Online loyalty programs are offered by companies to reward consumers who visit their websites more frequently. Like many other online developments, many of these online loyalty programs were ones that crashed suddenly. But it is not so much because of a mistake in the loyalty model rather than because of the excessive expectations of what loyalty programs are capable of delivering.

If you’re thinking of starting an online loyalty program, here are a few key suggestions to maximize your results:

• Start online loyalty programs only when you have a solid e-commerce basics.
• An online loyalty program is a project for a long duration. It may prove to be a disaster to stop an online loyalty program after a short time.
• The amount of incentive you offer is critical. If it is too high your revenue can be adversely affected. If it’s too low, it will not draw members

What can be done?

1. Put E-commerce Basics First

Detailed information, suitable return policies, good consumer support and service. Until these basic practices are set up, an online loyalty program is of no value to a company, as consumers will view the loyalty points as publicity stunts.

2. Develop a Long Term Vision

Online loyalty programs should be available for a long duration (minimum of a year). Consumers participating in online loyalty programs collect points that can be cashed later and also offer their loyalty. Do not commence a loyalty program until you are ready to continue it for at least the stated time period, or risk the alienation of customers.

3. Get to Know Your Customer

If you aren’t aware the reason for which your consumers remain loyal, then you can’t design a plan to increase their loyalty. A loyalty program should concentrate on the consumers who return you the most profit, to increase their association with your company and persuade them to spend more. Gather data to learn your demographics. The information may surprise you.

4. Give Suitable Rewards

There are many approaches of an online loyalty program:

• Points Plans: A well known plan that gives points to consumers on the basis of the amount they buy.
• Status Programs: Consumers who spend an amount that he/she has previously set and buyers who buy an item repeatedly are awarded a special status and they get discounts, gifts, special offers and so on. The aim is that the consumers feel special by knowing that they are getting attention and awards that others aren’t.
• Buyers’ Clubs: Unique mass discounts are provided when a group of consumers purchase an item together.

5. Evaluate the Benefits and Costs

A majority of online loyalty programs offered incentives that took too long to achieve, had merchandise rewards that were clearly overvalued or which were poorly designed at the onset. Be sure to figure in breakage or slippage (non-redemption rate) and calculate your budget. Most companies err on the side of too much caution figuring they will get 70-80% or more participation rate. In reality, most get redemption rates in the single digits for a long-term program.

6. Clearly State the Advantages

Make the advantages of your online loyalty program clear to your consumers. They should know that they will be awarded more if they are participate in your program for a long time.

7. Keep in Contact with Your Customers

Keep in close contact with your customers at the proper intervals, which you will learn by trial and error. Out of sight is out of mind. Too much contact is annoying.

Following these seven ideas and examples will help you get the biggest bang for your online incentive program. A properly designed rewards program can greatly improve customer loyalty, increase profit margin and help you stand out from your competition.

Happy promoting.