What makes a shopper want to repurchase from a brand? One strategy is a loyalty program! Whether you’ve set up a paid loyalty program or one that’s free to join, a loyalty program gives shoppers exclusive offers (exclusivity sells!), tailoring the experience for them and making them feel valued.
While free loyalty programs are most common, a paid membership is sometimes the right choice. In this blog, we’ll help you figure out what kind of loyalty program suits your brand and dive into customer loyalty examples from leading ecommerce stores.
The Perks of Paid Loyalty Programs
The most valuable benefit of a paid loyalty program is customer retention. You're giving your loyalty program members early access to products and other perks like free products or special discounts and early access to drops in return for brand loyalty.
Such programs are always worth the ROI: You're giving them exclusive benefits like better discounts, and they keep coming back and hopefully even start making referrals. The exact opposite of a double-edged sword, loyalty programs (both free and paid premium loyalty programs) are like double-edged...rainbows?
The Cons of Paid Loyalty Programs
The only real drawback of a paid loyalty program is that it's paid. So, unless your product is pretty high-ticket and targets a more affluent customer base, it's likely that not too many customers will be willing to pay for a membership. That's why conducting market research about your target audience's consumer behavior and customer data is important.
...and that's where free loyalty programs come in.
Paid vs Free Loyalty Programs: which one is right for your brand?
Members with a paid loyalty program pay an annual fee (or a monthly or one-time fee). In return, they can get exclusive offerings on every order, perks that add value, and even store credits, points, or cashback rewards.
Free loyalty programs also provide rewards but with limited offers. These offers are usually based on customers' rewards or how much they’ve purchased.
Choosing a loyalty program for your brand depends on the products you sell and the value you can give back to your members.
A paid loyalty program is ideal if:
- Products like food, outdoor gear, or makeup need to be purchased frequently.
- You sell high-ticket products.
- Customers continue to come back and shop from you (based on your store’s trends).
- Shoppers get larger savings than the membership fee they paid.
Shopping behavior online also shows that more customers are opting in for a paid program than before. A Deloitte study found that 53% of consumers surveyed pay for a loyalty program, up from 32% in the previous year.
Learn more about setting up a paid loyalty program on your ecommerce store.
But if you sell low-ticket products that aren't essential and don't require frequent purchasing (like a fashion brand), a free loyalty program would be best. By offering rewards, you’ll attract more shoppers and effectively bring them back to shop.
With either kind of loyalty program, you still achieve the main goal—to build rapport with your customers, drive repeat purchases, and effectively retain them.
Shopify’s guide gives you an in-depth understanding of loyalty programs.
Subscription Products vs. Paid Membership Products
While a subscription product means that your customer has committed to receiving your product on the same day every month (or whatever timeframe they choose), a paid membership program is a flat fee for exclusive benefits and perks across your entire store (like exclusive access to new products). So, they're similar but not quite the same.
Examples of Paid Loyalty Programs and Why They Work
1. Amazon Prime
Type: Paid loyalty with offers and extra benefits
Amazon was one of the first to introduce a paid membership program, Amazon Prime, to its global audience.
For a monthly or annual subscription, Amazon Prime offers many benefits to subscribers:
- Shipping: Members get delivery within 2 days or even on the same day for the millions of items available.
- Offers: Prime members have access to deals like 10% off groceries and 5% cashback on purchases.
- Additional perks: Prime gives members access to movies and TV shows on Prime Video, unlimited music streaming on Prime Music, and hundreds of books on Kindle.
Brands can take inspiration from Amazon and its well-designed membership program. Here are some ideas:
- What exclusive content can you share with your loyal customers to make your membership seem sweeter?
- Can you give them an extra perk as part of the program? This can be a discount for your brand's anniversary or free gift wrapping for Christmas.
These personalized touches are what your loyal customers would appreciate and continue engaging with your loyalty program for.
2. Fresh Chile
Type: Paid loyalty with store credits
Fresh Chile Co. started with the family's traditional and homemade Red Chile Sauce, made with a seasonal chile. Over the years, the brand has expanded its product line and found a loyal community of customers who can't get enough of its sauces.
(Image: Fresh Chile paid loyalty membership)
Due to the kind of products they sell, loyal shoppers are likely to repurchase frequently, making a paid loyalty program right for the brand. For $199 a year, members get 20% off on every order, free shipping, cashback, store credits, and early and exclusive access to specific products.
Fresh Chile uses Rivo to create a membership program that its customers are eager to sign up for. Install Rivo on your ecommerce store and build a working paid loyalty program.
3. REI
Type: Paid loyalty with offers
REI is an outdoor co-op that has existed for 85 years. The brand provides its customer base with top-quality gear and apparel, rental equipment, expert advice, and stories on life outdoors.
REI's membership program is straightforward. For a one-time fee of $30, shoppers get a lifetime membership, giving them access to a $30 member bonus, annual cashback, and special offers.
On the membership page, REI has listed all members' benefits. In addition to the discounts, members also get free shipping, attend exclusive events, and participate in the brand's donation fund, making it clear why it’s worth signing up to be a member.
4. Sweetgreen
Type: Free and paid loyalty options
Sweetgreen allows people to order simple, seasonal, and healthy dishes, ensuring that they don't have to opt for fast food or worry about meal prep.
Its branded loyalty program, Sweetpass, offers both free and paid loyalty options. The free program allows the brand to incentivize new customers, giving them offers that will keep them invested in the brand and even turn them into paid members.
Meanwhile, the paid program ensures that repeat business is rewarded. Their members get a daily $3 off on their orders and donations to a non-profit.
5. RH
Type: Paid loyalty with discounts
RH was established as Restoration Hardware in 1980 when the founder sensed a need in the market for authentic period furniture. Today, the brand is one of the leading luxury home furnishing brands.
RH has a straightforward membership program. For an annual $200 membership fee, members get 25% savings on all full-priced items, an additional 20% off on sale items, and complimentary interior design services.
Since the brand sells high-ticket products, the paid loyalty program ensures that members get a good deal on every item they purchase.
How do Paid Loyalty Programs Differ from Free Loyalty Programs?
Paid loyalty programs typically offer more exclusive benefits, higher discounts, and personalized rewards compared to free programs. Customers pay a fee to join a paid loyalty program, which often results in increased engagement and loyalty due to the perceived added value and investment in the program.
Alternatives to Paid Loyalty: Examples of Free Loyalty Programs
Are free loyalty programs right for your brand? Here are 4 examples of brands with loyalty programs that are free to join and the strategies they use to build a loyal community.
1. Swoveralls
Type: Tiered program with store credit
Swoveralls combines two of the most common apparel items, sweatpants, and overalls, to deliver the comfiest outfit. The brand’s innovation has earned it a dedicated following and even a spot on Shark Tank!
Swoveralls uses tiers in its program and customers who have spent more than a certain amount automatically level up to a higher tier. Customers also earn store credits with every purchase and interaction, which they can use to redeem on orders.
Swoverall’s loyalty program stands out most because they stick to their core value, comfort, reflected in how they’ve named each tier.
2. August Rewards
Type: Free loyalty using store credit and tiers
August prioritizes period care, providing its customers with comfortable period products and a fun experience.
August uses store credits for its loyalty program and has a comprehensive page that lets shoppers know what activities earn them credits. In addition to buying products, shoppers can earn credits for sharing them on social media or leaving a review.
This way, the brand gets multiple benefits:
- Retain their shoppers with the credits
- Nurture their community on social media
- Drive word-of-mouth with customer shares
- Build credibility with product reviews
Loyal shoppers can unlock higher tiers on the program, which means larger rewards. This works especially well for the brand because the products it sells are always recurring purchases for its shoppers.
August uses Rivo to set up a loyalty program that reflects the brand’s fun visual identity. Install Rivo on your store to set up a loyalty program that reflects your brand.
3. Marks & Spencer
Type: Free loyalty with offers
Marks & Spencer is a renowned British brand selling high-quality clothing, home products, and even food. Founded in 1884, M&S has grown to be loved for its comfortable, stylish, and durable clothing and gourmet food selection.
Marks & Spencer has a popular customer rewards program called Sparks. Members get personalized offers, access to exclusive launches and events, and even birthday treats. Since they have a loyal and dedicated customer base, the rewards program lets the brand retain and delight its shoppers.
4. XSuit
Type: Store credit with tiers
Noticing that the market was filled with stiff, uncomfortable suits that wrinkled easily, xSuit was set up to offer premium men's suits and other luxury menswear.
Reflecting its brand image, xSuit has set up a tiered loyalty program that reflects the luxe the brand provides through its products and experiences. The tiers, Silver, Gold, and Platinum, offer different rewards to loyal shoppers, like cashback, free shipping, and exclusive offers.
What Customers Value in Loyalty Programs
Giving your customers access to exclusive rewards is a great way to keep them loyal. Investing in your customer experience is the best way to keep them loyal.
Customer experience is one of the strongest determining factors in whether a shopper will buy from your store again or not. Unfortunately, it is extremely difficult for your customer loyalty program rewards to compensate for poor customer satisfaction. So, keep your customers engaged with your ecommerce store by investing time and effort into building your customer experience team and processes.
Another good way to keep your customers loyal is by giving them rewards that they would want. Run a post-purchase survey, ask them for feedback directly, and have regular check-ins to see how they like their rewards and if they have any product recommendations.
Using Email Marketing to Promote Your Loyalty Program
Whether you decide a paid loyalty or a free loyalty program is for you, you need to invest time in promoting your program. Sending strategically timed emails can help you immensely with this.
Here are some important touchpoints that you should be sending an email on:
- Right after they make a purchase, send them an email detailing the features of your loyalty program and telling them exactly how to earn and redeem their rewards.
- If you've just created your loyalty program, email your customer list to tell them how they can participate in it.
- If a customer has made a repeat purchase on your store, email them how many points they've earned with their new purchase to keep them excited.
Ready to Set up a Membership Program That Gets You a Loyal Customer Base?
These ecommerce brands have set up a customer loyalty program that their shoppers are eager to join and engage with.
A well-designed loyalty program lets you turn one-time shoppers into repeat customers, fostering a community and ensuring that each customer you acquire continues to shop with you.
One factor that determines the success of your loyalty program is the app you use. You need a loyalty app that lets you customize every aspect of the program to fit your needs.
Rivo is a Shopify loyalty app that lets you customize your loyalty program based on your brand's priorities. You can pick the kind of program (free or paid) and the rewards you want to give shoppers (store credits, points, or discounts) and add specific customizations like tiers and extra offers.
Install Rivo on your Shopify store and set up a winning loyalty program.
