty program is live, actively promote it through various channels:

• Dedicated Landing Page: Create a page on your website detailing the program's benefits and how customers can join.

• Email Marketing: Inform your existing customers about the program and its perks.

• Social Media: Use your platforms to highlight rewards and share testimonials from satisfied members.

Regularly assess the program's performance using analytics to identify areas for improvement, ensuring it remains engaging and valuable to your customers.

Shopify Customer Loyalty Program Case Studies

• Blume: A Shopify-based skincare brand that uses Smile.io to reward customers for purchases, referrals, and social media engagement. Their loyalty program has helped increase repeat purchases and customer lifetime value. (Source)

• Death Wish Coffee: This coffee brand implemented a tiered rewards system on Shopify, where loyal customers unlock higher-value perks over time. The program has significantly boosted customer retention. (Source)

• Rothy’s: A sustainable fashion brand leveraging a referral-based loyalty program to incentivize eco-conscious customers. Their Shopify-integrated rewards system has driven significant brand advocacy and repeat purchases. (Source)

• Doe Lashes: By integrating Smile.io with Shopify, this beauty brand increased customer retention through a points-based rewards system, leading to a 44% growth in repeat purchases. (Source)

• Owala: This drinkware brand created a hybrid points and referral program, encouraging social sharing and engagement, leading to increased organic customer acquisition. (Source)

Customer loyalty is a part of customer retention marketing. An effective customer loyalty program can boost your customer satisfaction and brand loyalty, as well as increasing your profit margin while lowering the cost.