Shopify’s 4 types of loyalty programs for E-commerce

Table of contents:
✅ What is a loyalty program?
✅ What are the benefits?
✅ Different types of loyalty programs
✅ Combining the different types
✅ Issues with the models
✅ Conclusion: the solution

Keeping customers coming back is one of the hardest parts of running a business. Consumers now are more aware of the number of different businesses they can choose from and will rarely dedicate their loyalty to just one brand. If your brand wants to stand out and drive repeat purchases, you need an effective loyalty program.

What Is a Loyalty Program?

A loyalty program is a type of marketing strategy used to encourage customer loyalty. The goal of a loyalty program is to create an incentive for customers to keep coming back to your brand instead of trying out your competitors. In this article, we discuss the different examples and benefits of good incentives for engaged customers. There is no one-size-fits-all solution: each brand needs to find the program that best fits their customers, business model, and goals – not just for the short term but in the long run. With so many different loyalty programs out there and more being introduced every day, it can be difficult to decide which one is right for your brand.  

Benefits of a Loyalty Program

A loyalty program is a great way to keep your customers coming back and engaging with your brand even after they made their first purchase. There are many benefits to implementing a loyalty program. It can help your brand stand out from the competition by letting customers know that your business is generous and that you truly appreciate their commitment. When customers feel appreciated and rewarded, they’re more likely to engage with your brand and recommend your business to their friends and family members who are looking for similar products or services. The most important benefits of loyalty programs are:

☑️ Increased brand awareness
☑️ Consistent brand engagement
☑️ Improved customer retention
☑️ Additional customer spending

In this article about loyalty program benefits, we discussed the results for businesses that come from these benefits.

Best-performing loyalty programs can increase revenue from valuable customers who use points by 15% to 25% annually by boosting their basket size, purchase frequency, or both (Source)

Different types of loyalty programs

Keeping your customers coming back isn’t just about having a neat rewards program on your website. It’s about creating loyal customers who keep returning to you over and over again, boosting the customer's lifetime values. There are several loyalty programs you can implement in your business with benefits that last long after launch day.

☑️ Points-based loyalty program
☑️ Tiered loyalty program
☑️ Paid loyalty program
☑️ Value-based loyalty program

Types of loyalty programs: points-based

Points-based programs are the most common type of loyalty program. Traditionally, customers earn points every time they make a purchase. Once they earn enough points, they can redeem them for a gift card, a discount, or additional products from your store. 

Types of loyalty programs: tiered

These work a bit differently. Traditional tiered loyalty programs are also awarding points based on how much each customer spends. Consumers can spend a lot to get promoted to a higher tier and enjoy more benefits and privileges of the program than lower-tier members. You will be able to provide benefits that span a wide range of spending levels, which is a great way to show your customers that you appreciate their business at any level. 

Types of loyalty programs: paid

A paid loyalty program offers rewards and benefits to customers who decide to pay a fee upfront to be able to enjoy certain privileges. Paid loyalty programs can be successful if your brand comes up with creative ways for customers to redeem their points. 

Types of loyalty programs: value-based

This is the only program in which the customer doesn’t get rewarded directly. All the rewards a customer generates, are awarded to charity or welfare. So in this example, the customer chooses to donate a percentage of their purchases. In most cases, the customer is allowed to choose an initiative that they like. For businesses, this results in a positive brand image which encourages customers to come back more often.  

The loyalty management market globally was valued at 4.02 billion dollars in 2020 and is expected to reach 13.8 billion dollars by 2026, with a 22.7% annual growth rate (Source)

Combining the different types of loyalty programs

These different types of loyalty programs all have their charms, so which one is Crowny? Well, even though developments are still taking place, Crowny could combine all different types of loyalty programs in one with the loyalty program software that we are building. Here’s how:

Types of loyalty programs: Crowny’s points-based system

The Crowny loyalty software allows business to create their own points-based system, tailored to their brand. With branded loyalty points, brands can make their community thrive through a points-based system. But not just any points-based system, it’s a points-based system built on blockchain technology. We refer to it as tokenized economies for businesses.

Types of loyalty programs: Crowny’s tiered loyalty cards

Brands that use the Crowny portal are able to design their own loyalty card for their program, which is registered on the blockchain’s network. It’s one of many advantages of implementing blockchain in your loyalty & marketing strategy. These cards can represent a certain set of benefits, which can be anything from an earnings booster to access to exclusive products. In the future, partner brands could be using loyalty cards as tiers for their community. 

Types of loyalty programs: Crowny’s paid loyalty programs

Brands with a loyalty program powered by Crowny can also choose to launch a paid loyalty program. This would mean the program is privately accessible to supporters who have paid the brand a fee to be able to join the program. 

Types of loyalty programs: Crowny’s value-based loyalty 

Brands can choose to host a value-based loyalty program. A portion of the rewards that would usually go to the onboarded community, could also go to a charity or welfare institution of their choice. The transparency of blockchain-based loyalty rewards is the key factor in the trustworthiness of these types of loyalty programs.

182% of customers prefer continuing to buy from a company that they trust, even over companies become trendy at that point in time (Source)

Issues with the different types of loyalty programs

If there’s one issue that stands out for the different types of loyalty programs and how they’re traditionally run, it’s that they all are based on purchases. Even though purchases are the most important for business, there is way more value that customers are generating nowadays.  An engaged (online) community is worth so much more to any company nowadays than just their money. That’s because loyal customers nowadays don’t just spend, they also:

☑️ Spread the word on social media for more exposure
☑️ Provide data points that are super valuable
☑️ Spread the word in their own personal network
☑️ Engage on social media which creates more social proof
☑️ Give feedback on certain topics when asked
☑️ Leave reviews after they’ve had a good experience

These are just some examples that loyal and engaging customers provide for the brands they support. And that’s resulting of their own initiative, but what if they were properly incentivized to do so with a loyalty program that fits the modern industry? Crowny’s interact-to-earn model solves the issue.

Interaction experience and product experience significantly impact customer loyalty, accounting for more than 30.4% and 36% shifts in customer loyalty, respectively (Source)

Conclusion

The best loyalty programs of the future are tailored to a brand’s audience and are run by brands that get the value of rewarding their community for more than just purchases. Also for engagement, data generation, feedback, content consumption, referrals, etcetera. Crowny is the first in the loyalty marketing industry to combine the different types of loyalty programs and provide incentives for the value an online community generates.

Curious about how we make it work? Get early access for a demo, and we will show you.