Customer loyalty is a top priority if you want your website or e-commerce company to succeed. There are millions of websites and companies that are competing with you for market shares. Fortunately, you do not have to reinvent the wheel in order to improve your bottom line or to increase your customer base. You can learn from top online performers like Amazon.
Customer Loyalty Programs
Customer loyalty programs come in several varieties. The first type is a free points based program. The more a customer engages in behaviors you have outlined in your loyalty program, such as visiting your site or making a purchase, the more points that they earn. The customer collects the points and exchanges them for gifts or perks, such as free shipping.
The second type of customer loyalty program is a fee based program. Here the customer pays an annual fee to receive certain benefits or perks. The Amazon Prime program, for example, offers members free two day shipping on all of their purchases. Other perks that can be added to this type of program include discounts on merchandise and access to special sections of your website.
Fee or Free, Which Is Better?
Free programs have a broader appeal for customers, as all they have to do to take advantage of the program is to sign up for a free account and to engage in the behavior that is outlined in the program. This type of program has upfront costs that your company will have to absorb, such as merchandise purchases and promotional item purchases. To make this type of program effective, and profitable, you need to balance the value of the promotional item with the value of the behavior you are requesting. You do not want to give away your profits, but you also do not want your customers to feel that your loyalty program is a gimmick or too complicated.
Fee based programs may seem like the worse of the two options, but this really is not the case. By asking for a fee upfront you are increasing the chances that the member will be loyal to your site and that they will make more purchases or visits to your site than they would if they were not a member of the loyalty program. Since they paid a fee they have a vested interest to get the most from their fee as possible. If you offer free shipping, for example, then the member will need to place orders in order to recapture their membership fee investment. To keep costs down you will need to partner with shippers or vendors to make the perk of the loyalty program affordable.
Fowler, Geoffrey A. (2010, October 6). Retailers to challenge Amazon-Dozens including Babies ‘R’ Us, PetSmart to combine forces to one-up ‘Prime’. The Wall Street Journal, B.1. Retrieved October 30, 2010, from http://www.proquest.com