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How to Launch Your Loyalty & Referral Program

Posted by Drew Melendy on May 6, 2020 12:21:12 PM
Drew Melendy

It’s never been easier for retailers to reach their ideal customers thanks to the internet. The problem, it seems, is finding an effective way to capture their attention and convert them into returning customers at a low cost.

Loyalty and referral programs are long-standing, successful methods of doing this. However, they fully rely on your customers’ willingness to adopt them. 

If you want to get the most from your promotional programs, you’ll need to customize them to fit your business’s needs, plan for their debut, and properly introduce them to your customers.

Minature shopping cart sits in front of woman working her online retail business.

Getting Started

Customers won’t adopt your programs if they don’t know how their purpose or how to use them. Therefore, it’s vital that you also understand their differences and how they work. When the time comes, you’ll be able to effectively communicate their value.

Loyalty & Referral - What's the Difference?

Loyalty and referral programs are often confused with each other. Both offer valuable rewards for customers, but the difference is the specific behavior your customers are getting rewarded for.

Loyalty programs offer incentives, such as account credits, towards future purchases every time a customer makes a purchase. The goal is to lock in customer loyalty and encourage repeating spending.

Referral programs offer rewards to customers that share a referral link or code that successfully brings in a sale from a brand new customer. The goal here is to use digital word-of-mouth marketing to increase customer acquisition.

Set Your Incentives & Conditions

The way your loyalty and referral programs work and which rewards are given will depend on which software provider you use to implement them. 

Many e-commerce platforms offer referral and loyalty programs that can be tailored to your business’s needs. Make sure you thoroughly understand it’s capabilities and have your rewards fully set up to meet your needs. 

For example, CommentSold’s referral program lets you choose to offer a revenue share or a flat fee per successful referral. You can also choose rewards for the newly-referred customer to tempt them into making their first-time purchase.

Whereas, CommentSold’s loyalty program will offer customers account credits for the net amount of their purchases. You simply set the percentage to award them.

Be aware of costly expenses when you are setting up. Programs should exclude discounts, coupons, shipping, or any portion of a purchase where account credit was used for payment. These can quickly eat into your revenue, so be certain they're included in your programs' conditions.

Make It Easy to Redeem Rewards

Once your customers have earned their loyalty and referral points or cashback credits, how will they receive it? Ideally, you want your customer to make a repeat purchase, so make your rewards obvious and easily accessible.

Again, this will probably depend on custom settings within your software. Your customer may see their new rewards displayed within their account page and on the check out. These are vital details you'll have to communicate to customers during your launch.

To keep your offer top of mind, use automated emails to remind them to redeem points or credits. Even if your customer gets busy, you can still bring them back by showing up in their inbox.

Related: 5 Types of Emails That Strengthen Customer Loyalty

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Plan Your Programs' Debut

Loyalty and referral programs are great drivers for new business and customer retention, but you still need to ensure a good return on investment. When you first launch your programs, you may want to set them up for specific use cases and test out certain reward percentages.

While loyalty programs are a fantastic way to invigorate your customer base, you don’t have to leave them on at all times for them to be effective. Some shops leverage their loyalty programs by turning them on for exclusive sales instead of leaving them on all the time.

It's most likely that you'll want to keep your referral programs on at all times, so that customers will always work to bring you new business. Still, if you are unsure how that will benefit you, perform a test run with your top customers first.

Another option is to roll your referral program out to all customers and start by offering a smaller percentage. It's much easier to start with a conservative rewards system to see how well it works initially.

Experimenting with your rewards will help you pin-point what makes sense for your business. Just make sure to analyze your results.

A robust loyalty and referral software will have built-in reporting to show you key performance metrics. Look for reporting on how many new customers you've acquired, the dollar amount you've rewarded, revenue generated, and your return on investment.

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Create Awareness & Communicate Value

Once you’ve completed set up and understand your strategy, you’ll need to tell the world about your new programs!

Customers have to understand the value of your programs and how they work in order to get excited and make use of them. Make every effort to promote your programs and communicate how they work.

Use email or SMS text subscriber lists to let customers know about their new perks. Website banners can be also used to notify people of your new programs or invite them to social media, where you can talk about them in-depth.

For instance, Facebook Live makes it easy to be engaging and make a splash with your debut. The real-time, two-way dialogue from live broadcasts create an atmosphere of excitement, which is perfect for building hype for your new programs and to talk about how they work.

If you have Instagram, don’t forget to advertise there as well. Getting your message across as many channels as possible ensures that you’ll get more people on board. Introduce and reinforce the value of your programs every chance that you get for the most success.

The Takeaway

Loyalty and referral programs can turn passive scrollers into repeat purchasers and strong brand advocates. Still, for them to work, you need to optimize your set up, get a strategy for their launch, and advertise and educate wherever possible.

A weak roll-out will produce weak results, but with these tips and techniques, you can make the most of your loyalty and referral programs and get them started with a bang!

Topics: Marketing, Sales, Gamification

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