ecommerce loyalty program

Why E-commerce Businesses Must Invest in Loyalty Programs?

The e-commerce industry has seen sound growth in the past decade. Especially after the pandemic, there has been a huge growth in the e-commerce businesses. A large number of people today prefer buying different products and services online. The demand for online purchasing has boosted the growth of e-commerce businesses. However, as more and more businesses are coming online, it has increased the competition in the e-commerce sector. Businesses strive hard to maintain their presence in the market by offering superior quality products and services. They try every strategy to attract more customers and stay ahead of the competition.

Some e-commerce businesses often forget to focus on their existing customers in the race to attract new customers. No doubt, growing the customer base is necessary to enhance a brand\’s reach, but existing customers should be given more preference. It is important to keep hold of the customers who are more likely to purchase from the same brand repeatedly.

As per some reports, increasing the customer retention rate by 5% can greatly enhance profits by up to 95%. So, how can businesses keep hold of their existing customers? Well, one of the best ways to achieve this is by creating an e-commerce loyalty program.

A dedicated program is designed to provide several loyalty benefits to the customers, making them feel more valuable. This further encourages them to keep sticking with the same brand for the long run. So, what exactly is an e-commerce loyalty program? A loyalty program is simply a customer retention tool used by businesses to keep hold of their existing customers and engage them in various activities.

With the help of loyalty programs, businesses can encourage their existing customers to shop more often and communicate with the brand more frequently. One important thing to note here is that the loyalty programs must be easy-to-understand, easy-to-use, and offer a great experience.

Loyalty programs are the best for the customers, but how can e-commerce businesses benefit from these programs? Let’s find out the key benefits of loyalty programs that encourage e-commerce businesses to invest in these kinds of programs.

Benefits of loyalty programs for e-commerce businesses

Here are some of the key reasons why e-commerce businesses must consider loyalty programs.

#1. Keep hold of existing customers:

Acquiring new customers could cost a business at least five times more than retaining their existing customers. Members of a customer loyalty program can bring more value to a business, even in tough times. As per some reports, when the pandemic resulted in lockdown, the online orders from signed-up members were far higher than new customers. This has made businesses realize the importance of retaining their existing customers. It is also one of the most cost-effective ways to grow a business. With a well-defined loyalty program, e-commerce businesses can encourage their existing customers to keep coming back and spend more.

#2. Improve Customer Lifetime Value:

Customer lifetime value or CLV is the net profit credited to a business\’s overall relationship with a customer. The CLV helps businesses determine how valuable a customer is in the present time and how much this bond will benefit the business in the future. The key benefit of a customer loyalty program here is that it presents all the key data about their customer’s unique buying habits to the business.

Through this data, they can easily determine their customers\’ likes, what they prefer the most, how they like to connect with their brand, etc. Using this data, businesses can customize their loyalty program and reward their customers at each step of their journey, thereby enhancing their CLV.

#3. Strengthen personal relationships:

For long-term relationships, businesses must create an emotional bond with their customers. They must design their program in a manner that should make customers feel more valued. It is important to note that each customer is unique; therefore, businesses must treat them differently.

As mentioned in the above point, data plays the most important role in understanding customer’s requirements. Businesses must utilize valuable customer data and insights like their order history, past activities, the number of visits, most searched things, referrals, feedback, etc. Knowing customers more and accordingly employing a loyal program strategy can help greatly to strengthen the relationships between the business and its customers.

#4. Create brand promoters:

For e-commerce businesses, creating valuable customers isn’t just about the ones who spend money. Valuable customers are those who can help businesses in their growth by promoting the brand to others. Customers who prefer the brand name to others, including their family, friends, or people in their social media circle, are usually called brand advocates. With the help of a loyalty program, e-commerce businesses can easily build a network of promoters.

According to some reports, more than 92% of people trust word-of-mouth (WOM) recommendations given by friends or family members compared to any other form of marketing practice. A loyalty program is the main base that can help to boost the power of advocacy in action. More than 85% of customers are likely to engage with a brand they are loyal to by spreading word-of-mouth. This is perhaps the most effective and two-way reward system for both the business and its customers.


So these are some of the key e-commerce loyalty program benefits. By creating a dedicated loyalty program, e-commerce businesses can surely hold onto all their important customers. If you are searching for the best loyalty management platform, you can connect with LoyaltyXpert that gives you complete freedom and control of the loyalty program. You can request a demo to get an idea about how this platform will work for your loyalty program.