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Consumers can buy almost anything online from groceries to holidays, gadgets to clothing, even cars.

Ecommerce today is exciting, innovative, and profitable: last year U.S. shoppers made internet history when Cyber Monday sales topped a record-breaking $1.5bn in online sales.

According to comScore, it was the biggest spending day in U.S. ecommerce history.

But one of the cornerstones of retail, be it online or in physical stores, has always been turning one-time shoppers into regular customers. What's the best way to do that?

When it comes to gaining repeat customers online, independent research commissioned by Rakuten revealed that 39% of shoppers surveyed see loyalty programs as the biggest incentive to making a second purchase online.

Retailers and marketers should look to put loyalty schemes in place to garner repeat purchases, encouraging yours to become the "go to" brand. 

The modern loyalty program

Loyalty programs are nothing new.

In 1979, Texas International Airlines launched the first frequent flyer program, and in 1981 American Airlines followed suit with the AAdvantage frequent flyer program, seen by many as the first full-scale loyalty marketing program of the modern era.

Department stores have long offered store cards, while other retailers offer products instead of points, like the My Starbucks Rewards, which offers you a free coffee after you've bought a certain number of drinks or when it’s your birthday. 

Today retailers are realizing that rewards and loyalty programs don't just mean money off.

Partnerships with complimentary brands, such as spas, salons, and restaurants, are becoming increasingly popular. Consumers are open to receiving incentives and rewards based on their interests and shopping behaviors.

This might mean early access to sales or new lines or being able to buy treats -- such as tickets to the movies or a Broadway play -- with loyalty points.

In 2006, Coca-Cola began its own customer loyalty marketing program, My Coke Rewards. The program allows customers to enter codes found on specially marked packages of Coca-Cola products on the company's website, where customers can redeem points for prizes, sweepstakes entries, gifts, and more. Coca-Cola also works with a number of partners including Nike, FTD, Live Nation, Olive Garden, and Disney Parks.

The program has been such a success that it’s been extended every year since its start. It's currently scheduled to run through December 31, 2013. 

Personalizing your rewards

In ecommerce, online loyalty programs are now highly sophisticated. Cookies, other tracking technologies, and services such as affiliate networks mean that retailers, brands, and marketers have a vast wealth of data on when, where, how and why their customers shop online.

They also have data on what shoppers have bought, how much they spend, and what else interests them based on their purchase history and web-browsing behavior. This allows brands to offer incentives targeted at an individual customer.

This is great news for brands trying to reach younger generations; Rakuten’s research recently found that younger online shoppers prefer the personal touch, with 24 percent stating that personalized offers were most likely to encourage another sale.

It's also worth noting that consumers don’t differentiate between channels. As PriceWaterhouseCoopers explains in "Understanding how US online shoppers are reshaping the retail experience," retailers need to understand that even digital channels don’t change the face of a business. It’s all the same for the customer.

Retailers need to focus on providing services for customers across all channels, integrating all channels to provide the best customer experience.

Treats for everyone

Loyalty programs present benefits both for retailers and consumers. The data that retailers gather on consumers who opt into a loyalty program is invaluable, allowing them to better target offers and products to a consumer based on purchasing history. This personalized targeting continues the virtuous circle of buying, rewards, and therefore more buying.

Make sure to offer your customers something that will encourage them to pick your brand over another brand, whether it’s points, discounts, or other treats.

A modern, digital loyalty program can either be specific to one retailer or, even better, encompass multiple brands and retailers. Ideally, online shoppers should be able to shop, earn, save, and spend with every purchase made, whether they shop online or in-store with the participating brands.

This drives customer loyalty and return rates to multiple brands, rather than restricting customers to one loyalty system per retailer. 

Bernard Luthi

Published 30 April, 2013 by Bernard Luthi

Bernard Luthi is CMO and COO of Rakuten.com.

4 more posts from this author

Comments (3)

Pete Williams

Pete Williams, Managing Director at Gibe Digital

I love Wiggles model which slowly grows your discount based on your overall spend over time. I know that I will always get a discount when I shop with them so it's my first and usually last point of purchase for sports related goods.

over 3 years ago

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lesley adair, Fidelity

I'd question how realistic this research really is in terns of actually encouraging repeat business.

What we all know, many of us from personal experience, is that what we say (in surveys, usability labs, forums etc) and what we actually do are, quite often, two different things.

I have very little interest in loyalty rewards when I'm choosing an online supplier. My primary benchmark is the customer experience.

Has this company bothered to really think about my needs? Made it easy for me to find what I want? Made the checkout process effortless? Given me reassurance that my product is on its way?

I'm thinking Amazon, Ebay, etc. That's what really gets customers coming back - make it really, really easy... even, dare I say it, enjoyable.

over 3 years ago

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Cathy Burgess

I absolutely agree with this post. Loyal customers are indeed the key to every online grocery business growth. Many people tend to purchase groceries online since the experience is great. This is the best and most convenient way of buying one's grocery needs. Online grocery shopping means a lot to me. I've tried this already and I find it great! So convenient and saves a lot of time, money and effort in going to supermarkets on weekends. Thus, family bonding can be done instead of still doing the groceries. This also lessens gas emissions, thus, more environment-friendly.

over 3 years ago

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