What is a loyalty program?

In ecommerce, a loyalty program is designed to offer exclusive benefits that reward customers for key actions, such as making repeat purchases or signing up for a subscription. Loyalty programs can take many different forms depending on their pricing structure and benefits to the customer. 

As these programs are designed to reward customer loyalty, they can be a powerful strategy for attracting new customers, retaining existing customers, and increasing customer lifetime value (LTV). After all, research shows that loyal customers are more likely to make additional purchases with a company, provide positive reviews, and act as brand advocates.

What are the benefits of customer loyalty programs?

These programs aren’t just created to build customer loyalty. For businesses, these programs can lead to more valuable customers overall, as they are designed to motivate customers to take specific actions with a store, like spending a certain amount or making a certain number of purchases. This can allow businesses to more effectively retain customers and acquire new shoppers. It can also lead to increased customer engagement and brand awareness.

Rewards customers can receive within these programs can vary greatly. They may include exceptional customer service, discounts, free gifts, store credit, exclusive access to content or products, an improved customer experience, and more. 

What’s the difference between a free customer loyalty program and a paid membership program?

Often, loyalty programs fall into two main categories: free loyalty points programs (also referred to as rewards programs) and paid membership programs. While these programs have some level of overlap, they also differ in the benefits they offer customers and businesses, as well as their pricing. 

For example, in a rewards program, customers earn points in exchange for their purchases, and these reward points can then be redeemed toward future purchases. In a paid membership program, however, customers must pay a fee in order to gain access to deeper benefits, such as recurring discounts, exclusive content, special events, and more. Knowing these differences can help you determine the best strategy for your own loyalty program.

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