How to Implement Customer Loyalty Program for Your Dropshipping Store

In today’s fast-paced digital world, where customers can switch to a competitor with just a click, how do you make them stay and keep coming back for more? The answer lies in customer loyalty programs. Rather than just offering discounts or freebies, a customer loyalty program is a powerful way to build long-term relationships with your customers, increase repeat purchases, and boost customer lifetime value, all while turning satisfied shoppers into loyal brand advocates.

Think about it: wouldn’t you rather sell to loyal customers who trust your brand and are excited to shop with you again, rather than constantly chasing new ones? From exclusive rewards and early access to sales, to loyalty points and VIP perks, a successful customer loyalty program can help you stand out in a crowded market, retain customers, and encourage repeat purchases.

In this blog, we’ll break down how to implement a customer loyalty program for dropshipping. Whether you’re aiming to increase customer loyalty, reward existing customers, or create a stronger brand connection, this is the roadmap to get there. Ready to turn one-time buyers into loyal shoppers? Let’s dive in.

Emphasising the importance of customer loyalty programs

With the rapid growth of online shopping, ecommerce businesses are booming like never before. Global ecommerce sales reached a staggering $4.9 trillion in 2021 and are projected to soar to $7.4 trillion by 2025, a clear sign that online shopping is here to stay and only getting stronger.

As these numbers promise a bright future for ecommerce businesses, many new dropshipping stores are launched every day. With such a busy marketplace, keeping your customers engaged is no small feat. That’s where a customer loyalty program for your dropshipping store can make all the difference. By rewarding customers for shopping with you and encouraging them to keep coming back, loyalty programs help you move beyond one-time transactions and build lasting relationships that grow your business over time. 

Let’s take a closer look at why customer loyalty programs should be a core part of your dropshipping business strategy.

Higher customer retention rates

Acquiring new consumers is important, however, retaining engaged customers is where real profits lie. Research consistently shows that customer acquisition can cost 5-6 times more than customer retention. Further research states that companies have a 60-70 per cent chance of selling to an existing customer versus a 5-20 per cent chance of selling to a new consumer.  Having a customer loyalty program for your dropshipping store can help you retain customers by giving them a reason to return to your store rather than shopping with a competitor. 

By offering perks like exclusive discounts, points, or free shipping, you show customers that you value their repeat business. This sense of appreciation makes customers feel valued, which helps improve customer satisfaction and increase repeat purchases. Over time, a well-designed loyalty scheme can significantly improve your customer retention rates, which increases their overall Customer Lifetime Value (CLV), a key metric for any successful dropshipping business.

Brand advocacy

Keeping your customers loyal can be a real challenge. When you reward your loyal customers and provide them with exceptional customer service, they’re far more likely to share their positive experiences with others, usually by word of mouth and on social channels. Happy and satisfied customers become brand advocates. According to a study by SAP Emarsys, 47 per cent of consumers demonstrated loyalty by recommending a company to friends and family. This word-of-mouth marketing by your customers can prove to be invaluable, especially in today’s digital age, where reviews and recommendations can make or break a business. 

Word of mouth has long been recognised as a powerful marketing tool. Research shows that word of mouth can have a significant impact on consumer behaviour. According to a study by Nielsen, 88 per cent of consumers trust recommendations from people they know more than any other channel. Another study by McKinsey found that word-of-mouth is the primary factor behind 20-50 per cent of all purchasing decisions. 

Incorporating a referral loyalty program as part of your long-term loyalty strategy encourages loyal customers to bring in new customers, which can help grow your customer base without heavy advertising spend. Additionally, as more people hear about the great customer experience and outstanding service your store provides, brand loyalty grows, turning first-time buyers into loyal customers who return again and again.

Increased sales 

Customer loyalty initiatives aren’t just about customer happiness, they also make great business sense. Loyal customers tend to buy more frequently and spend more per order. As Frederick F. Reichheld and W. Earl Sasser, Jr., documented in “Quality Comes to Services” (HBR September - October 1990), a company’s most loyal customers are also its most profitable.  

McDonald’s and Starbucks aren’t the only ones reaping the rewards of loyalty programs. By introducing exclusive rewards, early access to new products, or special promotions, you can improve repeat purchases and drive up the average order value. 

A successful loyalty program doesn’t just keep customers from coming back but also motivates them to spend more each time. A study found that 60 per cent of revenue comes from repeat customers. Businesses must focus on long-term revenue and leverage rewards programs to lower costs for customers. Whether it’s customers earning points for every dollar spent or unlocking tiered loyalty rewards, these incentives increase customer engagement and help boost repeat purchases. And with every additional sale, you’re not just improving revenue, you’re also deepening the customer relationship, making customers more invested in your brand. 

What’s more, loyalty programs give you a valuable opportunity to gather customer data that can be used to improve the customer journey, fine-tune your marketing strategies, and deliver more personalised experiences that drive even more repeat business.

Steps to implement a customer loyalty program in your dropshipping store

Launching brand loyalty programs for dropshipping can seem like a big task. Whether you’re starting from scratch or improving an existing program, following a thoughtful process will help ensure your loyalty program resonates with customers and delivers real value to your business. Here’s how to implement a rewards program for your business:

Define the program goals

Before building customer loyalty schemes, get clear on what you want to achieve. Do you want to boost purchase frequency, or encourage customers to become your brand advocates? Perhaps you want to increase customer lifetime value, collect more customer data, or retain customers for longer periods. Setting clear goals will help shape the entire rewards program, from the type of rewards you offer to how you measure success.  

For instance, if your goal is to encourage repeat purchases, a points-based system might work best. If you’re focused on building customer loyalty and nurturing your loyal customer base, a tiered loyalty scheme offering exclusive perks as customers spend more could be the right fit. 

Having clear objectives ensures that your customer rewards initiative is more than just a nice add-on, it becomes a strategic part of your dropshipping business.

Choose the type of loyalty program

Not every loyalty program will suit your store or your customers. Selecting the right ecommerce loyalty program is crucial for dropshipping businesses. Think carefully about what will motivate your target audience. Here are some popular options:  

Points system 

A loyalty points system rewards customers for their engagement and purchases by granting them points. Customers earn points for every order, which can be redeemed for discounts, free shipping, or even exclusive services. Implementing this points system helps businesses boost customer retention and increase purchase frequency. Points systems are flexible. You can offer points for not only purchases but also actions like writing reviews, following your brand on social media, or referring friends. 

For instance, Myer offers a Myer One loyalty program to its customers. Membership is free, and once customers join, they’ll be able to earn credits when shopping in-store or online. For every $1 customers spend at Myer, they’ll earn 2 credits. Once customers accumulate 1000 credits, they’ll receive a $10 reward voucher. 

Tiered rewards

Tiered loyalty programs are a powerful tool to enhance engagement, increase retention, and drive long-term allegiance. Tiered loyalty schemes are known for their easy-to-understand mechanisms. As customers climb the tiers, they unlock better rewards, such as early access to sales, exclusive discounts, or free shipping. Members can quickly understand the benefits associated with each tier, making it more likely for them to strive for higher ones.  Additionally, tiers allow businesses to segment customers, enabling you to target different groups with personalised offers and experiences. 

Businesses can create a successful tiered program by deciding on clear reward methods, determining the optimal number of tiers, differentiating benefits, engaging through direct communication, and monitoring and optimising.  

A good example would be Starbucks. This American coffeehouse chain and one of the most recognisable brands in the world offers a tiered loyalty program. It has two main levels: Green and Gold. Customers start at the Green level and can earn ‘stars’ for every dollar they spend at Starbucks. Once they accumulate a certain number of stars, they achieve Gold status. At the Gold level, members enjoy perks such as a free beverage on their birthday, free in-store refills, and access to exclusive offers and promotions. Additionally, Starbucks Rewards members can earn stars faster by using the Starbucks mobile app or Starbucks Rewards Visa card. 

VIP programs

A VIP loyalty program is a special customer rewards system designed for the most loyal customers. It focuses on personalised experiences and elite status. This value-based loyalty program offers exclusive benefits, premium access to new products, and unique rewards, providing VIP members with more value in appreciation for their continued loyalty. 

However, there’s a set criteria that customers must meet to be a member of the VIP program, such as overall spending or level of engagement. Customers climb through VIP tiers by accumulating points, usually through frequent purchases or paid loyalty schemes.  

For instance, Sephora’s Beauty Insider models what a great VIP loyalty program should be. The program is highly popular both in-store and online. It offers exclusive perks, rewards and personalised experiences to its most valued customers. Sephora sees clear benefits from its loyalty program, as members account for 80 per cent of total sales. 

Referral programs

A referral loyalty program rewards customers for sharing a brand or product with their family or friends. It creates a pipeline of trustworthy brand ambassadors who help build brand awareness. Studies have shown  that 29.9 per cent of internet users aged 16 and over discover brands through word-of-mouth marketing. This can be a powerful way to grow your customer base organically and increase customer loyalty. 

Customers who enter a referral loyalty program are provided a unique referral code, which tracks all their shares and referrals. If one of their referrals ends up making a first purchase, the customer gets a reward (and possibly the referred friend), creating a win-win situation that builds trust and encourages customers to engage. Approximately 44 per cent of consumers participate in customer referral programs to earn incentives and rewards.  

Hindbag, a brand committed to ethical fashion, has set up a simple and highly effective referral loyalty program. Customers can refer a friend and receive a 10 per cent discount. Through this double-reward referral program, the brand earned 3700+ new customers, generated thousands in sales, and received over 2700 reviews in just 1 year.

Paid loyalty program

Paid loyalty initiatives are relatively uncommon compared to free programs because it’s hard to get a customer to sign up for a paid program, and it’s even harder to deliver the kind of value that will keep them signed up. This loyalty program may charge a one-time fee or recurring fee. As a report from Clarus Commerce points out, 81 per cent of free loyalty program members would join a paid program at their favourite retailer, as long as the benefits were valuable. A 2020 McKinsey survey on loyalty programs found that members of paid loyalty programs are 60 per cent more likely to spend more on the brand after subscribing, while free loyalty programs only increase that likelihood by 30 per cent. The suitability of a paid loyalty program will depend on your business model, target audience, and financial goals. 

Amazon Prime is the best loyalty program of all time. The core of Amazon’s growth comes from its premium loyalty program, Amazon Prime. The program has been hugely successful, with Prime members spending over twice as much as non-prime members.

Select tools and platforms

To manage your ecommerce loyalty program efficiently, you’ll need reliable loyalty program software. Loyalty software makes it easier to establish and nurture strong customer relationships by automating loyalty processes related to management, tracking, and analysis. You want software and tools that can deliver personalised and relevant messages, offers, and rewards to your customers across multiple channels and touchpoints. 

Look for tools that integrate smoothly with your ecommerce platform, whether you use Shopify, WooCommerce, or other platforms. Choose a software that offers customisation to match your brand identity, allows easy tracking of customer interactions, and provides clear analytics so you can keep track of customer loyalty over time. Some popular loyalty program software options includeSmile.io, Yotpo, and LoyaltyLion. These ecommerce loyalty program tools and software offer user-friendly tools to help you create and manage effective rewards programs.

Design the program

A successful ecommerce loyalty program is much more than just handing out discounts, it’s about creating a customer experience that makes your shoppers feel connected to your brand and excited to return. When designing an ecommerce loyalty program, ensure it aligns with your brand identity, appeals to your potential audience, and supports long-term customer loyalty.

Brand alignment

Your customer loyalty initiative should feel like a part of your brand, not an afterthought. Every element, from the visuals to the tone of voice, should reflect your strong brand identity and resonate with the customers you want to attract and retain. 

For instance, if your dropshipping business focuses on eco-friendly products, offering sustainable rewards like planting a tree for every completed tier or donating a percentage of reward points to environmental causes can strengthen your message and encourage customers to engage. If your store sells luxury or high-end products, the program should reflect a premium feel.   

You should use consistent colours, fonts, and imagery that match your store’s look and feel. Ensure that the wording matches your usual way of communicating with customers. Additionally, if your brand stands for something, like sustainability, quality craftsmanship, or affordability, weave those values into the rewards you offer. 

When done well, brand-aligned loyalty programs help strengthen the emotional connection customers feel with your brand, which is essential for building customer loyalty and nurturing brand advocates.

Reward structure

The core of any loyalty scheme is a strong reward structure that offers meaningful, relevant, and attainable rewards to encourage customer loyalty.

Here are some best reward types to consider for your dropshipping business:

• Reward points: Customers earn points for every dollar spent, which can later be redeemed for discounts or free gifts. You can also give points for sign ups, reviews, referrals, or following on social media. This keeps customers engaged beyond just buying.

• Exclusive discounts: Offer percentage or fixed-price discounts on future purchases. You can also provide discounts for members of specific tiers to encourage customers to climb the loyalty ladder.

• Free shipping: An always-popular reward. Offering free shipping once customers reach a certain tier or accumulate enough points can drive repeat purchases, especially for dropshipping stores where shipping costs may deter customers from buying.

• Early access: Give your loyal customers early access to new products, sales, or limited-edition collections. This makes them feel valued and part of an inner circle, encouraging repeat business and customer retention.

• Personalised gifts or bonuses: Who doesn’t love gifts? Surprise your most loyal shoppers with a free gift, personalised note, or bonus discount. This can help create an emotional connection and drive customer satisfaction.

• Exclusive rewards: Think outside the box - offer access to VIP events (virtual or in-person), member-only product lines, or loyalty rewards tailored to your niche. For example, if you sell fitness gear, a free eBook or video tutorial might resonate well with your audience.

To keep rewards sustainable, set achievable milestones and mix short-term perks (e.g., 10% off for signing up) with long-term rewards (e.g., free products after multiple purchases). This balance appeals to both new and loyal customers, helping drive repeat purchases and increase customer lifetime value. Most importantly, make reward redemption easy by clearly displaying points, sending reminders, and automating processes to ensure a smooth, satisfying customer experience that keeps customers coming back.

Easy enrolment and engagement

To build a successful customer reward scheme, make it simple for customers to join and stay engaged. You can make customer enrolment easy by offering multiple ways to sign up such as at checkout, through pop-ups, email invites, and account creation. Highlighting key benefits like exclusive discounts, free shipping, and reward points can motivate customers to join. For instance, “Sign up now and get 100 bonus points, that’s $10 off your next order!”

Additionally, you can keep your customers engaged via email updates to show point balances and reward progress. Offer surprise perks like birthday gifts or double points days to increase repeat purchases. Add progress bars to motivate customers to reach the next reward tier. For instance, “you’re just 50 points away from free shipping!”.

Communications strategy

Clear communication is key to a successful customer reward program. Make sure customers know about the program and its benefits. Here are some communication strategies for your dropshipping businesses. 

• Send personalised emails and reminders about points, rewards, and exclusive offers. 

For example: “You’ve earned 750 points. Redeem them for $15 off.”

• Promote your customer reward program via multiple channels like email, SMS, social media, and on-site banners to keep it top of mind. 

For example: “Join our rewards program for early access to new collections.” 

• Offer proper customer support. Explain how your customer reward program works, help with redemptions, and offer exceptional service that makes customers feel valued. 

• Showcase real customers enjoying their rewards to inspire otters to join. 

For example: “Eloise has unlocked free shipping and exclusive discounts. Join now to start earning rewards!”

Monitor and adjust

A successful customer reward program isn’t set-and-forget. It requires ongoing monitoring to ensure it continues to meet both business goals and customer expectations. Regularly review key metrics such as:

• Customer retention rates

• Customer Lifetime Value (CLV)

• Repeat purchases

• Engagement levels 

• Net Promoter Score (NPS) and customer satisfaction

Additionally, keep an eye on customer comments and feedback to see if they’re happy with the rewards and overall experience. If something isn’t working, for instance, if customers aren’t redeeming points or if tiers seem too hard to reach, don’t hesitate to make adjustments. Flexibility is key to building more frequent customers over time.

Legal and privacy considerations

When running a customer reward program, especially one that collects customer data, it’s essential to comply with privacy laws and protect customer information. These laws differ depending on where your customers are located. For example, Australian businesses must adhere to the Privacy Act.

Be transparent about how you collect, store, and use data. Clearly explain this in your terms and conditions and privacy policy. Avoid asking for unnecessary personal details, and ensure you have proper security measures in place to protect customer data. 

Additionally, make sure your rewards scheme terms are fair and easy to understand and outline how points are earned, how they can be used, and if/when they expire. Providing this clarity builds trust and enhances customer satisfaction, which reduces the chance of disputes or negative customer experiences. 

FAQs

What is a customer loyalty reward program for dropshipping?

A customer loyalty reward program for dropshipping is a scheme that rewards customers for shopping with your store. By offering perks like reward points, exclusive discounts, and free shipping, these programs increase repeat purchases, help retain customers, and turn one-time buyers into frequent customers.

What are the best rewards to offer?

Great rewards include discount codes, free shipping, early access to sales, exclusive products, and loyalty reward points that can be redeemed for future purchases. The key is to offer rewards that make customers feel valued and motivate them to keep coming back.

How do I choose the right program model for my store?

Consider your target audience and business goals. If you want to encourage customers to spend more over time, tiered loyalty programs work well. For broad engagement, points programs are a simple option. If you’re looking to create deeper connections, a paid reward scheme or VIP program offering premium perks might be ideal.

Can I run a customer reward program if I’m a small dropshipping store?

Absolutely! Even small stores can benefit from a loyalty scheme. Start simple - offer reward points for purchases and small discounts for repeat shoppers. As your customer base grows, you can expand the program with tiered rewards and exclusive benefits.

Summary

A successful customer reward scheme can transform your dropshipping store from a one-time stop to a favourite destination that shoppers return to again and again. By focusing on customer satisfaction, rewarding customers meaningfully, and making it easy for them to engage, you can increase customer loyalty, retain customers, and boost repeat purchases, all of which contribute to long-term growth and profitability.

Whether you choose a simple points system, a tiered loyalty program, or a referral program, the key is to provide excellent customer service and create an experience that makes customers feel valued and appreciated.