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Key Takeaways

Loyalty Programs—Your Secret Weapon: Ecommerce loyalty programs transform occasional shoppers into loyal customers, significantly boosting spending by 67%. These programs not only increase sales but also foster word-of-mouth referrals, benefiting from customer appreciation.

The VIP Club Vibes: Ecommerce loyalty programs offer exclusive perks like discounts, free shipping, and member-only products to reduce customer churn and boost retention. These programs make customers feel valued and encourage return visits.

Point-based Programs—The Starbucks Standard: Point-based loyalty systems engage customers by rewarding them with points for purchases and interactions. Successful examples like Starbucks and Collagen Co. incentivize repeat visits and multi-channel engagement.

Paid Loyalty—A Prime Example: Amazon Prime showcases the allure of paid loyalty programs, where customers pay for exclusive benefits and speedy delivery. This model creates a strong incentive for customer retention and satisfaction.

Bribing with Love and Deals: Ecommerce brands effectively use loyalty programs to offer tailored rewards like referral bonuses and exclusive access, enhancing value perception and turning customers into brand advocates.

Ecommerce loyalty programs aren’t just a gimmick—they’re your secret weapon for turning one-time shoppers into ride-or-die customers.

Think of them as the ultimate relationship hack: keep customers happy, and they’ll keep coming back (and spending more while they’re at it).

And we’re not just saying that—loyalty members spend 67% more than regular customers.

That’s right.

They’re also way more likely to tell their friends about your brand, partly because you’re bribing them with referral perks (which we’ll get into later) but also because people love flexing about the brands that actually appreciate them.

Bottom line? Show your customers some love, and they’ll return the favor—with their wallets. So, let's get into this.

What are Ecommerce Loyalty Programs?

Ecommerce loyalty programs are like VIP clubs for your best customers—except instead of a velvet rope, you’re handing out discounts, perks, and exclusive access to keep them coming back for more.

The goal is to reduce customer churn, boost retention, and rely less on expensive new customer acquisition to drive sales.

Loyalty program members can score all kinds of rewards, like:

  • Points or credits. The more they shop, the more they earn.
  • Exclusive discounts. Because who doesn’t love a deal?
  • Free shipping. The ultimate cart-conversion hack.
  • Members-only products. Limited-edition drops or early access to new arrivals.
  • Referral bonuses. Get rewarded for sending your friends (win-win).

What you offer depends on what makes sense for your brand and your customers. Some brands go all-in on points-based rewards, while others lean on VIP tiers or referral incentives.

Let’s break down the different types and how they work.

What are the Different Types of Loyalty Programs?

There’s more than one way to bribe customers with rewards—and loyalty programs come in all shapes and sizes.

The classic points system is everywhere, but brands are also cashing in on paid subscriptions, tiered loyalty programs, and exclusive benefit programs. Let’s break them down.

1. Point-based loyalty program

You know it. You’ve used it. Starbucks Rewards is the gold standard of point-based programs.

Their app is one of the most downloaded for a reason: every order earns you stars, and stars = free coffee. This keeps customers engaged, encouraging repeat purchases in the name of free lattes.

But it’s not just Starbucks.

Collagen Co., an ecommerce supplement brand, sweetens the deal by offering points for social media follows, SMS sign-ups, and reviews—not just purchases. The result? Higher engagement across multiple channels.

collagen club loyalty program
Collagen Co’s loyalty program’s landing page

2. Paid loyalty rewards program (one-time and subscription)

Amazon Prime didn’t just reinvent loyalty programs—it made them irresistible.

That “get it tomorrow” promise is enough to hook millions into paying for perks. In fact, over 200 million people worldwide are Prime members, proving that people will pay for convenience, speed, and exclusive benefits.

Amazon is one of the few companies that can deliver on that promise without delays, and they know it.

Once you are ready to check out, they use their membership landing page to entice you with a free 30-day trial to test Prime benefits. A timely offer like that is hard to opt out of. 

And it’s not just Amazon—63% of consumers pay for at least one loyalty program, whether it’s Walmart+, Sephora Flash Shipping, or airline memberships.

Paid programs drive higher purchase frequency, bigger carts, and stronger brand affinity—because once people pay in, they want to maximize the benefits.

mckinsey statistics paid loyalty programs 63% consumers pay for at least one paid program
While Amazon Prime is the biggest player in paid loyalty programs, people love them across industries.

3. Tiered rewards program

Hierarchy is a fact of life. We all aim for ever higher tiers, striving to earn our way upward. So, it only makes sense that tiered loyalty programs would be a hit.

You can give certain customers the feeling that they are VIPs, or can be, by working their way up tiers and getting special rewards for their work.

Take Sephora’s Beauty Insider program, which boasts 17 million Sephora Beauty Insider reward members in North America alone. Better yet, 80% of Sephora sales are due to their loyal members.

Their tiered system—Insider, VIB (Very Important Beauty Insider), and Rouge—keeps customers spending more to level up and unlock exclusive rewards.

They also nail the omnichannel experience: their rewards bazaar updates twice a week, giving members fresh reasons to check the site (and shop).

Plus, their ecommerce platform mirrors the retail store experience, reinforcing customer loyalty across all touchpoints.

image of sephora reward bazaar
Sephora’s Reward Bazaar landing page allows members to redeem their points for products or charity.

4. Benefits rewards program

Some brands skip points altogether and go straight for exclusive perks.

Example? IKEA Family. No points, no complicated redemption—just free coffee, discounts, and surprise perks throughout the year.

Simple, effective, and designed to drive store visits and brand love.

5. Referral program

While not always a traditional loyalty program, referral programs work hand-in-hand with them.

They reward customers for doing what they already do: recommending brands they love.

Whether it’s cash, discounts, or bonus points, referral incentives turn customers into a free marketing team—which is why so many brands double down on loyalty + referral programs for maximum impact.

6 Ways Loyalty Programs Help Your Business 

If you are wondering about how a loyalty program can benefit your ecommerce business, here are six reasons why creating a loyalty program is great for your bottom line. 

1. Loyalty programs boost sales 

Struggling with slow sales and low web traffic? A loyalty program might be the easiest way to turn things around. It’s one of the best customer retention strategies—and retention is where the real money is.

Here’s the math: Reducing customer churn by just 5% can increase profitability by 75%.

That’s because loyal customers spend more, stick around longer, and bring in new customers through referrals. Plus, they have a higher average order value than one-time buyers.

Sure, setting up a loyalty program takes some effort (we’ll break down your options soon), but once it’s up and running, you’ll see the impact in your sales notifications—and your bottom line.

Looking to boost sales for your ecommerce store? Here are some other proven marketing tactics worth checking out. 

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2. Loyalty programs build trust

Building customer loyalty is key when it comes to encouraging repeat purchases.

But it can also help you through the worst-case scenarios. With a recession looming and inflation rising, many brands are forced to bump prices due to supply chain issues and the rising cost of raw materials. 

Cosmetic brands with a loyal fan base can deliver the bad news without prompting a major customer exodus.

When Rare Beauty announced a price hike due to manufacturing costs earlier this year, the customer response was mostly sympathetic rather than reactive. 

We are all price sensitive, but building a rapport with your customer beforehand makes you more valuable in their eyes, and they will be less likely to break ties for a competing option. 

3. Loyalty programs encourage social shares and referrals 

You can tailor your ecommerce loyalty program to your needs.

If you want more mentions on social media, encourage your loyal customers to tag your brand or give you a shoutout on platforms like Facebook, Instagram, and TikTok in return for an incentive.

Or ask them to share a discount with their friends to get a kickback. 

Happy, loyal customers will feel more compelled to mention your brand if they get a discount or gift with their next purchase.

And you will benefit majorly from word-of-mouth buzz. 

4. Loyalty programs increase the customer lifetime value 

Your customer lifetime value can be calculated by multiplying the average value of their past orders and multiplying it by the number of purchases they’ve made within a certain time frame. 

This metric is a good gauge of whether or not customers' basket sizes are getting bigger after you’ve implemented a loyalty program and if they feel compelled to make repeat purchases.

Here’s one of the formulas you can use for your own ecommerce store: 

Customer Lifetime Value (CLV) = Average Order Value x Orders x Time 

Customer lifetime value equation

For example, if I ran an ecommerce site selling running shoes, I might see that one of my customers tends to purchase shoes twice a year, with an average order value of $100.

Their lifetime value would then be $200 a year. Suppose their customer lifetime value (CLV) goes up after I implement a loyalty program.

$200 = $100 x 2 x 1

In that case, that’s good news, and it means the incentives I've created are compelling enough to encourage either higher or more frequent orders. 

For more ways to calculate your customer lifetime value and other ecommerce KPIs, check out this article here

5. Loyalty programs build more robust customer profiles 

When I worked for an organic skincare brand, we encountered a problem. 

We wanted to launch a new antioxidant moisturizer for more mature skin, women in their 40s to 60s concerned about fine lines and wrinkles, and use email marketing as one of our main tactics.

However, there was no way to segment our emails since we’ve never captured data regarding the age range. All we had to go by was their name and email. 

Setting up a loyalty program would have made it easier to capture this crucial detail.

In our sign-up process or as a short survey where a loyal customer could be awarded extra points or a GWP, we could have messaged our intended audience exclusively rather than send out a mass email. 

Perhaps age isn’t a concern since you only offer one product that appeals exclusively to a specific market, but you never know what will happen as your business grows and expands its product line. 

Knowing more about your customers will make segmentation and personalization a lot easier.

Therefore, the messaging hits home and converts an eager buyer rather than a bewildered one wondering why anti-aging cream targets someone still in their teens! 

6. Loyalty programs save on customer acquisition costs

It costs 5x more to acquire new customers than to retain your current ones

Rather than spending the majority of your budget trying to get new customers to your website, nurture the customers you already have who already know the brand and incentivize them to repurchase.

The only way to have a healthy ecommerce business is to have loyal repeat customers. 

Not only that, but a healthy base of loyal customers will spread the love via word-of-mouth and referrals, thus driving acquisition of new customers at a lower cost.

How to Set Up Your Customer Loyalty Program in 8 Easy Steps

Now that we’ve covered what types of loyalty programs are available, here are some strategies to keep in mind before kickstarting your ecommerce loyalty program 

1. Figure out why customers are loyal to you in the first place (or why they aren't)

Before building your loyalty program, ask yourself: Why do some customers keep coming back while others bounce after one purchase?

The best way to find out? Ask them. Send out surveys, look at customer reviews, and analyze repeat purchase behavior.

What do they love about your brand? What’s missing?

Maybe it’s your pricing, product quality, or brand personality that keeps them engaged. Or maybe they love your fast shipping and seamless customer service. Knowing their motivation will help you build a loyalty program that actually resonates.

This is also the time to benchmark your conversion rates and set stretch goals.

If your repeat purchase rate is 20% now, what does success look like? 30%? 40%? Having a clear goal will make it easier to measure your program’s success down the line.

2. Make your program easy to use, understand—and find

Nothing kills enthusiasm faster than a confusing loyalty program. If customers can’t figure out how to earn or redeem points, they’ll bounce before they ever see the benefits.

Keep it simple. Make it crystal clear how points work, when they can be redeemed, and if they expire (because no one likes surprise point losses).

And don’t make them hunt for it. Create a dedicated loyalty program landing page optimized for SEO. People are literally Googling "[Your Brand Name] + loyalty program"—so give them a page that ranks high and answers all their questions upfront.

Pro tip: Add an FAQ section to your loyalty page covering:

  • How points are earned and redeemed
  • Expiration rules (if any)
  • Exclusive perks
  • How to sign up

The easier your program is to find and understand, the more customers will actually use it—which means more repeat purchases and brand loyalty for you.

3. Look at what your competitors are doing and offer something different 

Chances are, your competitors already have or are thinking about creating a loyalty program themselves.

What can you do differently to set your brand apart? Aside from offering points, Summer Friday’s Self-Care Club rewards program offers members a birthday gift and a sweet discount upon signing up. 

summer fridays ecommerce loyalty program self-care club
Start from competitor loyalty pages and write down the best and worst bits as you build your own.

You can research the biggest names in your vertical to see the types of programs they employ, the language they use to describe the program, and the rewards they offer.

If it works for them, it could likely work for you as well.

Beyond that, look at your direct competitors and figure out how you can develop a loyalty program that is more compelling than theirs.

4. Make rewards feel achievable (challenging, but within reach)

If customers aren’t engaging with your loyalty program, they might feel like the rewards are impossible to earn.

Think about it: If you’re giving 20 points per purchase, but customers need 10,000 points just to get a 10% discount, they’re going to check out—mentally and literally.

No one wants to grind for months just to save a few bucks.

The key? Balance. Rewards should feel challenging enough to be exciting, but not so hard that people give up. When customers actually hit those milestones, they get a dopamine boost—which reinforces the habit of shopping with you.

If engagement is dropping, ask yourself:

  • Are customers earning points fast enough to stay motivated?
  • Does the reward match the effort required to earn it?
  • Would I personally stick with this program?

A loyalty program only works if people actually use it—so make sure your rewards feel worth chasing.

5. Engage with customers outside of collecting points 

While an ecommerce loyalty program exists to track a customer’s accumulation of points, there are other ways you can engage with customers outside of the point system. Here are some examples:

  • Find out their birthday to send them a personalized message and gift.
  • Provide them with early access to your new product launch.
  • Invite them to an experiential pop-up.

There are certainly ways to do this that are particular to your vertical and your customers, so brainstorm! Add a more human touch to deepen the customer relationship. 

6. Think omnichannel 

Nowadays, there are various customer touchpoints to consider. Customers may begin their journey on your mobile website but end up making purchases via social media. 

When choosing a loyalty program for your ecommerce site, make sure that it can track customers across different platforms. You can then analyze this data later on. 

Wherever they are interacting with your brand, they should have a consistent experience.

Increasingly, customers are going online to buy something but picking it up in-store (referred to as BOPIS), so this same experience should be accessible with their rewards program.

7. Use AI to develop targeted offers 

As artificial intelligence advances, you can elevate your loyalty program based on the information you are collecting now.

Segmenting customer profiles and delivering personalized messages will become easier and more efficient than ever as AI is integrated into more of the ecommerce tools we use.

Customer expect personalization from brands they shop with these days, with 76% more likely to purchase from brands that personalize.

The advancement of AI tech means that customer data can be used more intelligently to offer this sort of helpful personalization.

Investing more into a high-quality customer experience will undoubtedly result in a higher checkout rate. 

8. Be flexible with your tactics 

As the economic situation forces consumers to tighten their purse strings, cost savings are top of mind more than ever. So be flexible with how you reward customers.

Expedia restructured its loyalty program and renamed it One Key so customers can now earn and redeem points across their travel platforms, including Hotels.com, Vrbo, and Travelocity, providing customers with more choices when it comes to planning a budget-friendly vacation. 

Regularly ask your customers about their program experience so you can adapt it for better customer experience and sales.

9 Ecommerce Loyalty Program Metrics For Tracking Your Growth

A loyalty program is only as good as the KPIs you track to measure your success. Let’s look at nine KPIs that can give you a good idea of whether your program is helping or hurting.

  1. Customer Lifetime Value (CLV): Measures the total revenue a business can expect from a single customer over the duration of their relationship.
    • Formula: CLV = (Average Order Value × Purchase Frequency) × Average Customer Lifespan
  2. Customer Retention Rate: Indicates the percentage of customers who continue to do business with you over a given period.
    • Formula: Customer Retention Rate = [(Number of Customers at End of Period - New Customers during Period) / Number of Customers at Start of Period] × 100
  3. Redemption Rate: Shows how frequently customers redeem their loyalty points or rewards.
    • Formula: Redemption Rate = (Number of Rewards Redeemed / Number of Rewards Issued) × 100
  4. Customer Acquisition Cost (CAC): The total cost of acquiring a new customer.
    • Formula: CAC = Total Marketing and Sales Costs / Number of New Customers Acquired
  5. Average Order Value (AOV): Reflects the average amount spent per order by customers.
    • Formula: AOV = Total Revenue / Number of Orders
  6. Net Promoter Score (NPS): Measures customer satisfaction and loyalty, indicating how likely customers are to recommend your brand.
    • Formula: NPS = % of Promoters (customers who score 9-10) - % of Detractors (customers who score 0-6)
  7. Repeat Customer Rate: The percentage of customers who have shopped more than once.
    • Formula: Repeat Customer Rate = (Number of Repeat Customers / Total Number of Customers) × 100
  8. Active Engagement Rate (AER): Tracks how actively customers engage with your loyalty program.
    • Formula: AER = (Number of Actively Engaging Customers / Total Number of Loyalty Program Members) × 100
  9. Customer Churn Rate: Measures the rate at which customers stop doing business with you.
    • Formula: Customer Churn Rate = (Number of Customers Lost During Period / Number of Customers at Start of Period) × 100

Best Loyalty Program Tools: Plans And Pricing 

Managing a loyalty program isn’t simple, which is why there are tons of great loyalty software to make it easy and intuitive.

In fact, the global loyalty management market was valued at $6.47 billion in 2023 and is projected to grow to $28.65 billion by 2030.

Here are some of the best ecommerce loyalty programs you can easily integrate into your Shopify store or website. 

(Note: Prices shown below reflect basic plans offered. High-volume businesses and large enterprise pricing will vary.)

Yotpo

As one of the longest-running ecommerce loyalty programs, Yotpo offers a quick setup for building your ecommerce loyalty program. 

With no coding required, you can easily drag and drop design elements to create a landing page for your loyalty program, choose what kind of redemptions you want to award customers and follow customers through every touch point, and track data through their analytics dashboard. 

While a free plan is available, you’ll likely want to upgrade to their other plans as your business grows. 

Price: Starting at $79/month 

screenshot of yotpo’s loyalty program
An example of Yotpo’s loyalty program points redemption page and design builder.

Smile 

Smile’s ecommerce loyalty program allows your customers to accumulate points through purchases, social shares, and their birthdays. They can also set up a VIP program for your top loyal customers and a referral program. 

Used by 100,000+ small businesses, this is a great way to test out a loyalty program at a low cost. 

Price: Starting at $49/month

Smile's rewards platform integrates with Shopify and mobile for customers on the go.

Joy

Joy is a great loyalty points app that can set you up quickly. With many five-star Shopify reviews, they are becoming a popular way to create a loyalty program quickly and affordably. 

You can create a customized pop-up to encourage visitors to join your program, control membership status, and view your progress through their analytics dashboard. 

If you encounter issues, their customer support team is quick and responsive. 

Price: Starting at $35/month 

screenshot of joy loyalty program
Joy lets you design pop-ups that encourage customers to sign up for your rewards program.

ShopHub

ShopHub is a virtual stamp card that you can customize with your logo, brand colors, and desired stamp. You can choose when and how customers get awarded. 

This is a great option for small businesses that want to reward customers without making too many tweaks. There’s also something charming about using a scratch card that will make it feel nostalgic for customers. 

Price: $49/month 

screenshot of shophub loyalty program
Remember retail rewards stamp cards? You can create digital versions with ShopHub.

6 Ecommerce Loyalty Program Examples For Inspo

If you are looking to start a fancy new loyalty program, a little inspo from successful brands helps.

Newsweek recently put together their list of "America's Best Loyalty Programs" with the help of Statista, and you'll find some very familiar names there.

best loyalty programs in america newsweek statista
Apparel seems the big winner in the loyalty world according to this 300 long list from Newsweek and Statista.

Whether you sell makeup, coffee, or a bit of everything, there’s a type of loyalty program for you.

Sephora Beauty Insider

sephora insider ecommerce loyalty program
Sephora makes members feel VIP with points and tiers that give great rewards.

Sephora’s point-based Insider program includes numerous benefits like free standard shipping, cash off on purchases, seasonal event savings, end-of-year discounts, and more.

They also add a tiered element to this with their VIB and Rouge levels, accessed by spending a certain amount each year. These special spenders get bigger benefits, plus extra benefits only accessible to those tiers.

Starbucks Rewards

starbucks ecommerce loyalty program
Starbucks keeps people coming back with convenient ordering and quickly accumulated rewards.

Their app-based rewards program makes it easy to order your coffee online while earning stars for drinks, food, and merchandise. Plus, they’ll give you a free treat on your birthday!

Amazon Prime

amazon prime ecommerce loyalty program
The most well-known paid loyalty program, Amazon Prime gives hard to beat benefits.

We all know Amazon Prime. Statistically, many of you reading this are members.

For a monthly or annual fee, you get free fast shipping on all Prime orders, access to Prime Video and Amazon Music for great movies, shows, music, and podcasts, and exclusive deals throughout the site.

Plus, with the Amazon Prime credit card, you get 5% cashback on Amazon and Whole Foods purchases.

e.l.f. Beauty Squad

elf beauty squad ecommerce loyalty program
e.l.f. drives loyalty with a combo tiered and points-based rewards program.

Similar to Sephora, e.l.f. uses a point-based program with tiers (Fan, Pro, and Icon). These give members rewards like early access, a birthday gift, members-only sales, free shipping, and more.

Target Circle

target circle ecommerce loyalty program
Target keeps customers in their orbit with rewards and exclusive deals.

Target’s free loyalty program, Circle, gives members access to special deals, partner perks, and redeemable rewards points.

Like Amazon, they also have a credit card, which gives you a 5% discount on Target purchases and free 2-day shipping.

Sand Cloud

sand cloud ecommerce loyalty program
Sand Cloud has various ways to earn points, which either drive online engagement with the brand or new sales.

Towel brand Sand Cloud has many avenues for earning points, like how you can earn more tickets in a sweepstakes.

Points are earned through creating an account, following them on social media, writing product reviews, purchasing products, and celebrating your birthday. Redeem points for cash off future purchases.

On top of that, they have a VIP tier system (Silver, Gold, Diamond) that increases your reward points for birthdays and purchases.

Loyalty Programs Build Brand Trust And Retention—And Attract New Customers

Starting an ecommerce loyalty program is a great opportunity to capture more customer data that would benefit your business.

Retention is top of mind, of course. But it can also help shorten your new customer acquisition process and improve the ecommerce customer service pipeline.

If potential customers know there is a major draw for signing up for a loyalty program (receive a discount code to use for registering), there is more of an incentive to join.

And once you’ve built a rapport with your customer, you'll be rewarded with their loyalty and more frequent orders. 

Don’t forget to subscribe to The Ecomm Manager newsletter to get more strategic insights for your ecommerce business.

Ecommerce Loyalty Programs FAQs

Now time for a little Q&A! Since we’re not doing this live, I’ll just throw out some questions and graciously answer them for you.

What challenges might I face when developing an ecommerce loyalty program?

Developing an ecommerce loyalty program involves multiple challenges, including balancing cost and benefits to offer appealing yet sustainable rewards.

You also need to personalize the program to diverse customer needs, which requires robust data analysis and integration with existing systems. The technical aspect is particularly challenging, as seamless integration ensures the program operates efficiently without disrupting the user experience.

How should I market my ecommerce loyalty program?

Effective marketing of your ecommerce loyalty program requires clear, simple messaging and utilization of multiple channels such as email, social media, and your website.

Communicating the benefits, highlighting exclusive rewards and personalized offers, and demonstrating how easy it is to earn and redeem points are crucial strategies.

Personalization in communication can double engagement rates, making the program more attractive and relevant to potential loyalty program members.

How effective are loyalty programs in increasing customer retention and sales?

Loyalty programs are highly effective in enhancing customer retention and boosting sales. They incentivize repeat business by providing a sense of value and belonging, which encourages customers to continue engaging with the brand.

This engagement often results in repeated purchases and increased spending, significantly impacting sales and customer loyalty.

How do loyalty programs impact customer behavior?

Loyalty programs deeply influence customer behavior by encouraging frequent purchases and higher spending, which can make customers prefer one brand over competitors.

These programs enhance customer satisfaction and perceived value through rewards, which not only fosters brand loyalty but also motivates customers to explore new products, thereby broadening their engagement with the brand.

Frances Du

Frances Du is a content manager and writer with 10 years of experience in ecommerce and digital marketing, turning customer insights and market trends into actionable content strategies that drive engagement and discussion. Frances' editorial work has been featured in The Ecomm Manager, Village Living Magazine, GOOD Magazine, Traveler's Digest, SHE Canada, The Culture-ist, and The Huffington Post. She is a graduate of the University of Toronto.