Reward programs are known since the very appearance of trading. It’s quite natural, since as soon as you are engaged in free competition relations you need to promote your brand and attract customers.

Both monetary and nonmonetary, the number of invented purchase incentives are numerous. You can either lure customers with free gifts and free shipping or award them with reward points, free miles, etc. This way or another, you need to stand out from other providers or sellers and make shoppers consider your products the best option among other alternatives.

Reward Points

Reward point programs are popular in retail stores and considered to be a required element of any loyalty policy. Such loyalty incentives make their best for the companies that deal with repeated purchases and frequently sell products to the same customers. However, loyalty programs for brick-and-mortar and online stores do not match due to the different technological bases.

Offline stores greatly depend on the physical proximity to a special customer and often use loyalty programs just in order to strengthen the established connection. Online stores have no this advantage and experience much stronger competition, still they are able to serve wider areas successfully.

If traditional stores usually exploit loyalty programs technically based on physical cards, most online users prefer virtual engagement often using their smartphone or tablets including as tokens to be presented in physical stores. For example, according to Harvey Nichols, 80% of their customers prefered to be engaged in their latest loyalty program via mobile application.

Hard competition experienced by online stores makes them constantly look for new ways to attract and retain customers in their stores. Personal approach to any visitor and prospect makes the stores with reward programs much more attractive and appealing for customers. Since customer retention is 5 times cheaper than acquisition, it becomes just vital for any online business to keep customers loyal and engaged.

Reward Point Loyalty Programs

Loyalty programs based on rewards points are greatly valuable for online merchants as they have several advantages unavailable for other purchase incentives.

Own virtual currency. Customers really like points since they can use them to purchase real products as is seems to be so pleasant to exchange some intangible items for real staff. In fact, points are a ‘virtual currency’ that belongs to certain business owners and can be managed anytime and issued in any amount.

Freedom of action. The flexible nature of reward points and ability to meet the requirements of the fickle ecommerce environment allow merchants to quickly respond to appearing changes and always keep their loyalty programs attractive for customers.

Measurable format. Unlike other incentives e.g. free gifts or free additional services, points are easily measurable and clearly show their value both for spended and earned amounts.

Reward point programs are obvious for customers as they usually provide exact number of points for certain amounts of purchases or some activities. This simplicity is advantageous, in fact, as it allows shoppers to plan the number of points and the chances to purchase products with them. But, this approach lacks one compulsory aspect indispensable for online sales – personality.

Tiered Loyalty Programs

Awarding customers for their personal achievements is the next step towards lasting loyalty and sustainable credibility. Tiered loyalty programs better motivate customers to rich upper levels and keep them loyal much more effectively since they will hardly abandon multiple efforts led them to the current position.

Such programs also bring a brand new incentive related to the natural human wish to stand out from the crowd and get a new social status. Not only feel the dominance customers are also glad to realise that merchants appreciate their contribution and commitment. This way, they gradually and unconsciously become brand advocates spreading own loyal attitude on their friends, relatives and close ones building a new tire of followers.

Loyalty Program Implementations

If the value of tier loyalty programs is quite obvious for both merchants and shoppers, their real-life implementation is another side of the fence. For example, for such popular ecommerce platforms as Magento that do not provide the above functionality by default, it may require

quite difficult customisation in order to bring this marketing initiative to life, especially when it comes to Magento 2.

The easiest way to launch a tier loyalty program on Magento 2 is to take advantage of ad-hoc functionality extensions able to reward customers for valuable activities and purchases, of course. For example, the Reward Points extension for Magento 2 by Aheadworks allows merchants to provide points for product reviews, social media sharings, newsletter subscriptions and purchases. And if the points for activities are available on plain rates, purchases are awarded according to the tiers based on customers’ lifetime sales values. Even more so, the same tires may have different earning and spending rates for different customer groups, e.g. wholesalers need more purchases to obtain the same earning rates as retail customers.

 

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More Personality

This example shows that merchants can further differentiate customers across their tiered rewarding programs and make those programs even more tailored and attentive to specific clients.

According to the report by CapGemini Consulting, only 11% of companies offer personalized rewards based on purchasing history, certain locations, or other customers’ specific features. So, personalization of loyalty programs is a powerful competitive advantage able to become a driving force towards numerous repeated sales.

Of course, successful personalization is just impossible without genuine feedback from shoppers, so deep research of shopping audiences should become the first step towards a successful reward points loyalty program.

Conclusion

Loyalty programs based on reward points are likely the most suitable option for numerous online sellers. Although many of them already use such programs in their stores, they often lack personalization of reward points, while this may become a real advantage in the eyes of a buyer.

BIO

Shatkov Dmitry is a maketing manager at Aheadworks – one of the leading Magento 2 extension providers. Dmitry has been involved in Magento and in online marketing since 2012 and 2008 respectively. Focused on content marketing and ecommerce writings he obtained significant experience in blogging and social networking resulted in multiple published blog posts, ecommerce overviews and topical series.