Gaining customer loyalty is one of the most important aspects to make your eCommerce business successful. Loyalty programs help reward customers for their repeat purchases and retain them in the long run. Referral programs enable customers to earn rewards for recommending a business to their friends and family. Your long-term customers act as brand advocates, which helps to increase brand awareness and bring in new customers.
Regarding the eCommerce sector’s growth, Shopify Insights found that 17.8% of sales came from online purchases and may even reach 24.5% by 2025. In this post, we will explore the power of referral loyalty programs and how they can boost eCommerce business success in the US.
Benefits of Using the Referral Loyalty Program
A referral loyalty program is a marketing strategy that enables businesses to reward customers who recommend their products and services to family and friends. Here are some of the main benefits of using referral loyalty programs for eCommerce brands in the US.
- Increase Customer Retention
One of the main advantages of a referral loyalty program is higher customer retention. This means that many direct-to-consumer (D2C) shoppers consider loyalty programs that include referral incentives, making it a crucial reason for purchasing directly from brands. Apart from that, customers who get tailored offers through a referral program are likely to spend 4.5 times more in a year as compared to those who receive generic offers.
- Enhance Customer Lifetime Value (CLV)
Another advantage is new customers that are gained through referrals, showing a 37% higher retention rate and a 16% increase in customer lifetime value (CLV). This shows that referrals play a huge role not only in bringing in new buyers but also in boosting lasting relationships.
- Boost Brand Advocacy
Many shoppers join the loyalty program and don’t hesitate to share it via referrals to express loyalty to the brand. Nearly half of Gen X and Millennials (49%) and Gen Z (48%) take part in loyalty programs and share them through referrals.
After understanding the significance of referral loyalty programs in eCommerce brands, we can say that establishing a referral loyalty program is a great idea. However, building a successful program needs the right expertise and a well-strategized plan.
Factors to Consider While Building an Effective Referral Program
Though there are multiple referral program platforms available in the market today, choosing the most suitable one can be difficult. To help you make the right choice and evaluate carefully, we have come up with the key factors that must be kept in mind before building the referral program-
– User-Friendly Program for Customers
Ensure that you focus on the program’s ease of use for your target audience. This will help in attracting new customers as complicated programs cannot keep customers engaged, making all your efforts in the program worthless.
– Simple to Setup Program
Another aspect that must be considered is how you set up the program. Make sure that the loyalty program provider that you choose offers easy program setup capabilities, ensuring that the program works hassle-free without dependency.
– Integration Simplified
Make sure that your loyalty and referral program work seamlessly with other third-party tools like email marketing services, which can help in reaching your target audience more precisely. Learn about all the available integrations to align with your existing systems.
– Analytical Features
Go for the loyalty solution provider that offers smart analytical support to help you track the performance of your program. This will help in extracting insights for enhanced customization efforts and better business outcomes.
– Robust Loyalty Features:
Your referral loyalty program should not just help to gain new customers but also maximize their investments. Go for the platform that offers a wide range of loyalty features, which can boost your referral efforts and drive higher CLV.
Final Thoughts
In the end, we can say that referral loyalty programs act as a great way for your business to build more valuable relationships with customers. This creates a win-win situation for both customers as well as the business as customers get rewards for referring friends and colleagues, and the business benefits from new customers at a lower acquisition cost.
If you are planning to acquire new customers via referrals from existing ones & retain existing ones, get in touch with loyalty experts to help you reach more valuable customers and increase business revenue.
