Creating a Loyalty Program that Works: Tips for Ecommerce Stores

It’s no secret that repeat business is vital for sustained success, as it not only ensures a consistent revenue stream but also establishes a devoted customer base that fuels long-term growth. But the question is, how do you foster customer loyalty?


According to recent findings, 2 in every 5 of your past customers are more likely to become repeat buyers when you actively acknowledge and reward their loyalty through dedicated programs.


With this, having an effective customer loyalty program becomes an indispensable strategy for your ecommerce stores. Throughout this article, we’ll be exploring the value of having loyal customers in your online store and discussing how we can create effective customer loyalty programs that will oster it.


A featured image of an individual browsing an ecommerce store.


What is a Customer Loyalty Program?

A customer loyalty program is a marketing strategy designed to motivate customers to continue to shop at or use the services of your ecommerce store. Simply put, it’s a system designed to encourage customers to spend more money by rewarding customers for their repeat purchases.


Rewards can come in various forms, depending on the nature of your ecommerce store and the preferences of your target audience. Some common types of rewards in customer loyalty programs include:

  • Exclusive discounts and promotional offers
  • Early access to new products or services
  • Birthday gifts or special anniversary offers
  • Free shipping
  • VIP access to special events
  • Insider newsletters with exclusive content or sneak peeks
  • Access to a dedicated customer support hotline
  • Tiered membership levels with increasing benefits


With enticing rewards and exclusive offers as additional incentives, it’s no wonder that 68% of loyal customers are inclined to join a loyalty program. This will leave them satisfied and provide them with another compelling reason to choose your brand over your competition—this is very crucial for small businesses running against a competitive market.


But all of the additional incentives must come with additional expenses, right? The answer is both yes and no, it is cost-effective in the long run but you need to have an initial investment. To better understand what we mean, let’s try to understand how these loyalty programs actually work.


How Does a Loyalty Program Work?

Loyalty programs often work in many ways but we can simplify them into 3 types. These are the common customer loyalty programs brands use all the time, and you’re probably part of one of these programs already.


These are:

  1. Points Programs: This is the most common form of loyalty program. Customers earn points for every dollar spent, which they can redeem for future purchases or rewards. For example, credit card companies often offer points for every dollar spent using the card.
  2. Tiered Programs: This type of program rewards customers based on the level of engagement or spending. Regular customers might get access to special discounts, while top-tier customers might get perks like early access to new products.
  3. Referral Programs: These programs encourage customer referrals. When existing customers refer new customers, both parties get a reward. This type of program capitalizes on word-of-mouth marketing and can quickly expand your customer base.


Generally speaking, customer loyalty programs are designed to make your existing customers feel valued and appreciated by giving back to them. And when their actions are positively rewarded, it builds customer loyalty, thus increasing customer lifetime value (CLV) and customer satisfaction.


This then provides benefits that far outweigh the initial investment you put in building your reward system, as repeat customers spend almost 20% more than the average customer.


Benefits of having a customer loyalty program

Going back to the previous question, “Is having a loyalty program worth it?” The answer is a resounding yes, and here’s how:

  • Improves customer retention: Loyalty programs boost customer loyalty, and as a result, keep them satisfied. This approach is not only 5x more cost-effective compared to acquiring new customers.
  • Helps with referral marketing: loyalty programs contribute to referral marketing in two ways.
    • Direct referrals: Involve customers actively referring the brand to their friends and relatives in exchange for rewards. This creates a direct channel for new customer acquisition.
    • Indirect referrals: These occur when customers become advocates for the brand due to their positive experiences with the loyalty program. This organic advocacy helps spread the word about the brand, attracting new customers and acting as a powerful marketing tool.
  • Provides User-Generated Content and testimonials: Engaged customers are more likely to share their experiences with the brand, which can be in the form of reviews, testimonials, or social media posts. This serves as valuable, authentic content that can be utilized in marketing efforts, showcasing that the online store delivers quality service and further enhancing the brand’s reputation.
  • Provides valuable customer data: Customer loyalty programs not only offer customers benefits, but they also provide a treasure trove of customer data. This information can help you understand customer behavior, tailor your marketing strategy, and meet customer expectations.


How Do You Offer Loyalty Programs?

Offering loyalty programs might seem complicated, but they can be broken down into manageable steps.

  1. Understand your audience really well: The first step is understanding your target audience and aligning the program design with customers’ values and needs.
  2. Decide on the incentives: A rewards program could include benefits such as early access to new products, discounts, or exclusive products. Rewards could also come in the form of points, where customers earn points that can be redeemed for products or discounts.
  3. Keep it interesting: Your reward program should strike the balance between being challenging and doable. If your mechanics is conplicated, customers will not bother to be motivated regardless of how great the reward is. Make it too simple and uninteresting might discourage them from joining at all.
  4. Make it accessible: To make the program more accessible, integrate it into your ecommerce website. You can also develop a dedicated mobile app for tracking and scoring how reward points are earned and redeemed.


How Atlas Coffee Club Brewed Their Rewards Program to Perfection

If you consider yourself a coffee enthusiast, you might have heard of Atlas Coffee Club before. This exceptional brand has gained recognition for its commitment to delivering a remarkable coffee experience by sourcing beans from around the world.


However, their dedication to excellence doesn’t end with the quality of their coffee. They have also crafted a rewards program that embodies all the qualities of a truly outstanding customer loyalty program.


Atlas’ Rewards Program

The loyalty program mechanics of Atlas Coffee Club are designed to engage customers through various activities and provide them with a range of appealing rewards. Let’s delve into the mechanics of the program and explore how they contribute to the overall customer experience.


To start with, the type of program they used is a point-based reward system where customers receive points for every transaction they with the brand. Customers earn points by:

  • Purchasing coffee
  • Referring friends
  • Purchasing gift subscriptions
  • Exploring coffee from different countries


What’s even more interesting is their unique “miles traveled” mechanics, where customers earn points based on the miles their coffee travels from its country of origin to their doorstep, creating an element of adventure and storytelling.


This not only emphasizes the brand’s commitment to sourcing coffee beans from different regions worldwide. It also adds a sense of exploration and discovery, appealing to coffee enthusiasts who appreciate the origin and journey of their coffee.


Redeeming those points

When it comes to redeeming points, Atlas Coffee Club has crafted rewards that truly capture the essence of their brand. Customers can enjoy free shipping vouchers and discounts on future purchases, providing them with a tangible benefit for their loyalty.


Additionally, the brand offers the opportunity to indulge in free coffee or coffee-related merchandise, enabling customers to deepen their connection with Atlas Coffee Club’s offerings. They even offer a 10% lifetime discount as the top prize of their rewards program, locking in committed customers to their brand.


Why is their program effective?

Let’s explore the key elements that make this rewards program successful.

  • Earning Points: Atlas Coffee Club offers multiple ways for customers to earn points. Customers can earn points by making purchases and referring friends to join the club, which helps in growing the customer base. This referral system creates a sense of community and encourages customers to spread the word about the club.
  • Redeeming Points: The program provides meaningful rewards that align with the core product offering—coffee. Customers can use their accumulated points to redeem discounts on future purchases, and even a lifetime discount which further encourages repeat customers.
  • Execution of the Program: The execution of the Atlas Coffee Club rewards program is seamless and user-friendly. The club utilizes a well-designed online platform where customers can easily track their points, see available rewards, and redeem them with just a few clicks.


The Atlas Coffee Club rewards program is an excellent example of an effective customer loyalty program that has been well-executed.


Key Takeaways: What Ecommerce Owners Should Know When Creating Their Loyalty Program

There are several key takeaways that business owners can learn from the Atlas Coffee Club rewards program:


  • Align Rewards with Core Offering: Atlas Coffee Club understands the importance of aligning rewards with their primary product. Offering coffee-related rewards enhances the connection between the rewards program and the brand itself, leading to a stronger sense of loyalty among customers.
  • Multiple Point Accumulation Opportunities: The program provides multiple ways for customers to earn points, such as through purchases and referrals. This approach encourages engagement and allows customers to accumulate points more quickly, resulting in a higher level of participation.
  • User-Friendly Redemption Process: The online platform used by Atlas Coffee Club for managing the rewards program is intuitive and easy to navigate. Marketers should strive to provide a seamless redemption process to ensure customers can easily access and enjoy their rewards.
  • Engage Customers as Advocates: The referral system employed by Atlas Coffee Club turns customers into brand advocates. Encouraging customers to refer their friends not only helps in customer acquisition but also strengthens the community and loyalty around the brand.