Loyalty and ecommerce: a how-to guide

The relevance of loyalty marketing to ‘ecommerce’ depends on what aspect of ecommerce you’re talking about.

Are you a retailer?

Do you sell ecommerce technology?

Or are you from one of the many non-retail brands, associations or networks introducing ecommerce touchpoints to its various online and offline channels?

Depending on your line of work, you may wish to skip to different sections of this article using these links:.

reward programs for ecommerce retailers
the technology enabling loyalty in ecommerce contexts
loyalty applications in ecommerce ventures by non-retail businesses

In the first section I will explain loyalty marketing from the perspective of the ecommerce retailer. You’ll find this section most relevant if you’re a medium-to-large ecommerce enterprise that’s calculated that loyalty marketing will be one of the key pillars of its business (or, if you’re in the process of figuring that out).

It has been my experience that smaller ecommerce brands will struggle to run a points-based loyalty program effectively.

When you think of ‘an ecommerce company’, you think of Amazon, or one of the many other businesses selling fashion, food, homewares, etc. There are millions of such online retailers and most of them are striving to be found by target customers and find ways to stand out from the competition.

These businesses are typically very low-margin, which historically has made it hard for them to fund the issuance of meaningful value in points and miles. But not every loyalty strategy requires the use of points, so we also make some suggestions for other things you can try.

In the second section, I will discuss the various technology components that enable loyalty marketing, and how they tie into an ecommerce technical architecture.

Finally, we’ll look at the uses of ecommerce technology by many different types of business, and how loyalty integrations can make these initiatives more productive.

Shopping from social media, from your car’s digital UX, from a video game, or even from some in-store tech, are all arguably types of ecommerce. In such cases, the loyalty program can encourage customers to identify themselves and allow the brand to track and personalize their experiences from one channel to the next.

In fact, this customer identification is one of the main reasons to implement loyalty tools and tactics in ecommerce. Ecommerce retailers can generally only identify customers if they make a purchase; loyalty incentives can be used to get 80% of website visitors to identify themselves, and opt into further marketing.

While only certain businesses can successfully run a points-based loyalty program, every business needs a loyalty strategy. Many brands can borrow certain elements of the traditional loyalty marketing ‘playbook’, and benefit from certain items of loyalty technology, without necessarily issuing points.

The right formula for most ecommerce retailers is to build loyalty through maintaining a consistently good service with products that represent value, supported by personalized marketing.

What most retailers assume is they need to create their own loyalty points. For your most frequent customers, issuing your own points will be relevant, but for the majority of online retailers, customer frequency will not be sufficient, so you should consider issuing popular points or miles from airline or hotel loyalty programs, which the majority of your customers would rather collect.

Independent of whether you are issuing your own points, or offering the points/miles from a partner’s loyalty program, you are going to need some technology to identify the customer, run campaigns, and issue the loyalty currency. This has never been easier thanks to new-breed, cloud-based loyalty solutions from a handful of companies.

Rewards programs for ecommerce retailers – and other ways to build loyalty

Before we start talking about points-based loyalty programs, let’s briefly summarize the different ways a company can build customer loyalty, in ecommerce or any industry.

Ways to build customer loyalty

As you can see, there are many different ways to build loyalty. Some fall outside of the scope of what would be traditionally considered loyalty marketing – though they could also be combined with loyalty marketing practices, including the use of points. They could also be implemented using cloud-based loyalty solutions that can plug into other systems in an ecommerce retailer’s technical architecture like Shopify, BigCommerce, Magento, etc. We’ll look at these in more detail in the next section.

First, let’s look at rewards programs, since this is where many peoples’ thinking starts when they consider how to build loyalty with their customers.

There are three main ways to run a rewards program – which can all be run in parallel, or separately:

issuing your own points
issuing the points of a partner brand
rewarding loyal customers with other forms of value such as discounts, gifts, or special forms of recognition

We’ll discuss option 3 shortly. Options 1 and 2 are the most important things to consider first, because the unit economics of your business will determine whether you’re one of the retailers that can issue points effectively.

Points cost real money to issue, and brands will typically issue 1-2% of the value of a customer transaction. If the brand issues its own points, it has to maintain a liability to cover the cost when points are eventually redeemed. If it issues another brand’s points, it has to pay that brand for the privilege.

This 1-2% of the cost of sale may not be affordable to those ecommerce retailers who compete on price (and the right figure to incentivize customer behaviors could range from 0.5% to 10%).

This is because most ecommerce businesses struggle to combine two or three of the following key ingredients that are necessary to differentiate a loyalty program:

high margins x high emotional appeal x high customer frequency.

Margins and emotional appeal are often closely related.

In the travel sector, margins are high, and customers choose the brand for reasons beyond the functional need of a hotel room or a flight. Rather, the quality of service they get from these brands creates a preference for Qatar Airways, United Airlines, Marriott, Shangri-La, etc.

This emotional appeal is common to many customers, and the dream of these aspirational experiences motivates many more customers to participate in the program – even if many of them never actually reach a free flight or hotel night. With high margins, the airline or hotel can easily afford this points issuance at scale, acknowledging that some points will expire, but that they’ll also gain many valuable customers and achieve overall positive ROI.

By contrast, the only way a typical ecommerce retailer can compete with the likes of Amazon, Mercado Libre and Lazada is by operating on very thin margins or having highly differentiated products. So finding 1-2% to issue in points can be challenging. That said, if your business can increase total sales by 15% to 25%, that improvement will cover the cost.

Ecommerce retail is also relatively undifferentiated and the emotional appeal of their goods is often low, or highly subjective. Some people may dream about their next mattress or furniture item, but generally speaking, such purchases fulfil a functional need, and beyond delivering the goods undamaged and on time, there’s little additional value the retailer can build into the service. This makes the idea of a loyalty currency issued by such a brand appear less interesting and useful to most customers.

The other important dimension is customer frequency.

Other widely-used loyalty programs are in grocery, banking and credit cards, where the core service is fairly undifferentiated, but their volumes are huge and the customer frequency is very high, with many customers engaging with the brand weekly, or in banking, possibly daily.

This means that smaller rewards still add up to a lot of value for customers, and allows them to enter a regular cycle of earning and redeeming loyalty points. Someone who earns $25 – $100 of points value from their grocery store per year can also spend that reward value easily, and this creates a flywheel of regular customer engagement.

In ecommerce, this can be more challenging. For instance, issuing 2% on a $500 purchase of a closet, a mattress or a lawnmower would only leave the customer with $10 to spend – a sum that’s likely to be forgotten.

We’ve consistently found that at least $25 in reward value per year is needed to keep customers engaged – and even then, a $25 redemption won’t necessarily trigger a long-term relationship with the brand if it’s a naturally low-frequency category.

Indeed, many retailers specialize in items which are, by nature, occasional purchases and may present little reason for customers to make repeat visits. This challenge is why even the most successful loyalty programs need to allow customers to exchange their points into other loyalty currencies, or redeem on partners’ inventory, in order to make the points useful to more customers.

So, when you consider what a successful points-based loyalty program in ecommerce looks like, it’ll either be run by an atypical ecommerce business…

Farfetch: an ecommerce retailer whose luxury goods permit higher margins and emotional appeal (and where you have to spend $1,200 before the rewards get interesting)
Nordstrom: a luxury department store with a strong ecommerce brand. As a department store, they sell a wide range of goods which gives loyalty program members more reason to frequent the brand
Shein: a seller of fast-fashion items that are priced to be worn only once or twice, continually bringing the customer back for more.

Also, an ecommerce business with sufficient scale might be a very interesting partner to other brands such as airlines, banks, grocers, hotels, etc. The ecommerce brand can ‘borrow’ the partner’s emotional appeal to get more customers to engage more frequently with the program.

If you think points-based loyalty might work for your ecommerce business, you need to do the math and calculate predicted ROI on issuing different types of incentives, on different products, targeting different customers, etc.

It needs careful research, because setting up, promoting and then shuttering an unsuccessful loyalty program will usually cost a lot of money. So proper planning could save your business a costly mistake.

Alternative ways to achieve the core objectives of a loyalty program

If you’re still unsure whether you can run a points-based program, it’s worth considering that there are other ways to achieve the same objectives than with points – namely:

motivating higher customer frequency
gathering customer data to improve ad targeting and personalization
creating brand awareness and acquiring new customers
shifting or even monetizing distressed inventory.

For most of these, loyalty marketing produces better ROI than the alternatives – but if a points-based program isn’t right for your business, the alternatives could be the best options at your disposal

Motivating higher customer frequency

Loyalty points work by allowing customers to build up a store of value, which motivates them to return and spend more with the brand.

Many ecommerce retailers attempt to achieve similar goals through CRM, discounts, vouchers and cashback, and subscriptions. Common promotions include a $5 voucher for your next purchase, or a birthday promotion such as a gift-card or personalized gift. Recently, solutions such as post-purchase offers have emerged as solutions specific to ecommerce customer journeys.

Such rewards can certainly motivate additional spending for some customers, but this may only take the frequency from one or two purchases, to two or three. This is different from true loyalty: where the customer shows a preference for your brand, across many purchases over time.

In general, such vouchers are likely to be used once and forgotten – which makes them quite an expensive type of incentive. Nonetheless, they can be used effectively to increase customer frequency, with an expectation of positive ROI in some cases.

Similar effects can be achieved by assigning statuses to customers, i.e., spend $1,000 in 12 months to become a ‘gold’ member and get access to special perks. The stamp cards provided by many independent coffee shops, car washes, etc., have a similar effect.

You can actually use loyalty software to manage such non-points-based rewards: scoring different customer actions using a loyalty points bank, measuring their path to towards different tiers and providing a customer portal where they can track their progress towards statuses, free gifts, etc. This is attractive for retailers because it gives them the digital tools needed for running, measuring an incentives program. But it comes with the direct costs of points issuance, and rewards only have to be funded if the customer spends enough money to achieve that status.

CRM emailing, and content marketing more broadly, can also increase customer frequency, and this work usually incurs no direct cost to the business.

The newsletter by Bloomscape, a direct-to-consumer plants retailer, is a high-quality content channel where houseplant enthusiasts can see images and read about their hobby. This can build emotional engagement and provide a useful incentive to continue buying from the brand (rather than the hundreds of other places to buy plants online).

This might realistically secure several purchases a year from Bloomscape’s best customers – which would be tantamount to an effective loyalty tactic.

It’s also worth mentioning subscription programs which give the customer access to perks such as free delivery (i.e., Amazon Prime) or members-only pricing.

These can be attractive to some customers. The trouble with subscriptions is that the customer’s decision to enrol is probably based on a pragmatic calculation of whether they can get better value from their current level of spend with your brand. This makes such schemes relevant to your existing best customers, and also customers on the margins – where if they spend a little more, they will get more value. But this falls short of giving the majority of customers an emotional reason to shop more frequently in pursuit of rewards.

Collecting data and building out rich customer profiles

One of the strongest arguments for running a points-based loyalty program is the quality of the customer data it can yield. In particular:

for identifying customers with the potential to be high-spenders
…and for getting customers to identify themselves across more of the customer journey.

For identifying potentially high-spending customers…

Points become particularly useful when there’s a very large difference in the lifetime value of an ‘average’ customer compared to the best customers – and you need a broader picture of the customer’s lifestyle habits to figure out who those people are.

A classic example is air travel, where most middle-income consumers probably fly twice a year, but where the best customers might fly ten or more times, and are interested in luxury upgrades. This means the difference the best customers could be worth thousands of dollars per year more than the average customer.

So, travel brands invest a lot in issuing loyalty points via partners. Classic partnerships of this type include gas stations, so that the airline can see which customers put premium gas in their cars, or car rental firms, so that they know when the customers travelled far from home with a competing airline – and other such partnerships which hint at potentially valuable customers.

For most consumer goods, this doesn’t work because the ‘best’ customers aren’t that much better than the average. For bicycles, computers and cell phones, musical instruments, refrigerators, etc., either the margin is too low, or the lifespan of the product too long, that there’s a reduced business case for identifying wealthier customers.

In some ecommerce categories, collecting this data is desirable. Someone who buys a single, $5,000 bag from a company such as Hermès, for example, might be a one-time customer – or, they could be a collector or a personal shopper who buys a dozen such items every year.

The question is whether loyalty marketing is the right way to go about collecting the desired data for that business.

Most enterprise loyalty programs’ method of collecting such insights is via partner accrual, i.e., when a gas station issues an airline’s loyalty currency. The mass appeal of these programs means that the airline can spread its reach across dozens, even hundreds of brands in each market and collect data via many different brands’ customer base.

Hermès probably wouldn’t be able to issue their own points via partners because few other brands would want to issue them; most customers rarely or never buy a luxury bag. What might work better is the reverse scenario, where the luxury brands issues AAdvantage Miles or Avios, for instance – or where they allow customers to exchange their Hermes points into those of their favorite airline program.

With the right data sharing agreement in place, Hermès could tell the airlines about a serial buyer of luxury bags, and the airlines could tell Hermès about their frequent flyers – such as those who make regular shopping trips to Paris or New York.

For getting customers to identify themselves across more of the customer journey

In a traditional retail shop, the owner and clerks might know the customer by name and recognize how best to serve them. This personal recognition is a foundational component of loyalty because it makes the customer feel valued for more than just their trade.

The trouble with online shopping – and modern, enterprise-scale retail- is that, unless the customer buys something, or they’re incentivized to identify themselves, the brand won’t know anything about 80% of the traffic through their stores, online or offline. This makes it hard to personalize offers and drive higher customer frequency.

Such behaviors can be incentivized with cash-based promotions, or by offering forms of emotional value such as access to exclusive events. But points as an incentive will usually have a lower direct cost.

Ideally, the brand would incentivize more customers to register for the loyalty program, which can then keep them engaged, and allow the brand to continue to build data outside of the ecommerce setting.

For instance, the loyalty app could also be used to scan QR codes on offline advertising and build out a more complete picture of the customer’s relationship with the brand. Indeed, loyalty programs are now quite widely used by retailers to get customers to identify themselves in-store.

Creating brand awareness and acquiring new customers

Though loyalty marketing is usually considered a customer retention tactic, it’s also highly effective for new customer acquisition – not least for those smaller companies which issue the points of more aspirational partner brands.

The cost of new customer acquisition and brand awareness by any other channel is highly variable. A cost per action (CPA) of $20 would be fairly typical for most forms of digital advertising. A brand awareness and advertising campaign could cost a larger SME hundreds of thousands of dollars – an investment that has to be made around 4 times per year to compete with all the other brands doing the same thing.

Generally speaking, loyalty points represent a significant saving on such tactics, if they’re points which the customer is motivated to collect.

As described above, customers may not be interested in earning points from a houseplant retailer, if they can only spend the points on more plants. Instead, an ecommerce brand would generally want to issue a partner’s currency because they know that the partner’s points or miles – Avios, Marriott Bonvoy Points, etc. – have mass appeal.

Compared to issuing your own points, this is more expensive per point issued, because the issuing brand adds a margin when selling you the points. But it saves on the costs and risks of setting up and running your own loyalty currency – and potentially avoids total wastage issuing points that the customers just aren’t motivated to earn and spend.

‘Issuing brands’, such as airlines and hotels, usually maintain partner portals which customers can browse for places to earn and spend their loyalty points or miles. These portals effectively serve as low-cost advertising; if you collaborate with British Airways, you might reach 30m new customers. With Flying Blue, it could be 25m. The only ongoing cost of this advertising would be the cost of a few points, which you only pay if the customer spends with your brand.

Issuing a partner’s loyalty currency is easy with Currency Alliance’s Loyalty Partnerships Marketplace^TM – lean more here.

Shifting or monetizing distressed inventory

This last one is less about building customer loyalty and more about leveraging a company’s assets to produce incremental trade. Nonetheless, it’s a staple feature of most enterprise loyalty programs so it’s worth discussing.

‘Distressed inventory’ is goods or services which will go to waste unless sold: empty rooms in a hotel or seats on a train; fresh goods which would otherwise perish.

Most ecommerce retailers don’t experience distressed inventory in quite in the same way; refrigerators, skateboards and t-shirts don’t have a sell-by date.

Nonetheless, most businesses are often motivated to clear their shelves. A highly publicized example was when Adidas parted ways with a musician for PR reasons, and ended up with $1.2bn worth of co-branded sneakers stuck in warehouses. Luxury retailers are also known for incinerating unsold stock, to avoid devaluing the brand through heavy discounting. And every business needs to keep stock moving to keep inventory as light and low-cost as possible.

An easy way to shift distressed inventory is to lower the cash price of an item. By instead offering a points redemption, the brand can effectively control the perceived cash value of the discount.

Some customers may be willing to pay 10,000 points for some sneakers to avoid paying cash. Other customers pay 50,000 points for the same pair of shoes; the brand can even tailor this pricing for individual customers. Either way, the brand avoids a total loss on the goods and the perceived cash value of the sneakers remains unaffected. This also can avoid any non-competition agreements with partnered resellers.

But as described above, your ability to do this as a business depends entirely on customers perceiving your points as being worth collecting.

If you’re not issuing points: distressed inventory can also be leveraged as a means of new customer acquisition if you become a redemption partner in an enterprise loyalty program.

American Express’s reward catalog, for instance, features a lot of offers for high-end department stores, fashion items and accessories. The brand may consider a 30% discount on a product to be generally unacceptable. But if it’s offset against the usual cost of new customer acquisition, or if the 30% is a B2B-only rate that allows a partnered brand to give the customer a 15% discount, and earn 15% margin on the transaction, this cost could appear more worthwhile.

As you can see, the many different ways to build loyalty – and the many different reasons for running a loyalty program – are of varying relevance to an ecommerce retailer.

If you feel a points-based loyalty program is for you, I have one further word of advice.

Loyalty currencies are now consolidating, as brands increasingly gather around the relatively few different points and miles that customers actually want to collect. This will accelerate as medium and smaller brands recognize that most customers cannot spend enough with them to ever get to interesting rewards – so they will embrace those loyalty currencies from popular coalition or travel brands that customers really want to collect.

There can be a lot of good business sense in issuing another brand’s points, and a certain amount of risk in issuing your own. Ultimately the only rational option will provide the greatest value to your customers at the lowest possible cost to your brand.

The technology enabling loyalty in ecommerce

The chief hurdle to introducing loyalty touchpoints to ecommerce web shops, in the past, has been the work of integrating legacy technology systems.

Many loyalty program members would like the ability to see the price in points for an item alongside the cash price, and pay with points without friction. Accepting points is simply another payment method like Paypal, Alipay, etc., yet this remains relatively uncommon.

Retailers would like to allow this, and introduce related forms of loyalty engagement online and in-store. Where ecommerce platforms offer native loyalty functionality, they typically only incentivize the purchase itself. The modern loyalty team, however, would generally want to incentivize the 4-6 steps prior to a purchase to get the customer to follow the journey and check out, or return another day and complete a purchase. Along the way, the customer leaves breadcrumbs which can be measured, scored and enable better follow-up marketing and personalization.

These technology hurdles are being resolved by:

more modern, API-enabled platforms for both loyalty and ecommerce
SaaS-based solutions which can add specific areas of functionality to ecommerce customer journeys, or to address specific needs for businesses, without installing new software
in-store tech, which increasingly brings some of the tools and benefits of ecommerce into bricks-and-mortar retail locations.

Modern developments in loyalty and ecommerce platforms

Traditionally, most enterprise ecommerce firms would have operated a monolithic ecommerce platform from the likes of SAP, Adobe, Oracle, Demandware, etc.

Enterprise loyalty program operators, meanwhile, traditionally licence a bundled loyalty platform from the likes of LoyaltyOne, Carlson Marketing, Epsilon, etc.

These technology platforms are still widely used by enterprises today. Both such loyalty solutions and ecommerce solutions are expansive, powerful pieces of software which combine most of the functionality required by the loyalty team or the ecommerce team in a single software platform.

The challenge is that those platforms originally developed more than 5 years ago were not designed in a very modular way, or with multi-system connectivity as a core feature.

This is obvious when you consider how you often have to log into one customer account to shop a brand online, and another to engage with the loyalty program.

A further problem arising from legacy technology is duplication of customer records. Both the loyalty platform, and the ecommerce platform, would often contain a CRM module – meaning that different teams in the business are building up different data profiles on the same customers, in many cases sending out conflicting marketing messaging, or missing out on valuable insight that could have been used for personalization.

The past five years, however, has seen accelerating adoption of platforms designed to solve these problems.

SMEs meanwhile – which make up the majority of ecommerce businesses – are more likely to use a modern ecommerce platform such as Shopify, which offers several loyalty solutions as pre-configured add-ons. In this case it should be easier to avoid duplication of customer data across loyalty and ecommerce.

On the loyalty platform side: ecommerce retailers now have the option of modern loyalty platforms, such as Antavo, which is purpose-built for integration with ecommerce stores and other marketing technology.

Currency Alliance’s contribution to this evolution has been our dedicated technology for managing loyalty partnerships with complementary brands.

Most loyalty platforms offer some level of partnership interface, but they are not purpose-built to manage the entire lifecycle of multi-partner collaborations. Our platform connects easily to the brand’s existing loyalty system and brings that time and cost close to zero, and abstracts a lot of the work of managing partnerships ongoing. Read about our partner connectivity and partner lifecycle management solutions here.

Loyalty solutions for ecommerce touchpoints and ecommerce businesses

The trouble with both ecommerce and loyalty platforms is that they’re difficult to replace, and the convenience they offer – of a lot of bundled functionality – comes at the cost of choice and flexibility.

A business that’s already on Demandware or LoyaltyOne may wish to switch to Shopify or Antavo, but that could cost hundreds of thousands of dollars in development work and become an 18-month project for a large organization. And even if they do switch, the business may find this only solves the integration issue. A secondary challenge will be getting the exact campaigning flexibility and agility they need; inevitably, no platform vendor can anticipate all the requirements of every one of their thousands of different customers.

The answer to this challenge is lighter technology solutions which are best-in-class for specific areas of functionality. This is happening at pace in the field of payments and promotions, with hundreds of different apps available for things like checkout, post-purchase offers etc. All of these could theoretically include loyalty points as incentives, or enable other forms of loyalty engagement, by connecting the solution to the loyalty platform with adaptable, low-cost technology.

In loyalty specifically: Currency Alliance offers five no-code, white label solutions, which can be added to any ecommerce customer journey with virtually no IT dependency:

pay with points – so that customers can choose loyalty points as full- or part-payment: either your points, or a partner’s
account linking – so that the customer can establish a secure connection between their account with your business, and their accounts in other loyalty programs. This could enable them to set up an ongoing transfer of points value between the programs, for example
points or miles exchange – so that customers can exchange your points with those of one of your partner brands, without leaving ecommerce environment, and earn/spend their preferred form of reward value
partner accrual – add this screen at the end of your checkout process to allow customers to choose between earning your currency, or your partners’ points or miles
member portal – where customers can securely log in and manage their loyalty account, see their points balance, transaction history, redemption options, and earn offers, etc.

Since Currency Alliance integrates with the brand’s loyalty platform, these white label solutions effectively serve as a bridge between the ecommerce environment and the loyalty platform with no additional integration effort.

Another way to integrate loyalty functionality into an ecommerce platform is in a ‘headless loyalty’ setup, where you licence only the core modules of a loyalty platform and integrate those with your marketing and ecommerce technology stack.

A traditional loyalty platform comprises five key modules:

the loyalty points bank – which records loyalty transactions and customer points balances
the loyalty rules engine – that defines and executes the logic for loyalty points transactions
a CRM
a campaign management platform
a redemption catalog – essentially an ecommerce environment where customers can shop different ways to spend their points.

You will quickly notice that the ecommerce retailer already has three of these pieces of underlying technology in their business.

In theory, therefore, an ecommerce brand could simply add the points bank and rules engine as microservices, while continuing to rely on their incumbent CRM, campaign management system and ecommerce environment.

But the campaign management module in a loyalty platform, in particular, will come with a lot of standard campaign templates which are common to most loyalty programs and saves the brand a lot of learning, training and setup time. Smaller businesses will also often be averse to running microservice architectures comprising different technology components from different vendors, because of the technical demands of managing a lot of different API integrations.

For such businesses, an all-in-one loyalty platform, whether provided by a specialist loyalty solution vendor, or bundled into an ecommerce platform, would be the simplest way to set up and run a loyalty program with minimal direct cost. Any additional functionality can be built around this by licencing other solutions as needed.

Loyalty marketing across online/offline customer journeys

The line between ‘ecommerce’ and traditional retail is now blurred, with a lot of ecommerce technology being used to manage in-store tech, customer relationships and commerce across online and offline settings.

This is an advantage for loyalty marketers because it means that the retail store can now be incorporated into loyalty campaigning more easily. The brand can get a more complete picture of the customer, and increase the number of touchpoints where loyalty engagement can take place.

For a time, brick and mortar stores were a blocker since many customers would pay cash and/or simply decline to identify themselves by scanning a loyalty card. Identifying loyalty program members in-store is a much wider topic which you can read about here, but to focus on three areas where ecommerce technology is deployed in retail stores…

ePOS (electronic point of sale) apps are now often provided by ecommerce technology vendors because they resolve a lot of the complexity of managing disconnected retail channels. These apps can marry-up customer profiles via sign-in screens, via a QR code scan or by detecting their payment card information.

So, if your loyalty platform is connected to your ecommerce platform, then identifying your customer via the ePOS should be possible.

Alternatively, Currency Alliance offers an alternative to POS integrations specifically for loyalty engagement which you can read about here. This Universal Points Terminal webapp would also allow you to identify the loyalty program member without requiring integration into the ecommerce platform.

Another is the brand’s mobile app, which these days, is likely to run on the same headless ecommerce backend as the brand’s primary webstore. The brand may prompt the customer to take an action in-store using the app – i.e., scanning a QR code to complete a purchase, or engage in a promotion. This can also be used in other offline settings such as print media and out-of-home advertising.

In-store retail media displays can be used in similar ways, and there’s also in-store tech such as virtual fitting rooms, where customers share a lot of data about their interests, sizes and favorite colors, and may also carry out transactions.

In any of these cases, this data can be combined with data from the online store, to help the in-store team figure out if the customer is a big spender worthy of special treatment. It can also be used to improve personalization the next time the customer shops online.

All these digital touchpoints could be used to identify the customer with or without loyalty incentives. The reason loyalty incentives are so powerful here is that customers often will decline to sign in, scan, etc. if it requires additional time and effort.

With incentives, the store might successfully identify the majority of customers – and if those incentives are points, the direct cost of the incentives may be lower than cash vouchers or discounts.

Loyalty for ecommerce outside of the retail industry

A lot of companies which are not traditional ecommerce businesses may still make use of ecommerce technology to extend their value proposition.

An ecommerce front-end can provide an environment for transactions and customer engagement, while the backend can push offers and promotions into various digital touchpoints other than the web shop.

These companies could be associations that sell branded merchandise, or online community websites that enable members/customers to avail themselves of various forms of benefits. There are many other industries and sectors where this may be relevant, but to list a few examples…

Marketplaces and social media environments

Brands, naturally, would prefer that customers shop with them directly. But in practice, customers shopping via marketplaces is unavoidable because customers find it more convenient.

Also, marketplaces can be a good way to address a wider audience and reach more customers. This happened several years ago when Hilton allowed their members to spend points directly on Amazon. The value is terrible, but the level of member engagement skyrocketed.

This does not necessarily require an integration between the brand’s ecommerce platform and the marketplace. But modern headless ecommerce platforms are now widely designed to push products and promotions into marketplaces, and most of them offer standard integrations with social media channels including TikTok shop.

If the brand’s ecommerce platform is integrated with loyalty software, this should make it easier to run joined-up campaigning across both environments. It may also help to unify reporting and analytics across both channels, and help the brand to vary the points value in each channel based on the predicted ROI for different customers.

Mobility and in-car ecommerce:

Audi’s connected vehicles use the commercetools backend, allowing customers to purchase things such as car upgrades from the vehicle.

It’s not clear how widely used this is by Audi customers, but certainly, mobility is a key growth vertical for loyalty marketing. Uber’s points-based loyalty program has been steadily adding partners in train travel and aviation, and since customers today are more likely to lease a car for two or three years, rather than purchase one every 10 years, loyalty points are now more applicable in securing customers’ repeat business. Indeed, Ford and Nissan, amongst others, issue loyalty currencies which can be used towards complementary services.

So, it’s easy to see how an ecommerce platform can join up these different parts of the automotive ecosystem and allow the customer to earn and redeem points value at the different touchpoints.

B2B loyalty

B2B loyalty has always been limited by a lack of digital touchpoints in B2B trade, since this mostly takes place offline via direct sales.

Increasingly in recent years, however, B2B brands – in particular, manufacturers, wholesalers and distributors – have been implementing marketing tactics and technologies better-known from B2C industries, including B2B ecommerce.

B2B brands have certainly been able to run effective loyalty programs without an ecommerce platform, but these have often depended on building custom digital solutions.

IBM, for instance, built an e-learning environment where its partnered sales reps could complete learning modules in order to earn their points. In 2024, The Wholesale Group (formerly called Confex) launched a loyalty program for retailers in its network, relying on a third-party technology company to provide mobile tracking technology.

While building bespoke technology can be effective, the advantage of B2B commerce is that it moves a lot of the customer journey and customer relationship into a single technology platform. If you then integrate loyalty solutions with the ecommerce platform, this makes it a lot more practical to run a more traditional points-based loyalty program for B2B customers, that reaches the majority of the transactional and non-transactional touchpoints.

Media advertising

In the last two years, loyalty programs – with their wealth of rich customer data – have provided the foundation for a lot of brands to launch paid media ventures, whereby they charge other brands to advertise in their digital customer touchpoints.

This is happening in many different industries. Retail media was described by one journalist in 2024 as a “£2bn goldrush” in the UK; United Airlines recently launched its own media offering, and marketing companies such as Brave Bison own and operate media networks specifically in social media channels.

These retail media environments don’t necessarily require ecommerce elements in order to show personalized advertising to customers – but they are widely being deployed with ecommerce integrations.

This shortens the customer journey from advertising, to shopping, to potentially only a couple of clicks, while the loyalty program can be used in parallel to incentivize engagement and enrich customer data profiles. This, in turn, should allow the media network operator to charge more for ad space, if they can reliably drive transactions from the client’s ad spend.

Ecommerce solution vendors

Historically, the loyalty solutions bundled in with major ecommerce platforms have historically been fairly basic.

They have been relatively low cost, and of course, they synchronize neatly with any ecommerce promotions and transactions run from the same platform. This resolves the integration issues that the retailer would encounter if it wanted to use an enterprise loyalty platform.

They generally have not, however, incorporated the partnerships management functionality that’s needed to make a loyalty program truly successful.

This is changing.

A great recent example of this is Xsolla, which provides an ecommerce backend for video games, and can enable gamers to earn and spend a range of different loyalty points as in-game currencies.

And more widely, any ecommerce solution vendor can connect its native ecommerce platform with Currency Alliance in order to offer its clients more functionality around loyalty partnerships.

Equally, the retailer could integrate its own instance of the ecommerce platform with Currency Alliance, without necessarily engaging the platform vendor in the process, and gain access to all the white label loyalty solutions described above.

Loyalty marketing offers clear potential lift for the right ecommerce businesses

Very few businesses have the potential to become a globally dominant loyalty program of the likes of American Express Members Rewards, Avios, etc. But nor should they need to be.

There is an incredibly diverse range of businesses which can benefit from some form of loyalty marketing, with or without the use of points or miles as incentives.

So, as online retailer businesses seek their next percentage lift, they should certainly be aware of the technology available, and the various quick, low-cost ways to introduce loyalty touchpoints to their ecommerce settings.

If you can successfully operate a points-based program, issuing the popular points or miles of different partner brands is likely to have the greatest impact on customer behavior and repeat business.

With flexibility of modern tools, ecommerce provides an incredibly useful environment in which to test and trial different types of marketing. So, there’s no bad time to start innovating.

If you think that issuing points as incentives could work for your business, get in touch with Currency Alliance here.