Ecommerce Summer School: Discounts Killing Your Business? Do This Instead — Fiona Stevens | Why Rewards Beat Discounts, Why Loyalty Programs are more than Points, How To Design Loyalty Programs, What Incentives Work Best (#324)

In this podcast episode, we dive into strategies to increase the number of returning customers, boost customer lifetime value, and decrease churn rates. We explore why rewards can be more effective than discounts, how loyalty programs offer more than just points, and what alternative incentives work well in loyalty programs. Tune in to learn how to design an effective loyalty program that goes beyond just points and builds lasting customer relationships. Our featured guest on the show is Fiona Stevens, Director of Marketing at LoyaltyLion.com.

Topics discussed in this episode: 

• How to get started with a loyalty program: Begin with small, simple rewards and gradually expand based on performance.
• Why loyalty programs are more than just giving points: They're about building ongoing connections and customer communities.
• Why personalization is crucial in loyalty programs: It allows for tailored experiences and more relevant communications.
• How to determine the right frequency for loyalty program communications: Base it on your product's purchase cycle and customer lifecycle.
• Why loyalty programs should be actively managed: Set-and-forget approaches often fail to deliver value.
• How to align loyalty rewards with brand values: Offering donations or sustainability-focused rewards can strengthen emotional connections.

Links & Resources

Website: https://loyaltylion.com?utm_source=podcast&utm_medium=ecommerce-coffee-break
Shopify App Store: https://apps.shopify.com/loyaltylion
LinkedIn: https://www.linkedin.com/company/loyaltylion/
X/Twitter: https://twitter.com/loyaltylionhq

Get access to more free resources by visiting the show notes at
t.ly/1zTeK

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Transcript

Claus Lauter: Welcome to the e commerce coffee break podcast and our summer school. This week, it's all about loyalty. So let's dive right into it. 

Voice Over: This is the e commerce coffee break. A top rated Shopify growth podcast dedicated to Shopify merchants and business owners looking to grow their online stores, learn how to survive in the fast changing e commerce world.

Voice Over: With your host Claus Lauter and get marketing advice you can't find on Google. Welcome to the show. 

Claus Lauter: Hello and welcome to another episode of the e commerce coffee break. Today, we want to talk about loyalty programs. We want to find out what opportunities can loyalty bring to you. And usually it's much more than just giving your customers points.

Claus Lauter: So we want to find out a little bit more about this. For that, I have Fiona Stevens with me. She is the head of marketing at Loyalty lion. Hi, everyone. I'm the head of marketing at Loyalty lion. a data driven loyalty and engagement platform for fast growing e commerce merchants. Fiona has 14 years experience in marketing, has worked in in house and agency side across functions including PR, SEO, and content, and she has specialized in loyalty for retail and e commerce brands for the past eight years.

Claus Lauter: So definitely the right person to talk to. Hi Fiona how are you today? 

Fiona Stevens: Hi, I'm very well. Thank you. Thanks for having me. 

Claus Lauter: Yeah. Give me a bit of a background of what got you in e commerce, what got you into the side of loyalty programs? 

Fiona Stevens: Yeah, absolutely. Um, it was really when I was working, uh, in house marketing for a content marketing agency, and we were working with a lot of e commerce brands.

Fiona Stevens: And it was all about the onsite experience. It was about a product copy and conversion on site and that kind of thing. Um, but we also started doing lots of email post purchase email work and things like that. Uh, and it was a lot of it translation. So how do you get your, the same message across? in lots of different markets.

Fiona Stevens: And I just, I found that sort of transition from onsite to post purchase really very interesting. And then the next company or the next agency I moved into was loyalty specific for much bigger brands, much bigger retailers. Um, and I just found it an absolutely fascinating. And then I was introduced to loyalty line where they were bringing together the sort of independent, smaller e commerce retailer side of things, but still that really fascinating world of loyalty programs as well.

Fiona Stevens: And the two together was a perfect mix. 

Claus Lauter: Okay. Sounds great. Now, obviously with increasing ad cost, increasing CPAs and so on and so forth, customer lifetime value becomes more and more a focus of a lot of merchants. Now, different ways to do this, obviously loyalty programs. Is one way to do this. Many people just have in mind is like I give some points out and then hopefully at some point my customer will come back, but the topic is much more complex than that.

Claus Lauter: Give me a bit of a background on how it actually should work in a perfect world scenario. 

Fiona Stevens: I think it's absolutely true. Points are behind almost everything, even the most high end luxury programs. You know, they run by points, but the customer doesn't have to see those points. It should be more about customer experience.

Fiona Stevens: I think more and more. With ad costs going up, et cetera, but also with people opting out of those ads and opting out of sharing their data, it's getting harder to deliver those personalized experiences. You've also got, you know, cost of living crisis, economic downturns, right, left, and center. People are a lot more nervous, a lot more cautious about spending their money and they want to spend their money with brands that they know and trust.

Fiona Stevens: So rather than seeing a loyalty program as a point It really should be a way to build a connection with a customer, an ongoing connection, and actually to start building up a customer community of people that know and love your brand. So that when they do have the money that they want to spend, there's not really any question in their mind.

Fiona Stevens: They think, who do I know? I'll get good quality, good service, good product, and a bit of additional something from, and they come straight back to you. So I think, um. Particularly in the environment we're operating in today, um, it is much less about rewarding purchases and it's much more about finding ways to keep in touch in between those purchases.

Fiona Stevens: It's about, um, helping customers understand through your program that you share the same beliefs or values. Uh, it's about building a community that they want to be part of, even when they're not shopping so that when they do decide to shop, you're their first port of call. 

Claus Lauter: Okay, you brought a very interesting term up out there, opt out era.

Claus Lauter: So a lot of people opt out of a lot of things, email marketing, and obviously with all the updates from, um, Apple, for instance, iOS 14. 5 and so on and so forth, it becomes more difficult to, for merchants to get through to their customers. How can a loyalty program help with that? 

Fiona Stevens: Well, essentially when you join a loyalty program, you're opting in to communications, you know, and there's, there's lots of different ways that, you know, at the highest level, they have said yes to receiving transactional emails from you.

Fiona Stevens: So you can be sending them things like points balances or available reward reminders and things like that on a monthly or weekly basis. Just those, those check in points that are really highly personalized. They're entirely unique to that customer because they've got their points balancing. But then there's also ways you can use loyalty programs to collect more of that data.

Fiona Stevens: So for example, we have a dog food brand who awards points for people that take the time to fill in their pet profile. So it asks questions like what color is your dog, when's its birthday, et cetera. And they can then provide personalized comms or personalized loyalty offers, et cetera, based on the profile that they've built.

Fiona Stevens: And I think that works for a lot of DTC brands, especially things like skincare or haircare, where you've got people filling in profiles with a little bit more information around what works for them or what kind of skin they have. And it just allows you as a merchant to carry on delivering that level of personalization that we're struggling to do a little bit more at this point, or actually just to move beyond that first name personalization that we've done for a long time.

Fiona Stevens: Everybody, we all think we're doing it, but what really what we're doing is putting very light detail, like a first name or something. And the more you can use points to encourage people to share more and more information, the more you can personalize. 

Claus Lauter: Okay, very interesting example. Maybe you can give more of these.

Claus Lauter: So people, when they enter more details about their dog for, Someone in a pet niche get more points for every answer. Is that right? 

Fiona Stevens: Well, you get points for filling in the profile and then you, you may receive things like bonus point promotions on products that would suit your dog. Um, so it's kind of, it's, it's, Gathering the information and incentivizing a customer to share their data, but then it's using it in a really clever way as well to get that next purchase through.

Claus Lauter: Okay. Can you give some more examples? I think a lot of merchants are sort of struggling to get their head around as on how to come up with ideas. Maybe from your experience, you can give us some ideas there. 

Fiona Stevens: Uh, ideas about personalization or just where to find ideas or yeah, I think there's lots of different ways really.

Fiona Stevens: I think, you know, That is one. Profiles, you've also got things like quizzes. Um, so, uh, Octane, for example, and I think now, um, Akendo, they have quiz functionality built into their apps. Um, you can integrate that with your launch program. So, again, offer people, uh, points or rewards in exchange for filling in those quizzes.

Fiona Stevens: Again, you just gather more data about them. Um, it's a little bit of fun as well. And we also see people using tiers and as a kind of gamification in their loyalty program to collect more of that data and again then be able to use it to personalize experiences. So actually the vast majority of people using loyalty line have separate tiers in their program and the more points you earn the more you share data.

Fiona Stevens: The more points you earn, the more points you earn, the more you move up the tiers, and then you unlock more experiential rewards, things like early access to sales or early access to new product lines, the opportunity to feedback on products, that kind of thing. 

Claus Lauter: Hey, Claus here, just a quick one. If you like the content of this episode, sign up for our free newsletter and become a smarter Shopify merchant in just seven minutes per week.

Claus Lauter: We curate content from more than 50 sources, saving you hours of research and helping you stay on top of your e commerce game with the latest news, insights, and trends. Every Thursday in your inbox, 100 percent free, join now at newsletter. ecommercecoffeebreak. com. That is newsletter. ecommercecoffeebreak.

Claus Lauter: com. And now back to the show. Points in itself are worthless. So how would you convert, in the best case scenario, points to something that gives some kind of benefit To a customer. 

Fiona Stevens: I 100 percent agree. And I think it's also a big concern for stores. You know, if I offer loads and loads of points, does that mean I'm going to have to offer loads and loads of discount rewards?

Fiona Stevens: So I can completely understand why people worry about that. And in reality, there's a lot of experiential alternative kinds of incentives that you can use, which people actually value just as much. So, um. A few examples I already mentioned, um, early access to sales. People absolutely love the VIP feeling of being able to get to a sale before anyone else can.

Fiona Stevens: And that also works really well with either new product lines that you're dropping or when you have something really exciting like a collaboration, um, a new print that some designers put forward for your, for your range or something like that. And people love getting early access to that kind of thing.

Fiona Stevens: We also see a lot of people tear their, um, their shipping and their returns policies. Uh, so that the more loyal the customer, the faster the delivery or they can access free delivery where other people can't. Um, we've actually seen some people, uh, offer curbside pickup and things like that to their most valued customers as well.

Fiona Stevens: And then, uh, my absolute favorite that we're seeing more and more at the moment is people designing rewards in a way that supports their, their brand. system or their brand values and brand beliefs. So, um, for example, that same dog food brand, they allow you to redeem a reward in the form of a donation to a dog shelter for a doggy dinner.

Fiona Stevens: Um, we have a jewellery brand who give you rewards if you recycle old jewellery with them, and it doesn't have to be their brand. It can be any brand. Um, we also have a merchant who I think if you, you can redeem your points in exchange for planting a certain number of trees. Um, so it's. It's finding common ground and common values to connect with customers on and then prompting that emotional connection, but it, it doesn't cost you as much as a brand to deliver these, you know, it's not impacting your bottom line in the same way, but it is allowing you to connect with your customers and show them that you actually do care about the same things.

Claus Lauter: Yeah, I think these are great examples specifically when it comes to sustainability environment and donations in, in that direction. I think there's a lot of, um, power there for brands to, to build up a stronger connection with the emergence. Now, when, when it comes to frequency and getting back to your client, um, to build up the program, how often do you think do you need to get in touch with your urology program, with your points?

Claus Lauter: Um, with, with the clients to. Stay in mind basically. 

Fiona Stevens: And I think it depends on what your, um, purchase frequency is and what the life cycle of the customer is. So for example, if you're selling something like, um, handbags, someone's only going to come back and buy one of them. It depends how big a handbag habit you have, but you know, you're probably looking at three to six months max.

Fiona Stevens: So if you're sending somebody a weekly points reminder, it's going to get slightly And they're going to start to ignore it. However, if it's something like a haircare brand, then you may want weekly probably is the right answer because you want to make sure that when somebody is running out, you know, they come out of the shower and they're like, I must order some new ones and you're there and you're top of mind.

Fiona Stevens: So I think it really does depend on purchase frequency, but it's, um, It's about finding enough check in points and enough slightly different check in points that you don't start to be ignored. It's not the same message going each time, but you are regularly appearing with their, in their inbox with information that is really useful and really relevant.

Fiona Stevens: So I would probably look at alternating, to be honest, between a points based message, available rewards, this is your points balance, and also really important to tell them how to use it. So often launch programs forget to actually say, this is how you redeem it. And then for the customer, it's like, well, great.

Fiona Stevens: I've got those points, but I'm not really sure what to do with them. I'm not sure what they amount to. I'm not sure how they're going to be of any value to me. So I think those sort of slightly more transactional messages, points, balance rewards, and what to do with them. Um, but then alternate that with really great content that doesn't sell, that is not.

Fiona Stevens: Uh, product or discount heavy. It's, uh, perhaps examples of people using your products or really inspiring stories. Or I think actually there's a real opportunity for people, particularly in sort of independent retailer space to tell their brand story. So introduce your founder and interview your founder, trying, you know, use those emails to share some of the history of the brand, why you exist and why you're selling the products you are.

Fiona Stevens: And then I think you get as beautiful. synergy between the sales messages and the sort of the prompts to actually purchase, but then why you would want to purchase from that brand. And again, with the kind of lost cost of living and everything, I think it's important to straddle that line quite carefully.

Claus Lauter: Okay. Now, with LoyaltyLine, obviously, you are helping merchants in implementing a program that works with Shopify and other platforms. Tell me a little bit more about the app and how it works. 

Fiona Stevens: Yeah, absolutely. So, um, as exactly as you say, we, we do work predominantly with Shopify, Shopify Plus, but we, um, we work with other brands, um, sorry, other platforms and via API as well.

Fiona Stevens: And essentially with LoyaltyLine, you have the opportunity to create products. Your own blogs program so you can brand it how you like you can offer the points and rewards that you want. You can create something that reflects your brand entirely. Obviously, the, the level of customization depends a little bit on the plan that you're on.

Fiona Stevens: But the idea is that anybody. You should be able to build their own loyalty program without the need for a developer. Um, or if you have development expertise, then fantastic. You can make it that little bit more customized, but yeah, we believe that everybody should have the opportunity to retain their clients, which is not easy to do.

Claus Lauter: Okay. When it comes to a timeline and sort of what kind of homework does a potential user of your app need to do before they approach you? So what's, what do they need to have on the list before they can get started? 

Fiona Stevens: It's a really great question. I think. The important thing really is to just understand your customers lifecycle.

Fiona Stevens: So how often are they repeat purchasing? What should you expect in terms of repeat purchase rates? And how many years are they staying with you? What what's the full lifetime value looking like? What could you expect it to look like? And How often are they likely to purchase that? I think that's the kind of information that you really need.

Fiona Stevens: Average order value as well. What was it before you started? You know, if you have those benchmarks, then you can see how things impact. I think the tricky thing about loyalty is it doesn't happen overnight. It does take, um, it's, I kind of liken it to SEO a lot of the time where people, they want it to be a silver bullet.

Fiona Stevens: They want it to work straight away, but unfortunately customers don't become. loyal overnight. And even if they do join your loyalty program, they may not return to spend straight away because they have to have time to build up that points balance. They have to have time to need that product again. You know, so, um, unfortunately, yeah, we can't promise results overnight, but I think, yeah, what you need to do before you start is understand what the metrics are you're trying to move and make sure that you've got a good steer on what they are so you can compare over time.

Fiona Stevens: But also loyalty often is a set and forget. And people create a program, they run it in the background, people join, they don't see much value from it, but they never quite get around to tweaking it or changing it. So I, the key thing is to know where you want to start, start really small, start just by rewarding a few activities.

Fiona Stevens: Um, Start with purchases, but also a couple of simple additional things like points for birthdays or incentivizing social shares and follows, and maybe incentivizing reviews, that kind of thing. Start small, but make sure you've got somebody who has dedicated time to that loyalty program. Don't let it just run in the background.

Fiona Stevens: Make sure somebody is taking responsibility for retention, because if you, if you just leave it running, it won't perform. If you have somebody that's just regularly going back, checking in. Seeing what's working, adding a little bit of extra functionality here or there, then you'll start to see success.

Fiona Stevens: Okay? So I think again, in, in terms of homework, know what metrics you want to improve and know who's going to manage it. 

Claus Lauter: Okay. I think you just gave away a lot of golden nuggets there for someone who wants to get started, and it answered, already answered. Also, a few, a few of my questions that I had . So in regards of a, a pricing structure, how much does it cost immersion to work with you guys?

Fiona Stevens: And it completely depends on the plan size. So we start as little as 159 a month. So we do have a free plan on the Shopify app store as well. Um, and our pricing increases by, um, order number rather than member count, because we know that not every loyalty program member will engage with your store every single month.

Fiona Stevens: So to charge you for all of those members every month is unfair. So it will, the pricing really depends on the number of orders that you're processing. Per month. 

Claus Lauter: Okay. Where can people find out more about you guys? So 

Fiona Stevens: you can either head to loyaltyline. com or you can find us on the Shopify app store or we are on all the typical social media channels as well.

Claus Lauter: Okay. Sounds great. So I think giving the idea that loyalty programs is a bit of a long term game. I think that's a very important point there. Don't come and think that a day later you will make a huge lifetime customer value from the app. Um, so. Good takeaway there. I think it's, it's a strategy that most merchants should have in their repertoire to build up their customer base and to get more returning customers to their store.

Claus Lauter: Fiona, thanks so much for all this information. I will put the links into the show notes. Then you just want to click away and have a great day. 

Fiona Stevens: Better say thank you. Hey, 

Claus Lauter: Claus here. Thank you for joining me on another episode of the e commerce Coffee Break podcast. Before you go, I'd like to ask two things from you.

Claus Lauter: First, please help me with the algorithm so I can bring more impactful guests on the show. It will make it also easier for others to discover the podcast. Simply like, comment, and subscribe in the app you're using to listen to the podcast and even better if you could leave a rating. And finally, sign up for our free newsletter and become a smarter Shopify merchant in just 7 minutes per week.

Claus Lauter: We create content from more than 50 sources, saving you hours of research and helping you stay on top of your e commerce game with the latest news, insights, and trends. Every Thursday in your inbox, 100 percent free. Join now at newsletter. ecommercecoffeebreak. com. That is newsletter. ecommercecoffeebreak.

Claus Lauter: com. Thanks again, and I'll catch you in the next episode. Have a good one.