The guide to loyalty programs in e-commerce

A powerful loyalty program is no longer a bonus; it's an essential tool for turning one-time buyers into loyal, returning fans. But how do you go about it? Where do you start, which platform do you choose, and what are the secrets to a successful program? Don't worry. This guide will show you how to create a successful customer loyalty program that turns one-time buyers into lifelong, loyal fans. We cover everything from strategy and design to the best examples of loyalty programs.

Why does a loyalty program work on a psychological level?

A successful loyalty program works on a psychological level because it taps into deep human motivations such as reciprocity, the need for status and recognition, and the satisfaction of achieving goals (gamification). It transforms a simple transaction into an emotional relationship, making customers feel valued and inclined to show their loyalty. Loyalty cannot be bought with discounts; it is earned through emotion and a sense of connection.

These four drivers are the engine of your program:

Status and recognition: People have a natural need to belong. A tiered program (with tiers such as Bronze, Silver, Gold) responds perfectly to this. The “Gold” status is not just a discount; it is a badge of honor, a sign that the customer is a VIP who enjoys exclusive benefits.

Gamification and progress: The human brain is sensitive to achieving goals. A savings system with clear, achievable rewards functions like a game. The visual progress bar that slowly fills up and the unlocking of a new reward are small “victories” that link a positive feeling to your brand.

Emotional reciprocity: An unexpected reward, such as extra points on a birthday, feels like a personal gift and builds an emotional bond. This bond is the strongest defense against the competition's price war.

Reward for behavior: People are sensitive to progress and want to achieve goals. Motivate them to achieve their goals faster by rewarding desired behavior with a savings system.

How do you start a loyalty program strategically?

You start strategically with a loyalty program by not diving straight into the technology, but by first laying a solid foundation. This foundation rests on three pillars: a clear goal, a sharp target group analysis, and a realistic business case. Whether you run a large webshop or set up a rewards program for small businesses, these strategic steps are universal.

Pillar 1: What is the specific goal of your loyalty program?

A goal such as “more loyal customers” is not enough. Your goal must be SMART: Specific, Measurable, Acceptable, Realistic, and Time-bound. Choose one primary goal for your program to maintain focus.

Specific examples of SMART goals:

• Goal: Increase purchase frequency
• SMART goal: “We want to increase the average purchase frequency of existing customers from 1.8 to 2.1 times per year over the next 12 months.”
• How a loyalty program helps: By rewarding the second and third purchases more heavily or by reminding customers of their points balance.
• Goal: Increase the average order value (AOV)
• SMART goal: “We want to increase the average order value by 10% in the coming quarter.”
• How a loyalty program helps: By setting a reward threshold that is just above the current AOV (e.g., “Free shipping on orders over $75” if your AOV is currently $65).
• Goal: Generate more reviews
• SMART goal: "We want to increase the number of product reviews by 30% in the next 6 months to strengthen social proof.
• How a loyalty program helps: By sending customers an automated email immediately after their purchase with the promise of bonus points in exchange for a review.

Pillar 2: Who are you building this loyalty program for?

You can't approach everyone in the same way. Use your customer data to segment and determine who you are targeting. An effective method is to analyze RFM data (Recency, Frequency, Monetary value).

Specific customer segments and how to approach them:

Segment: Your Champions (VIPs).

• Who they are: They buy recently, frequently, and for high amounts. This is the top 5-10% of your customers.
• Your goal: Retain and nurture them. Turn them into ambassadors.
• Loyalty strategy: Focus on exclusivity. Give them first access to new collections, a higher tier in your program, and unique experience-based rewards.

Segment: Potential gems.

• Who they are: They have recently made their first purchase, often for a high amount, but not yet frequently.
• Your goal: Encourage the crucial second purchase.
• Loyalty strategy: Give an extra generous reward or a large amount of bonus points with their second purchase to create a habit.

Segment: Sleepers (At-Risk).

• Who they are: Customers who haven't bought anything in a while (e.g., 6-12 months).
• Your goal: Reactivate them before they're lost.
• Loyalty strategy: Set up an automated “win-back campaign.” Send them an email with the message “We miss you! Here are 250 free points to help you on your way to your next reward.”

Pillar 3: What is the business case?

A loyalty program is an investment in your most valuable asset: your existing customers. But every investment must be profitable. Make a simple calculation to estimate the potential return.

A concrete example: Suppose an average customer spends $150 per year and the profit margin on your products is 50% ($75 profit per customer per year). You want to set up a program where customers get 5% of their purchase amount back in points.

Step 1: Calculate the cost per customer.

• A customer who spends $150 receives $7.50 in value in points.
• Suppose the software costs per customer per year are $2.50.
• Total cost per customer: $7.50 + $2.50 = $10.

Step 2: Calculate the expected additional profit.

• Your SMART goal is to increase the purchase frequency so that a customer spends $200 per year instead of $150.
• This extra $50 in revenue generates (with a 50% margin) $25 in extra profit.

Step 3: Calculate the Return on Investment (ROI).

• The extra profit ($25) minus the costs ($10) is $15 net profit per customer.
• ROI: (€15 net profit / €10 costs) * 100% = 150%.

This calculation, however simple, immediately reveals the value of your program and helps you make the right strategic choices.

How do you design an effective loyalty program?

You design an effective loyalty program by choosing a model that seamlessly aligns with your strategic goals and your customers' wishes. The loyalty program design is where you translate the strategy into a tangible structure. The layout of your reward programs determines how customers experience the value.

• Model 1: The points program (Points-for-Purchase) Simple, direct, and effective. Customers earn points for every dollar they spend. Set a clear ratio (€1 = 1 point) and a tangible redemption value (100 points = $5 discount).
• Model 2: The tiered program Perfect for giving your most loyal customers a sense of exclusivity. Customers move up to a higher level as they spend more, with each level unlocking better benefits.
• Model 3: The value-driven community program This model rewards engagement and builds a community. Reward customers for writing a review or referring a friend (referral).

What are the top 6 best practices for a successful loyalty program?

The success of your loyalty program depends on strong execution. By adhering to a number of best practices, you can ensure that your program not only runs smoothly, but also delivers real results and is appreciated by your customers.

1. Make it simple and transparent

This is about removing friction and building trust. If a customer has to do calculations to understand the value of their points, they will lose interest. Transparency means that the rules and the value are immediately clear.

A good example: Omoda is a strong example of this with their ‘Club Omoda’. The rules are simple: every €25 you spend earns you €1 in store credit. It couldn't be clearer.

How can you do this yourself?

• Step 1: Choose a simple ratio. Determine a savings and redemption value that you can explain in one sentence (e.g., “For every dollar you spend, you earn 1 point. 100 points are worth a $5 discount.”).
• Step 2: Create a clear landing page. Create a single central page that clearly explains the rules, benefits, and FAQs of your program.
• Step 3: Visualize the value. In the account environment, don't just show “500 points,” but also the concrete value: “(worth $25 in store credit).”

2. Ensure a seamless omnichannel experience

Modern customers shop across multiple channels. Your loyalty program should reflect this. Points earned online should be immediately visible and redeemable in physical stores, and vice versa.

A good example: Hunkemöller is a textbook example of this. Members can use their (digital) membership card to collect points in-store, which are immediately visible in their online account. They can then redeem these points just as easily in the webshop as in the store.

How can you do this yourself?

• Step 1: Centralize your data. Make sure your loyalty software can synchronize with both your e-commerce platform and your point-of-sale (POS) system.
• Step 2: Ensure uniform customer identification. Make sure that customers can identify themselves in the same way at every location, for example via their email address or a digital customer card.
• Step 3: Train your staff. Make sure that store staff are familiar with the program and can help customers with questions about their (online) points.

3. Personalize the experience with tiers

A one-size-fits-all approach devalues your best customers. By working with tiers, you recognize the value of your most loyal customers and give them a sense of status.

A good example: De Bijenkorf demonstrates the power of tiers with their ‘Privilege Membership’. Anyone can become a member, but by spending more, you can upgrade to ‘Member+’. This status unlocks highly sought-after, non-transferable benefits such as access to pre-sales, unique collections, and personal styling sessions.

How can you do this yourself?

• Step 1: Analyze your customer data. Determine the boundaries for your tiers based on your customer data (e.g., the top 10% of your customers become the highest tier).
• Step 2: Define the benefits per tier. Make sure the benefits of a higher tier are really worth it.
• Step 3: Automate communication. Set up automated emails to congratulate customers when they reach a new level.

4. Offer more than just discounts

Transactional rewards are effective, but experiential rewards build a deeper, emotional connection.

A good example: Rituals excels in this with their ‘My Rituals’ program. In addition to saving for discounts, members receive a luxury gift of their choice with every purchase and access to exclusive masterclasses and meditation sessions in the app. This greatly enhances the brand experience.

How can you do this yourself?

• Step 1: Analyze your customer. What interests your top customers outside of your products?
• Step 2: Brainstorm creative rewards. Make a list of non-monetary rewards: a Q&A with the founder, early access to sales, or an invitation to an exclusive community.
• Step 3: Start small and test. Begin by offering one unique, experience-based reward for your highest tier and learn from the responses.

5. Consider a paid membership

This is an alternative strategy whereby customers pay a (small) annual fee in exchange for immediate, ongoing benefits. This model creates a higher level of commitment and attracts serious, loyal customers.

A good example: Gall & Gall successfully applies this with ‘My Gall & Gall Premium’. For €10 per year, members receive an immediate 10% discount on a large part of the range, exclusive deals, and access to tastings. The customer's investment is immediately recouped, which lowers the threshold and strengthens loyalty.

How can you do this yourself?

• Step 1: Define an irresistible benefit. Identify a core benefit that is so valuable that customers are willing to pay for it (e.g., free shipping or a fixed discount).
• Step 2: Set an accessible price. The annual fee should be low enough not to be a barrier and ideally be “earned back” after just a few purchases.
• Step 3: Communicate the value clearly. Include a simple calculation on your site: “Save $15 on this order now with a $10 membership!”

6. Make the reward immediate and personal

What it means: Abstract points are less motivating than concrete, personal benefits. The more direct and relevant the reward, the more powerful the impact.

A good example: Albert Heijn is a master at this with the ‘My Bonus Box’ in their app. Instead of saving up for vague future discounts, customers can activate five (or ten for Premium members) personalized offers each week on products they frequently buy. This discount is then automatically applied at checkout, making the process frictionless and the reward hyper-relevant. Another good example is Bol's ‘Select’ subscription. Although this is not a points program, the principle of instant rewards is the same. The benefits, such as free shipping or evening delivery, are applied automatically at checkout, without the customer having to think about it.

How can you do this yourself?

• Step 1: Use purchase data. Analyze which products or categories a customer buys frequently.
• Step 2: Create personalized offers. Offer a personal discount on the customer's favorite product via email or your app as a reward for their loyalty.
• Step 3: Automate the application. Ensure that claimed rewards are automatically applied to the shopping cart, if possible, to avoid the friction of discount codes.

How can you positively influence customer behavior with a loyalty program? 5 concrete ways

You can positively influence customer behavior with a loyalty program by strategically using rewards as a powerful driver for growth. You do this by focusing on behavior that really matters, making rewards achievable, being transparent, personalizing, and linking the rewards to your brand story.

Focus on behavior that really matters: Not every click is worth the same. An integrated loyalty system allows you to easily set rules to reward exactly those actions that are most important to your business.

Make it achievable: A reward that seems unattainable is demotivating. Provide accessible, achievable rewards such as free shipping or a small discount.

Be predictable and transparent: Loyalty is built on trust. Communicate clearly about the rules and make the savings status visible everywhere.

Personalize the reward: One-size-fits-all does not work. This is where the power of an integrated platform comes into play, combining data from your webshop with a powerful Customer Data Platform (CDP).

Link the reward to your brand story: A reward is a means of communication. For a sustainable brand, this could be a donation; for a wellness brand, an exclusive guide.

How do you measure the success of your loyalty program?

You measure the success of your loyalty program by looking beyond revenue and focusing on specific, data-driven Key Performance Indicators (KPIs). These indicators not only tell you whether your program is working, but also why it is working (or not working).

By analyzing these figures in clear reports, you can continuously adjust your strategy. The most important KPIs for measuring profitability and effectiveness are:

• Customer Retention Rate (CRR): The percentage of customers you retain over a period of time.
• Repeat Purchase Rate (RPR): The percentage of customers who make more than one purchase.
• Redemption Rate: The percentage of points issued that are actually redeemed.
• Participation Rate: What percentage of your customers participate at all?

1. Customer Retention Rate (CRR)

The CRR is the percentage of customers you manage to retain over a certain period of time. This is the most fundamental indicator of the health of your business and the effectiveness of your loyalty efforts. A rising CRR means that customers have a reason to return, and your loyalty program should be the most important reason.

How do you calculate the CRR? (Calculation example) The formula for the Customer Retention Rate is: ((Number of customers at the end - Number of new customers) / Number of customers at the beginning) * 100%

Let's use a calculation example for the second quarter (Q2):

• Number of customers on April 1 (start of the period): 10,000
• Number of customers on June 30 (end of the period): 12,500
• Number of new customers acquired in Q2: 3,000

The calculation is as follows:

• ((12,500 - 3,000) / 10,000) * 100%
• (9,500 / 10,000) * 100% = 95%
• Your CRR for Q2 is 95%.

What does this result mean? A CRR of 95% is very high and indicates that you are extremely good at retaining your existing customers. By comparing this percentage with previous periods, you can immediately measure the impact of your loyalty program.

2. Repeat Purchase Rate (RPR)

The RPR measures the percentage of your purchasing customers who make more than one purchase in a given period. This KPI is a direct indicator of habitual behavior. A high RPR percentage shows that your program is successful in convincing customers to make that crucial second or third purchase, rather than leaving after just one purchase.

How do you calculate the RPR? (Calculation example) The formula for the Repeat Purchase Rate is: (Number of customers with more than one purchase / Total number of unique customers) * 100%.

Let's use a calculation example for Q2:

• Total number of unique customers who made a purchase in Q2: 4,000
• Number of these customers who made two or more purchases in Q2: 1,000

The calculation is as follows:

• (1,000 / 4,000) * 100% = 25%
• Your RPR for Q2 is 25%.

What does this result mean? It means that one in four customers returned for an additional purchase during this period. By analyzing this percentage specifically for members versus non-members of your loyalty program, you can demonstrate the direct impact of your program on repeat purchases.

3. Redemption Rate

The Redemption Rate shows what percentage of the points issued are actually redeemed for a reward. This is a crucial indicator of the attractiveness of your program. A very low Redemption Rate (<10%) may mean that your rewards are not interesting enough, the threshold to achieve them is too high, or the redemption process is too complicated.

How do you calculate the Redemption Rate? (Calculation example) The formula for the Redemption Rate is: (Total number of points redeemed / Total number of points issued) * 100%.

Let's use a calculation example for Q2:

• Total number of points issued in Q2: 500,000
• Total number of points redeemed in Q2: 150,000

The calculation is as follows:

• (150,000 / 500,000) * 100% = 30%
• Your Redemption Rate for Q2 is 30%.

What does this result mean? It shows that customers are actively participating and appreciate the rewards, without this having a direct impact on your margin.

4. Participation Rate

What it is and why it matters: The Participation Rate is the percentage of your total customer base that has signed up for your loyalty program. This is the top-of-funnel KPI for your program. If this percentage is low, it means that your promotion and the initial appeal of your program are lacking. After all, a program cannot drive retention if customers don't even participate.

How do you calculate the Participation Rate? (Calculation example) The formula for the Participation Rate is: (Total number of program members / Total number of customers in your database) * 100%.

Let's use a calculation example on June 30:

• Total number of members in your loyalty program: 6,000
• Total number of customers in your database at that time: 12,500

The calculation is as follows:

• (6,000 / 12,500) * 100% = 48%
• Your Participation Rate is 48%.

What does this result mean? Almost half of your customers participate in your program. This is a strong score. If this percentage were low (e.g., below 20%), it would be a clear signal to more actively promote the visibility and benefits of membership on your webshop and in your marketing channels.

What are the next steps after designing your loyalty program?

After designing your loyalty program, the next crucial steps are promotion and actively avoiding common pitfalls. The way you launch your first loyalty campaign will largely determine its success.

At the same time, it is equally important to know what not to do. We have listed the 5 most common mistakes in e-commerce loyalty programs (and how to avoid them).

What about a B2B loyalty program?

Although this guide focuses on e-commerce (B2C), a B2B loyalty program is an equally powerful tool. The mechanisms are often different: instead of small, frequent purchases, you reward things like contract volume, long-term partnerships, bringing in large customers, or participating in case studies. The principles of recognition, status, and reciprocity remain unchanged.

What are the best tools for an e-commerce loyalty program?

Choosing the right loyalty platform is important for the success and management of your strategy. The Dutch market offers various types of solutions: from integrated e-commerce specialists to broad marketing suites and the proprietary modules of e-commerce platforms. Below is an analysis of the most relevant choices for a Dutch webshop.

Category 1: The Dutch all-in-one e-commerce specialist

This category focuses on platforms that are built specifically for e-commerce and offer all the necessary tools (email, automation, CDP, loyalty) in one package.

Reloadify

Reloadify is a Dutch Customer Data Experience Platform (CDXP) developed specifically for e-commerce. It is a total solution that combines email marketing, marketing automation, and a fully-fledged loyalty module in one integrated system. The focus is on ease of use, personal support, and providing a secure, GDPR-compliant foundation for European webshops.

Advantages:

• Truly all-in-one: You don't need separate tools for email, segmentation, and loyalty, which prevents data fragmentation and ensures a seamless customer journey.
• European base: Data is guaranteed to be stored in the EU, which means full GDPR compliance and peace of mind.
• E-commerce specialist: Every feature, from product recommendations to RFM segmentation, is specifically designed for webshops.
• Branding: Reloadify Loyalty has a fully integrated email editor and sidebar styling to develop the loyalty program in your own house style.

Disadvantages:

• Less well known internationally: As a Dutch player, Reloadify does not (yet) have the global brand recognition of a giant like Klaviyo.
• Focus on e-commerce: Although this is a strength, the platform is less suitable for companies that do not primarily run a webshop.

Category 2: Established Dutch marketing suites

These are well-known Dutch software companies that offer a wide range of marketing tools. They often have their origins in email marketing, from which they have expanded.

Spotler

Spotler (formerly MailPlus) is one of the best-known Dutch names in marketing automation. They offer a broad suite of tools, from email marketing (Mail+) to a Customer Data Platform (Spotler Activate). They serve many different industries, from B2B to publishers and e-commerce.

Advantages:

• Local, reliable partner: An established name in the Benelux with Dutch-speaking support.
• Strong in email: Has built a solid reputation in email marketing and deliverability.

Disadvantages:

• Not an e-commerce specialist: The platform is not specifically built for webshops. For in-depth e-commerce functionality such as a full-fledged loyalty program, you often need to combine multiple modules (such as Activate), which can lead to a fragmented feel and additional costs.
• Fewer ‘native’ integrations: The integrations are often less in-depth and less e-commerce specific than with a platform built exclusively for this purpose.

Copernica

Copernica is a very powerful and flexible Dutch marketing platform, primarily aimed at power users, developers, and marketing agencies looking for maximum freedom and customization.

Advantages:

• Extreme flexibility: Can be fully customized for complex, tailor-made projects. If you can think of it, you can probably build it with Copernica.
• Robust database and API: Technically strong and ideal for companies with complex data structures and linking requirements.

Disadvantages:

• Requires technical knowledge: Definitely not a plug-and-play solution. It requires development hours and a complex setup, which makes it unsuitable and too expensive for the average SME entrepreneur who wants to be in control.
• Focus on technology, not strategy: The emphasis is on technical capabilities, not on ready-made e-commerce strategies that you can roll out immediately.

Category 3: Dutch omnichannel loyalty specialists

This category includes Dutch specialists who are fully dedicated to loyalty, with a strong focus on the connection between physical and online sales channels. They are often a good choice for retailers who have both a physical store and a webshop.

Piggy

Piggy is a well-known Dutch loyalty platform with a strong focus on omnichannel: connecting the physical store floor with the webshop. They offer a savings and rewards system that works both online and offline, often via their own consumer app.

Advantages:

• Strong Omnichannel Focus: Their greatest strength is the seamless experience between physical stores and webshops, which is ideal for retailers with both channels.
• High brand awareness: As an established name in the Netherlands, Piggy generates recognition and trust among consumers.

Disadvantages:

• Specialized ‘Point Solution’: Piggy is a pure loyalty tool. For email marketing, automated win-back campaigns, or building customer journeys, you need a separate marketing system.
• Risk of data fragmentation: Your loyalty data is stored in a separate system, separate from your central marketing data. This creates a ‘data silo’ and makes it complex to build a truly integrated and personalized customer journey, where your loyalty data directly and automatically triggers a specific email campaign.

Yesty

Yesty positions itself as a modern loyalty platform for SMEs. They offer a flexible system that allows entrepreneurs to set up their own savings campaigns and rewards. Like Piggy, they focus on combining online and offline, allowing customers to save and redeem via an app or QR code.

Advantages:

• Flexible and modern: The platform feels modern and gives entrepreneurs a lot of freedom in setting up different types of rewards.
• Focus on SMEs: The tool is accessible and specifically designed for the needs of small and medium-sized businesses.

Disadvantages:

• Need for external marketing tools: Yesty is the engine for your savings program, but not for your marketing automation. Sending personalized emails based on savings behavior requires a link to an external email tool, which leads to additional costs and complexity.
• Fragmented customer view: Because loyalty data and marketing data are not stored in a single central system, you lack the 360-degree customer view needed for in-depth personalization and segmentation.

Category 4: Integrated platform modules

These are loyalty systems offered directly by the e-commerce platforms themselves. They are not separate tools, but a built-in feature.

Lightspeed Loyalty

Lightspeed Loyalty is the proprietary, integrated loyalty program for entrepreneurs who already use the Lightspeed POS system and/or the eCom platform.

Advantages:

• Seamless integration: Because it is a native product, it works seamlessly with Lightspeed's POS and webshop. Everything can be managed from a single system.
• Simple setup: For existing Lightspeed users, the program is very easy to activate.

Disadvantages:

• Vendor lock-in: The tool is exclusively available to Lightspeed customers. If you switch, you cannot take the program with you.
• Less specialized: As part of a larger platform, the functionalities are generally less extensive than those of a ‘best-of-breed’ specialized loyalty tool.
• No further development. The basis of this program is solid, but Lightspeed itself is no longer working on it.

MijnWebwinkel Saving program

MijnWebwinkel, a popular Dutch e-commerce platform for SMEs, offers its own built-in loyalty program as an add-on.

Advantages:

• Plug & Play: For users of MijnWebwinkel Pro or Premium, the system can be activated and managed with a single click from the familiar environment.
• Low threshold: It is a very accessible way to start building loyalty without having to connect external tools.

Disadvantages:

• Basic functionality: It is a solid loyalty program, but lacks advanced features. With Lightspeed Loyalty, points can be assigned per dollar spent.
• Vendor lock-in: The program only works within the MijnWebwinkel ecosystem.

Category 5: The international specialists

Also, it is important to know the most important international players who set the standard in the market.

Klaviyo

Klaviyo is the global market leader. Although it is an American platform (with the associated GDPR challenges), it is the benchmark against which many other tools are measured. Klaviyo does not offer loyalty itself, but it does integrate with the specialized point solutions listed below.

Advantages:

• Extremely powerful analytics: Offers data analysis and segmentation capabilities.

Disadvantages:

• Complex and expensive: Its power comes with a high price tag and a steep learning curve.
• American platform: Not a worry-free choice in terms of GDPR compliance.

Category 6: Specialized Point Solutions (Yotpo, LoyaltyLion, Smile.io)

These are international tools that, unlike an all-in-one platform, specialize in one aspect of loyalty. Yotpo is a master at combining reviews with loyalty. LoyaltyLion offers extremely in-depth and flexible loyalty features. Smile.io is the most user-friendly and accessible entry-level solution, especially on Shopify.

Advantages:

• Best-of-breed: They are extremely good at what they do.

Disadvantages:

• Data fragmentation: The biggest disadvantage is that you always need a separate tool for your email marketing and automation. This leads to separate data silos and makes a fully integrated customer journey more complex.

Turn your loyalty program into your growth engine

You now have the complete blueprint in your hands. From the psychology behind rewards to the hard KPIs that make your success measurable. As you have seen, a loyalty program is much more than a perk or a simple discount campaign. It is not a standalone tool that you turn on, but the beating heart of your retention strategy.

Think of it as a machine you've carefully designed: it turns customer data into personal recognition, transactions into lasting relationships, and one-time buyers into loyal fans. By building this on a central, integrated platform, you transform a reward system from a cost center into a predictable engine for more revenue and higher Customer Lifetime Value. The strategy is there. You have the insights. Get started with Reloadify loyalty today. Book a demo.