Let’s review Magento Commerce, Magento Open source, and everything you need to know about it. Want to sell products and services with your eCommerce store? Read on.

In this article:
What is Magento and what is Magento Commerce?
Magento eCommerce Review
Magento Pricing
Magento Pros and Cons
Magento Agencies and Developers
Magento Webshop Examples and Cases
Magento Alternatives

What is Magento and what is Magento Commerce?

Magento is an eCommerce platform used by companies to sell their products online. It is fit for any size from SMBs to enterprise brands. Research shows Magento covers 20% of all eCommerce shops, making it one of the most popular eCommerce systems.

Magento has everything you need to launch a successful eCommerce store. Core Magento features include a shopping cart system, site builder, product catalog management, and marketing tools.

Magento Open Source vs. Magento Commerce

There are two versions of the Magento platform:

1. Magento Open Source is the free version of Magento, previously called Magento Community.  You can download, customize, and run the platform on your own server or Magento host of choice.
   
   The majority of merchants use Magento Open Source because of the low cost and open nature. For developers, it doesn’t really matter if he develops on Open Source or Commerce. But Commerce has more built-in features that can be used out of the box.
2. Magento Commerce: Magento Commerce is the paid version of Magento, previously known as Magento Enterprise. Being the premium version, there are a lot of additional features from Magento Commerce. 
   
   Magento Commerce can be hosted on-premise. So you host and develop locally on your own server, or have the choice of your own Magento host. Alternatively, there is Magento Commerce Cloud, the cloud-hosted solution from Adobe. 

Here is a quick overview of the differences between Magento Open Source and the on-premise version of Magento Commerce:

As you can see, Magento Open Source has fewer features. But you can run a very profitable eCommerce business on it, especially in combination with extensions and other marketing tools.

Magento Commerce is a full-featured eCommerce platform that comes with additional features:

• B2B functionality, like quoting, custom catalogs, and manage buyer roles and permissions.
• BI dashboards, with Visualisation and custom report builder.
• Magento Chat (powered by dotdigital)
• Advanced marketing tools.
• Sensei powered product recommendations.
• WYSIWYG page builder.
• Customer segmentation
• Customer Loyalty Tools, like Easy-to-redeem coupons.
• Content staging and preview for Magento hosting.
• Visual merchandising.

Support and Commerce Cloud
One of the bigger differences beyond the features is that Magento Commerce comes with support from Magento directly, with access to account managers. This is not available for open source, where you would most likely turn to a Magento agency or freelancer to provide extra support.
And includes the ability to access Magento Commerce Cloud, where Magento provides the hosting.

When asking: “Magento Open Source vs. Magento Commerce, which is right for me?” The answer is easy. It all depends on your shop and business model.

Magento Open Source is recommended if:
If you’re launching your shop and don’t have the budget or revenue to validate the costs of Magento Commerce, start with Magento Open Source. This assumes that the additional functionality isn’t critical. Open source will need you to find your own Magento Hosting.

Magento Commerce is recommended if:
Alternatively, the functionality and services might be the consideration. Where BI, or B2B functionality or other of the functions or services are really needed. There is a price tag, so it isn’t a consideration if you don’t have the budget, but once your business gains momentum, you can switch to Magento Commerce.

Whichever version of Magento you go with, the platform is built as a powerful eCommerce solution.

Magento Software Review

Magento is one of the 5 most used eCommerce platforms, side-to-side with other giants like WooCommerce and Shopify. When it comes to picking the best eCommerce platform, the first thing to look at is the feature set. Let’s see which features made it such a popular eCommerce solution.

Most important and outstanding Magento Features

Magento has everything you need to run a modern eCommerce business. And if there’s a tool that isn’t in, Magento can be extended through plugins, and integrations and further customized. What are the most outstanding features?

1. Order Management

Magento Commerce’s order management helps you walk the tightrope between demand and supply. Even across multiple sales channels and locations, managing your inventory (including returns) is clear and doable. It makes it easy to manage your inventory. The order management function helps:

• Reduce costs as orders and inventory are managed in one place
• Efficiently handle returns and automate refunds
• Improve customer experience by not offering/showing out of stock items

Unless you are selling digital products, streamlining your order management and inventory is one of the most crucial success factors on the backend processes. – good fulfillment makes everything flow smoothly. 

2. Mobile-optimized Magento shops

Mobile eCommerce is expected to be 72.9% of the global retail eCommerce by 2021. You need a mobile-optimized eCommerce store, it isn’t even a question.

Magento supports HTML5, and with the templates, you don’t have to worry about setting up the basic mobile shop. Your store is ready to give customers a good shopping experience on mobile devices.

There is a lot of talk about headless – so that means you’d use Magento for the backend and another modern fronted, using programming frameworks like Vue or React for instance.

Headless allows for a great mobile experience + omnichannel optimization. With Magento PWA Studio, you can easily create PWA’s. These bring a webshop, website, and app into one solution. Fast and with cool personalization options such as push notifications straight from the webshop.

3. Open-source Platform and enormous ecosystem

Unlike most of its major competitors like Shopify and BigCommerce, Magento was built as an open-source and free eCommerce platform.

Since it’s open-source, it is customizable, flexible, and extendable. This is exactly what developers, Magento agencies, and anyone with a knack for code have been doing.

Regulated industries
The open-source and self-hosted nature is also a major consideration when you are in a regulated industry like CBD, gambling, health, affiliate, etc. With Saas applications, you always run the risk of them shutting you down. In Magento, you own the platform. You can switch hosting providers, payment providers, etc.

4. Ecosystem and community of developers

You can extend your store’s functionality with the help of a Magento development agency or freelance developer. Install pre-built Magento plugins and modules or (let an integration partner) develop your own.

There are many forums, events, agencies, and developers.

And for example, Meet Magento is held in many countries with a strong Magento ecosystem.  Meet Magento is a community hosted Magento event where partners, freelancers, and merchants can meet to discuss trends, features, and challenges. 

5. Shop speed and Performance

Performance and page load times affect your eCommerce revenue. Out of the box, Magento isn’t the quickest platform. But there are modules for Magento such as MagePack to enhance frontend speed. Magento Commerce supports horizontal autoscaling to provide stable performance during peak traffic, such as Black Friday sales.

The site speed will depend on your Magento hosting and can be much faster with the use of technologies like a CDN, NGINX, or Varnish.

6. Magento Payment and shopping cart options

Magento Commerce supports the most popular payment options like: 

• Bank transfer
• PayPal 
• Authorize.net
• Google checkout
• Amazon payment
• Cash on delivery

Customers want to have control of their payments. Multiple payment options bring your customers a good user experience (UX). For merchants it allows you to reduce or manage gateway and processing fees. And for Magento merchants, it is always good to know you can switch payment providers and be in control of the fees, etc.

Of course, a good experience results in repeat purchases, which, in turn, form the foundation of growth for your business.

7. Magento Chat

Online chat is a way for merchants to staff their virtual stores just as they would Brick and Mortar (especially relevant right now!) Solving site visitor challenges in real-time. In Econsultancy’s research, 79% of customers who prefer live chat said they did so because they get their questions answered quickly. 

Sometimes called conversational marketing is the marketing and sales side of chat and chatbots. Engage, support, convert, and even upsell customers. Or as Research from Aberdeen, shows that companies with live chat can see a 2.4x improvement on cross- and upsell.

Some of the most pertinent uses that directly impact revenue:

• Help people find the right products
• Answer and resolve payment and checkout problems.
• Suggest additions to their current product or cart.

The default Magento Chat bundled with your Magento 2 Store is free, including the first chat agent.

Turning on chat for the first time is as painless as changing the setting to yes inside the admin. Which then allows you to configure the widget, set agent roles, and get chatting.

8. Magento Multi-site multi-store Management 

Running multiple online stores at the same time can be a hassle, not so much with Magento. The platform allows you to add and manage several stores from a single dashboard greatly reducing store management time. Adding products and catalogs cross-site is simple thanks to the multi-site functionality.

After some configuration, you can also run multi-language stores, using multiple “store views” and with plugins for auto changing to the right language based on your visitors’ location.

9. Magento Customer Relationship Management (CRM)

Building meaningful relationships with your customers is essential to retention and your shopper loyalty program. That’s why every interaction and customer touch can be stored in the Magento CRM.

The CRM is part of the Magento admin panel, with an easy to navigate dashboard. With insight into all customer interactions, you can create the right content and message for each stage of the buyer journey.

You can integrate Magento with marketing automation software and use Magento CRM data to power your automated campaigns. An example comes from LensPlaza who integrates Magento with their dotdigital automation to personalize and automate their newsletters and use data-driven product recommendations in their campaigns.

10. Promotion and personalization tools

One reason many eCommerce brands like Magento is the way the platform makes it easy to promote your products. Some promotional tools include:

• Personalization tools. Segment customers using your set criteria and display content and promotions tailored to each visitor.
• Product recommendations. By analyzing customer behavior, Magento offers the right product recommendations to your customers. Magento also allows you to set rules that determine which products should be recommended as upsells or cross-sells or as related products. recently, smart product recommendations by Adobe Sensei are included for free with Magento Commerce, but there are many different options. 
• Visual merchandising. Drive more sales and optimize product category pages with Visual Merchandising. Arranging products according to rules and filters such as bestsellers, color, highest margin, new releases, or any other rules that work best for you. 

Magento Commerce makes it a bit easier to direct the eyeballs to the right products and turn visitors into paying customers. 

11. Catalog Management and on-site search

As your product catalog grows and grows, it can become difficult for customers to find and browse the site. This is where a sound catalog management system comes in.

Using Elasticsearch, Magento has a strong product search engine for customers to find the product they are looking for. It offers suggestions for misspellings, synonym management, attribute weighting, support for stop words, and more. Proper search makes it easier for customers to find what they’re looking for. As a result, your conversion rates go up. 

12. Reporting and Analytics

Data and analytics are the foundation of any business that wants to improve their sales and revenues. And they need to be monitored closely. That’s why the Magento Commerce Business Intelligence feature is one of the platform’s most valuable selling points.

It helps you know your business’ health with insights on:

• Average order value
• Customer lifetime value
• Customer Retention rates

Apart from that, Magento BI turns the data into visuals you can share with your team. Raw numbers aren’t information yet, you need to transform data into actionable steps that can help you grow your business.

With this core tool-set and more, launching and running your store becomes super-easy. Well, easier than it would be on other platforms, at least.

Magento Pricing

Now that you’ve seen what you can get from Magento, let’s look at one of the most pressing issues every business has to consider when investing in software – pricing. 

Magento Open Source Pricing

While Magento Open Source is 100% free, running your website certainly isn’t. Here’s a general outline of how much you should expect to invest when creating your eCommerce store on Magento Open Source:

• Hosting: $100 – $200/month or $1.200 – $2400/year
• Developer costs: $70 per hour (on average) for freelancers

Depending on the type of hosting plan you opt for, the amount of development needed, hosting an eCommerce store on Magento Open Source will need about $7,000/year. Of course, that is a very very rough estimate. There are lots of factors that go into calculating the cost of your ecommerce solution. Many smaller shops can be happy with a $70 virtual dedicated hosting package. Real pricing wildly varies and is dependent on many factors.

How Much Does Magento Commerce Cost?

If your business is about to generate a healthy revenue stream and you’d like to take it to the next level, you can consider the premium version, Magento Commerce. So how much does Magento Commerce cost?

The starting price for Magento Commerce is $1,988/month. Pricing is based on your gross merchandise value (GMV), which is the total value of merchandise you sell over a given period.

Related: Try our Gross Profit Calculator

Other costs to consider, include:

• Themes and plugins
• Development and maintenance. This will set you back, on average, $80-$200/hour if done by a professional Magento development agency or $60-$170 if you hire a qualified freelancer. If you opt for an in-house developer, they will cost anywhere from $40,000 to $100,000 per year.
• Customer support 

When it comes to pricing, Magento Commerce isn’t the cheapest option. But for example, a basic Shopify Plus license also starts at $2,300/month. The higher your GMV, the more you’ll have to pay for your Magento Commerce license. That’s not counting other things like credit card processing fees, but these are the same for any eCommerce shop. But more on eCommerce system comparisons in a bit.

Magento Review Pros and Cons

To make an informed decision when it comes to choosing whether to go with Magento or not, let’s look at the Pros and cons of Magento.  While we’ve looked at many of Magento’s good attributes, we’ll hone in on a couple more in this section. 

Magento is Highly Customizable

One of Magento’s greatest strengths is the way the platform is highly customizable. From the design, templating and functionality, you can have the exact kind of store you envision. It may take a bit of work, but with the right developer, agency, and plugins, your Magento store can be customized to offer users the best shopping experience possible. 

Flexible Magento Content Management

Content is the lifeblood of every online business. Having a flexible content management system is a must. Fortunately, Magento offers you just that. With the WYSIWYG page builder, you can display your web pages any way you want and customize the product, category, sales, and content pages. Catalog management for shops is important and in Magento Commerce, you can create custom catalogs, pricing for individual customers, etc. 

SEO-friendly pages and shop

Research shows that the first 5 organic results on Google’s SERPs account for 67.60% of all clicks. So yes, SEO isn’t dead. If anything, it is more important than ever. Magento was built with SEO in mind. Optimizing your product pages for SEO, Magento:

• Generates SEO-friendly URLs
• Loads fast
• Is mobile responsive
• Offers a great user experience

With all these features, ranking well becomes easier. Well it is probably still hard as a mofo, especially in competitive niches. But at least the system is there to work with you as opposed to against. 

Scalable eCommerce system

Every business has one primary goal, no matter the industry – growth. Magento is very fit to help you do just that.

The main reason Magento is so scalable is its large ecosystem of partners and extensions which is much more comprehensive than for example Shopware. So, as the business grows and new needs for a shop arise, Magento offers a lot of flexibility for added functions:

• there are a lot of good quality and stable extensions
• there are a lot of certified programmers available who can build customizations
• the open-source architecture of Magento allows for much more flexibility than “closed” systems

What to know before starting with Magento (cons)

So what’s the other side of the story of Magento? What flaws should you be on the lookout for? Here are a couple you need to know:

Watch out for over-customization

One of Magento’s biggest cons is the way the platform can become quite complicated. While the platform is 100% customizable, doing so requires you to jump through some hoops. This is why an experienced Magento agency or developer is needed when any significant changes have to be done on the platform.

Going premium is costly (compared to free)

Another drawback with Magento Commerce is the pricing. While Magento is not the most expensive eCommerce platform on the market, it does ask for a premium that puts it among the pricier eCommerce platforms around.

As they say, nothing is perfect. However, when it comes to eCommerce solutions, Magento does come pretty close.

Magento Integrations

It’s impossible to talk about Magento’s flexibility, scalability, and customization without looking at the Magento integrations that make all that possible. You can find a ton of Magento plugins to extend your online store’s functionality on the Magento Marketplace. The popular categories include:

• Marketing
• Customer support
• Security enhancements
• Site optimisation 
• Payment gateways
• Site optimisation 

Magento Agencies and Developers

Apart from extensions and integrations, you can also consider one of the Magento agencies to get the most out of your store. Certified Magento experts deliver high-quality code and are able to implement above standard Magento customizations.

Why partnering with a Magento agency is a good idea:

• Get to market faster and speed up your growth.
• Experience in updating, staging and development minimizes downtime
• Optimize your shop for usability, conversions, SEO and speed
• Let them make and design custom elements

Magento agencies can help you with everything from building your store to designing positive customer experiences to merchandising and sales. And remember updates and upgrades can do with some expert knowledge.

There is a big ecosystem with lots of agencies. The following are excellent Magento Agencies (that also provided the case studies below).

Creativestyle
Creativestyle is an agency for data-driven marketing and responsive e-commerce since 2001. Providing creative solutions for e-commerce shops with enterprise requirements, creativestyle offers concept, design, technical implementation, and online marketing. They are the developers of MageSuite, a comprehensive open-source CMS for Magento 2.

PHPro
PHPro builds durable digital solutions like enterprise websites, webshops, PIM, web2print applications. And of course a lot of Magento, as all are based on open source. With 60+ employees PHPro is one of the biggest PHP web development agencies in the Benelux and one of the few Magento Enterprise Solution partners in Belgium.
So if you are building a custom-made e-commerce website, or need custom plugins they can do it all. Besides development, PHPro also provides digital strategy tailored to your web project. From CRO analysis to digital marketing strategies. 

Experius
Experius is Professional Magento solutions partner, realizing successful Magento e-commerce platforms and strategies together with ambitious companies in B2B and D2C. The Dutch agency has over 60 employees and the most Magento certified developers in the Netherlands. Whether it is a Magento webshop, PIM system, or an e-mail marketing automation platform, they aim to add customer value.  

Magento webshop examples and Cases

One important question that can help you decide whether Magento is the right eCommerce platform for you is – who was Magento built for? In other words, who uses Magento?

Magento was built to be an eCommerce solution for SMB and enterprise-level businesses. That makes it a great option for businesses of all sizes and in every vertical. Here are examples of eCommerce stores that run on the Magento Platform:

Orac Decor Magento 2 Commerce site

Orac Decor is all about interior decoration with innovative materials and design. When it was time to transform their simple webshop into a full eCommerce platform they went all-in and implemented Magento eCommerce together with Belgian Magento agency Phpro.be.

What we like about this Magento Commerce site:

• It is a multi-store concept with 11 websites, 19 storeviews, and 14 languages.
  The visitors land on the correct store automatically based on GeoIP redirect.
• Custom crafted CMS content blocks make sure that the visitors get the right User Experience and editors are able to easily re-use the content blocks and save time.
• Full synchronization of products and assets like images in one central place with Akeneo PIM and SAP integration.

Being a combined B2B and B2C concept includes helpful functions like a Glue calculator, Dealer locator, search bar on all levels, and Inspiration including filters.

Lensplaza, Magento 2 Store with a focus on Automation

Lensplaza is a pure-play online retailer of contact lenses and related care products in the Netherlands and Belgium.

For their eShop relaunch they wanted a new and contemporary design – mobile-friendly, clearly arranged, and high-performance and got just that together with creativestyle, a Magento agency based in Germany.

What we like especially about this store:

• Fast delivery times – Interaction of Magento 2 and the merchandise management system (PostNL) of Lensplaza makes sure they can live up to their promises.
• Smart shipping costs and shipping date calculation. Using 3D Bin Packing (3DBP), an automatic calculation of package size and shipping costs is made on the fly in the shopping cart. The shipping date is also automated through Magento stock levels and replenishment time. The expected shipping date is dynamically determined and displayed.
• Effective use of Automated eCommerce Campaigns. For instance, Lensplaza sends personalized newsletters with product recommendations, displays Product Recommendations in the store, and sends an abandoned cart email series. Integrated with marketing automation software dotdigital, Lensplaza is able to use different channels such as email, chat, social media, and SMS for retargeting and customer engagement.

Peeze Magento site, Coffee for B2C and B2B

Peeze is a Dutch coffee roaster that offers sustainable coffee, tea, coffee machines, and coffee-related products for the office, catering industry, and at home. Their roastery is one of the most environmentally friendly in the world, they are known as a CSR leader.

Developed together with Magento agency Experius, their Magento shop serves both B2B and the B2C markets.

What we like about Peeze and their Magento shop:

• Peeze focuses on unique, high-quality, and sustainable products and this is clearly reflected in the shop. 
• Personalized ordering environment for both B2B and B2C customers
• Full integration with ERP back-end
• A Loyalty program to stimulate recurring sales. Set up together with dotdigital, they reward regular customers and incentive recurring orders. 

A brand like this is always in motion and a renewed branding and shop relaunch is in the works together with Experius. Expect even more Magento and client goodness. We can’t wait to see. 

Magento Commerce – one of the best eCommerce platforms around. 

When it comes to launching an eCommerce store, the platform you use can make or break your success. That’s why going with a platform that has a proven track record is important. As you’ve seen above, Magento is such a one. Giving your store both beautiful form and impressive functionality, you can’t go wrong.

Magento eCommerce alternatives

Commerce isn’t the only eCommerce solution for your online store. While it is an excellent option, it is interesting to list some Magento eCommerce alternatives and see how it fares against its competitors.

Magento vs. Shopify

Shopify is one of the top 3 of the world’s most popular eCommerce platforms. One thing that makes Shopify a crowd favorite is the easy-to-use interface. Development costs are usually lower than Magento. Its main weakness compared to Magento is that it’s not as customizable.

When it comes to pricing, Shopify has several plans you can choose from, Shopify Starter costs $5/month. Magento Commerce’s Shopify equivalent, Shopify Plus, will set you back a minimum of $2,300/month on a 3-year term.  

Magento vs. WooCommerce

WooCommerce isn’t a standalone eCommerce platform, it is a WordPress plugin to transform your WordPress site into an online store.

Like Magento, WooCommerce is open-source, meaning it’s free to download and use. To increase its functionality, however, you’ll have to buy premium plugins and extensions.

WooCommerce has a lot of templates and with a very involved community of developers, you can easily get help when something breaks. 

PrestaShop vs. Magento

If you like open source eCommerce platforms, PrestaShop is another option for you to consider. With over 270,000 merchants running on the platform, it’s gaining momentum to become one of the best eCommerce solutions around.

Like Magento, you’ll have to purchase Modules (Magento’s equivalent of Extensions) to increase your store’s functionality. You’ll also need to hire developers to help you build and maintain your store.

Bigcommerce vs. Magento

Another big player in the eCommerce platform space is Bigcommerce. If you have basic HTML and CSS knowledge, you can customize your Bigcommerce store. There are over 500 apps and integrations, to design the eCommerce store of your dreams.

As for pricing, Bigcommerce comes with 4 plans:

• Standard: $29.95 per month
• Plus: $79.95 per month
• Pro: $249.95 per month

The major drawback of Bigcommerce’s pricing is that the amount of sales is limited according to each plan. For example, the Standard plan limits your annual online sales to $50,000. 

Bigcommerce’s Magento Commerce counterpart would be a hosted Magento Open Source plan.

Magento vs. Volusion

Do a casual search for ” best online store builders” and Volusion pops up frequently. It’s a trusted eCommerce platform that you can consider when looking for a Magento alternative. 

The biggest difference between Magento and Volusion is that Volusion leans more toward streamlining your eCommerce operations than the marketing aspect.
That includes operational functions like Volusion inventory management and customer management. When it comes to the marketing side, like conversion and promotional tools, Magento wins this battle hands down. 

Pricewise, Volusion has 5 plans you can choose from:

• Personal: $29/month with an annual sales cap of $50,000 and one staff account.
• Professional. $79/month with an annual sales cap of $100,000 and 5 staff accounts.
• Business. $299 with an annual sales cap of $500,000 and 15 staff accounts.
• Prime. Pricing is customized according to your business needs.

Volusion is an option to consider if you’re looking for an alternative to Magento Open Source. 

Magento vs. Opencart

Opencart is another open-source eCommerce platform that makes for a good Magento alternative. Being lightweight, Opencart has the advantage of being cheaper to host when compared to Magento.

The major drawback of that is that Opencart is only suitable for small to medium eCommerce businesses while Magento can easily handle everything from small businesses to large enterprises. 

Magento vs. Spree Commerce

Spree Commerce is a Magento alternative you’ll want to consider if you’re looking for a truly free eCommerce platform to launch your business. Being open-source, using it is free. An added advantage is that the extensions are free. The only costs you’ll incur involve front-end customizations and additional functionalities you’ll want to develop on the backend.

Being open-source and having a lot of free extensions, Spree Commerce allows you to set up your store pretty fast and with a minimal budget. The extensions also help you customize your store to suit your business model.

So, Magento vs. Shopify vs. Bigcommerce, well, all the alternatives we’ve looked at? 

It depends on several factors that include, budget, how much flexibility and customization you need, as well as your business goals among others. In the mid-market plus segment, you can see Hybris and Saleforce being competitors as well. But it goes without saying, going with Magento is certainly a decision you won’t regret.

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In this article:
Customer Loyalty is your new Battleground
6 Ways to build customer loyalty
The Impact of a Customer Loyalty program

How to create a successful customer loyalty Program:
1. Understand Loyalty Economics
2. Choose the Best Customer Loyalty Management System
3. Setting the right mix of rewards to excite and engage
4. Launch and Promote your Loyalty Program
5. Customer Loyalty Program examples for you to steal

So, how to create the best Customer Loyalty Marketing Program? A program that tickles all the drivers of Customer Loyalty for your brand? Let’s dive in.

Customer Loyalty is your new battleground

You might be thinking: “What is Customer Loyalty?”
There are multiple ways of explaining, but this is the definition that always works:

Customer loyalty is the likelihood that current customers will stay with a brand. A customer brings repeat business because of the total value they receive from a company and the positive association they have with the brand.

The loyalty loop model (above from McKinsey) defines the “4 battlegrounds of the customer decision journey”. Which puts repeat customers at the heart of the model. Know that 20% of your current customers can make up 80% of your company’s future revenue. (Zinrelo).

Over time, customer loyalty becomes a powerful competitive advantage as it prompts customers to choose your brand over your competitors.
Plus, loyal customers are super profitable. That is one of the reasons why Brands are smart to invest in customer retention and loyalty.

6 ways to build Customer Loyalty:

Next to having a dynamite product and great customer service, how do we improve Customer Loyalty?

• Reward returning customers through a loyalty program
• Give extra attention to top customers with VIP tiers
• Improve customer experience (CX) in all channels
• Personalize your messaging and use segmentation
• Send event-triggered emails.
• Stimulate purchases with (exclusive) offers

An example case comes from Remedy Drinks, their automation starts with what looks like a simple welcome email with an offer. But actually goes on to engage with their customers with editorial on-brand content, how to’s, and complete scala of lifecycle campaigns. Their emails now have seen an increase of 15% in revenue. 

Customer loyalty doesn’t mean that the customer only and exclusively buys from you. People have a favorite store and from time to time visit others. Think about your own supermarket or fashion store for instance. A loyalty program can increase the likelihood that they will stay and shop more with you.

What makes a great Customer Loyalty Program then?

A customer loyalty program is a marketing program to stimulate loyalty and customer retention. It offers benefits and perks to frequent customers and regularly engages with them.

It is no surprise brands invest marketing resources in loyalty programs, as it allows the brand to build a deeper relationship with the customer, fueled by trust. To encourage long time repeat business, loyalty programs offer benefits. These can include discounts on merchandise, rewards, coupons, exclusive or early access to highly anticipated products, and more.

A customer is truly loyal if he acts and feels loyal. So a loyalty program can stimulate both short term business with promotions, but also the long term attitude and behavior.

Customer Lifetime Value and RFM

A small improvement in retention rate or brand preference makes a huge difference over time. According to Harvard Business School, a 5% increase in customer retention increases profits by 25% to 95%.

So we have to mention Customer Lifetime Value (CLV) and Recency, Frequency and Monetary value (RFM) analysis. An RFM analysis will allow you to pinpoint segments of your audience and launch triggered campaigns in their customer (loyalty) journey.

An example of RFM scoring customer segments. Then to develop specific actions based on the segments. It goes too far to spell out al the tactics here, we lifted the following tactics from the ebook “Mastering RFM; segmentation tactics for success”

But to get those segmentations and insights, they need to be made available.

Intelligent eCommerce and BI dashboards show you, for instance:
* Total Revenue,
* Average Order Value (AOV),
* Customer Lifetime Value (CLV),
* Number of one-off customers vs repeat buyers.

Here is an example of dashboarding that will allow you to develop specific client actions on customer RFM segments.

The impact of an excellent customer Loyalty Program

A customer loyalty program can have a huge impact on your brand and bottom line.

• Members of top-performing loyalty programs are 77% more likely to choose your brand over the competition (Bond).
• Research shows that Customers with an emotional brand connection have a 306% higher lifetime value.
• Companies with strong loyalty marketing programs grow revenues 2.5 times faster than their competitors and generate 100-400% higher returns to shareholders (HBR).

One of the best examples of a successful customer loyalty program is the Sephora Beauty Insider rewards program. Sephora’s loyalty program is point-based. Customers swipe their loyalty card with every purchase at the beauty store retail chain. Every dollar they spend earns the member one Beauty Insider point. 

The program has 17 million loyal members and drives up to 80% of Sephora’s annual sales. Yes, you read that right. Later we’ll show more examples of loyalty programs. But first, how do we create a successful loyalty program?

How to create a customer loyalty program?

Creating a loyalty program requires some planning. We start with the same framework for any loyalty program and then customize it based on your brand and audience. Here are the four steps to launch a solid small business loyalty program.

1. Understand your Loyalty Economics and set program goals

Starting a marketing program because ‘everybody else is doing it’ is never a good idea. You need to define the reason a loyalty program for your brand exists.

Loyalty economics will direct your “Why Loyalty”
The logic that connects customer loyalty to bottom-line results is simple. If customers love to shop with you, they buy more products and services and they’re less likely to defect.

The challenge is to dig in and find the loyalty drivers. What exactly makes them like to shop with you?

But a Loyalty Program often has additional goals that are not directly tied to customer loyalty. The loyalty program becomes a vehicle for other parts of your business model like enriching data and customer insights. So your program goals need to include those too. Then your ‘Why Loyalty Program’ is clear, a lot falls in place.

Here are 5 typical goals of Loyalty Programs:
* Gather opt-in, contact details, and data to support direct marketing.
* Improve repurchase rates and Customer Lifetime value
* Decrease service, communication, and acquisition costs
* Stimulate community and gather User Generated Content (like testimonials, reviews)
* Improve customer advocacy and increase the number of brand promoters

Ideally, the outcomes of your Loyalty Program directly support your business. It’s always better to have a number attached to it, making them measurable. This sometimes means working with surveys to catch changes in attitude.

If you find your Loyalty Program serves multiple goals, rank them based on importance and priority. Now you can clearly measure the success of your program with correct metrics and at defined milestones.

2. Choose the best Customer Loyalty Platform and Automation

A Customer Loyalty Platform is Saas software that bundles multiple loyalty marketing features. The platform is a key piece to realise your loyalty program. It has lots of impact on the day-to-day operation. So we need to understand the differences between the platforms.

A quick checklist to evaluate customer loyalty platform:

• Does the platform have all the loyalty features I want? 
• How much does it cost and is this within our budget?
• Is it a one-size-fits-all or customizable solution?
• Does the platform play well with my existing tech stack?
• Have they served brands like ours / in our industry?

Loyalty Marketing software will typically handle specific parts of marketing functionality. For instance, a Customer Loyalty Management system could handle saving points, rewards, and subscriptions, but then integrate with other CRM, email marketing, and eCommerce systems.

The 3 best Customer Loyalty Platforms

When serious about launching your loyalty program, use a Customer Loyalty Platform that bundles features and adds to your current MarTech stack. Here are three of the best Customer Loyalty Platforms to consider

LoyaltyLion

LoyaltyLion is a data-driven loyalty and engagement platform that powers eCommerce growth. 

• Use loyalty points and rewards to encourage repeat purchase and enhance engagement across all platforms
• Trigger loyalty emails and points statements to deliver targeted communications
• Increase customer acquisition and boost advocacy more cost-effectively via referrals

You can integrate LoyaltyLion with your existing marketing tools such as ESPs, subscriptions, review platforms, and helpdesk softwares. It works with all major e-commerce platforms including Shopify, Shopify Plus, BigCommerce, and Magento. Pricing starts at $135 per month. 

Antavo

Antavo: Antavo is an enterprise-grade SaaS loyalty platform that builds comprehensive loyalty programs. With a scalable and holistic loyalty logic. Antavo helps foster brand love and change customer behavior for omnichannel and e-commerce companies. They deliver a great shopping experience with in-store capabilities like POS integration, mobile wallet solution, in-store gamification, and kiosks.
 
* Earn & burn, tiered, gamified, coalition, and many types of programs
* for eCommerce, omnichannel, brands, retailers, and shopping malls
* Coalition loyalty, mobile loyalty, and touchless in-store solutions
* Built-in gamification

They highlight the API-centric nature of their Loyalty Program software. Making it an intergratable piece to include your tech stack. Pricing available on request.

Yotpo

Yotpo: Yotpo is a feedback and reviews management system that has grown into a full loyalty eCommerce platform. Use incentives and coupons to get more reviews or other user-generated content. The loyalty module comes with custom design, multiple rewards structures, and customer management.

• Start getting more customer reviews, feedback, and referrals
• Get a free plan for Shopify merchants
• Tier-based loyalty rewards programs

Note: Yotpo will shut down email and SMS marketing services by December 2025. They have already closed sign-ups to these services. If you’re looking for a similar service, check out our review of the best Yotpo alternatives for email and SMS.

Integrate Marketing Automation and plan Omnichannel messages

You can’t underestimate the importance of marketing automation in a digital loyalty program.

Every brand is active in multiple channels, where loyalty data and systems have to be integrated into your Marketing Tech stack. So we need to consider where to centralize or make available the data.

Using customer insight tools it is way easier to create loyalty segments as we mentioned earlier in the piece about RFM. Using these segments or tags, content can be sent to your most loyal customers. As well as those inactives, or at the risk of churning. Matching your customer’s phase in their journey. This can be in targeted emails, SMS, push messaging, remarketing, and web apps.

3. Set your Rewards Structure to be functional and exciting….

A loyalty program hinges on the structure of your loyalty rewards. Customers will only enroll if you give them a good reason. And need to experience the value of the benefits and rewards to stay enthusiastic. The first “Aha!”-moment’. So nailing the benefit structure is instrumental for the success of your program.

A mix of reward types will appeal to different types of customers as well as customers in different buying phases. Here are the 5 types of loyalty rewards.

I . Monetary Rewards and discounts:  A monetary rewards structure is the most popular system for rewards. That doesn’t mean there is no variety and fine-tuning to do:

Customers can get Monetary rewards in the form of:
* Upfront or one-time discounts to join
* Ongoing discounts or services (think 5% off or free shipping)
* Members-only exclusive offers on products
* Reward points redeemable for Store credit or products
* Cashback

These rewards are popular because they directly stimulate repeat purchases and are relatively easy to set-up and maintain.

II. Sweepstakes, Contests, and Giveaways:
A contest brings a bit of excitement to the entire loyalty system. People look forward to the possibility and the rush of winning something makes the entire brand experience memorable. Variable rewards are known to tickle the brain keeping it away from being purely transactional.  

III. Content and personalized touchpoints
Customers don’t value loyalty programs that fail to cater to their attitudes, behaviors, and expectations. Add touchpoints and personalized moments so the brand relationship deepens.

This is amplified if they can also enjoy benefits outside of their buying cycle – So they don’t have to purchase all the time, but member engagement is stimulated. 

IV. Experiences Rewards: Experiences are something many customers value more than money. An experience reward can create real excitement and memorable brand interaction.

For example:
Organizing industry events (in B2B), 
Discounting trips to theme parks, etc
Perks in the shopping experience
Meet and greets

Designing a loyalty program tailored to your audience is a way to please your customers. Especially if you consistently reinforce the brand and identify their preferences.

For example, The North Face gives rewards that fit perfectly with their brand and customers’  lifestyles. One part is the option to earn points by attending events, checking in at locations, etc. But redemption is where they shine. Customers can use points for unique adventures and travel destinations. 

V. Exclusive access and VIP program
People in the highest tier of loyalists are the apostles and advocates of your brand. This goes very well with a tiered loyalty program. A result is that you can segment your customers better (top clients versus other tiers). Adding benefits and services like free delivery or extended returns shields the customers in the higher tiers from being snatched by the competition.

VIP programs, show how much you care about them through:
Exclusive customer-only VIP events,
Personal shoppers / shopping experience,
Additional services, 
Branded and limited editions of products

Your own loyalty reward structure

Often a mix of different types of rewards is most effective and we’ll see that the reward structure is tailored to the brand type of loyalty that is to be expected and customer relationship in general. Nailing the reward structure to be both exciting and maintainable is key to the program’s success.

How to Launch and Promote your Loyalty Program

A successful launch makes sure your Loyalty Program can quickly get critical mass. But after that, we still need to promote your loyalty program. To keep the costs down, you need a smart launch and promotion plan. Here are the places and ideas to promote your loyalty program:
I. Store & Point of Sale Promotion: This is where you should definitely start. Make the loyalty program a part of the buying process.

If you have a Brick-and-Mortar physical location, it is perfect to promote the loyalty program. Not with a passive leaflet somewhere behind the counter, but especially the conversations your sales personnel have at the POS.

Also, think about in-store (self or assisted service) kiosks to sign up and bring the loyalty program to life. And a reminder for participants to swipe their card / register the purchase.

II. Your newsletter and triggered emails
Email is a great channel for loyalty program communication. It starts with your personalized newsletter, periodic promotions, and triggered emails. The triggered loyalty emails are sent exactly at the right time based on the customer’s actions in and outside the loyalty program.

By connecting a loyalty platform with marketing automation software you can send personalized emails based on their loyalty status.

By pulling data such as most recent purchases and loyalty points in your marketing automation software in real-time, you can make the most customized email campaigns. Here is a welcome automation in the dotdigital platform where customers are added to a ‘loyal customer’ segment based on their actions.

So in this case, data is coming directly from Magento and we start with a welcome + coupon. If the subscriber uses the coupon AND clicks on the recommended items in the next mail, they are deemed loyal customers, they are super enthusiastic – so definitely that is a great engaging segment.

There is an SMS part running as a fall back in our example, but those go into a different bucket. Just to show that this is 100% customizable as you’d like it and in the backend, customers can move in and out of groups as you see fit / it makes sense.

Five loyalty program emails to certainly send:
* Welcome to the program, let’s get started
* Post-purchase emails
* Emails promoting new perks and benefits
* Campaigns to receive extra points
* Reactivation emails

Consider using the newsletter subscription as an entry for your loyalty program. In other words – everyone that gets the newsletter also has a (tier zero) subscription to the loyalty program, even if they aren’t active customers yet.

Matches Fashion, winner of the Hitting the Mark benchmark report by dotdigital,  introduces their loyalty program “The Curator” as part of their welcome series.

III. Website visibility and pop-ups
Your website audience is already interested in your products / services. So adding more visibility to the program on your site is a no-brainer.

* Use landing page builders to make dedicated pages for new registrations
* Add more visibility and strategically place the calls to action on the site.
* Run (exit-intent) pop-ups leading them to the loyalty section of your website
* Add a sticky bar to the top of your site with the promo information.

IV. Current customer products and touchpoints

Promote the program in or on your product, making it a part of the customer experience (CEX). At the same time promoting your Loyalty program. With eCommerce platforms like Magento, Shopify, or others this can be inside the “My Account” login.

Some industries like travel or credit cards will have an automatic loyalty program opt-in. The moment you create a log-in, you are enrolled in the program. Monthly overviews of gathered points make sense there.

V. Remarketing, Social media, and word of mouth
Your website visitors are already part of the conversation. Promoting the loyalty program through remarketing ads incentivizes them to engage with you more. This is not just Google Adwords, Facebook audiences might be a good option, Linkedin, etc.

Break them into segments on loyalty and customer value from high to low. Start to promote your loyalty program to the most interesting customers and work towards less interesting. An additional thought is to target Look-a-Like audiences that share characteristics with your advocates and Loyalists.

An additional “social” way to promote is to use the power of Word-of-Mouth and include tell-a-friend functionality in your program. Incentivize customers that are already in the loyalty program with additional points/benefits for sharing on social and get their friends to sign up.

5 Customer Loyalty Program Examples for you to Steal

By now you know what a loyalty program is, how to choose a loyalty platform, the different ways to structure your rewards. Let’s look at loyalty program examples and all the different types you can implement and learn from today. 

1. Beer Hawk (Earn and Burn loyalty program)

An earn & burn loyalty program is based on the principle that the more you spend, the more points you earn. Every time a customer makes a purchase (or other engagement actions), they get points. This can be based on how much they spent. For instance, earn 5 points for each €5 spent. For every 100 (100 euro or more) points receive a €10 discount to use on your next purchase.

Alternative points loyalty programs focus on frequency and give delayed rewards. Like a stamps system. For instance, every 10th visit, get a coffee free. One of the most common examples of a points system is how the credit card rewards system works.

BeerHawk Beer Tokens
What is better than free beer? Two free beers :D. BeerHawk is the UK premier online retailer of specialty beers and ales. They wanted to connect mobile, online, and bars, and drive personalization with loyalty enhanced emails. The Beer Tokens loyalty program does all three.

• Earn loyalty tokens for purchases, friend referrals, reviews, and returning kegs.
• Every Beer Token is converted into a £0.05 off on the next order, in bar and online.
• POS integration that updates a customer’s point balance in real-time.

What we like about this program

What we like is the omnichannel data integration and feel of the loyalty program. All customer loyalty data – such as loyalty status, purchases, available Beer Tokens – are pushed to Beer Hawk’s marketing system account in real-time. This way the company’s email campaigns have all the loyalty information up-to-date and personalized.

2.  FNV Member benefits – (Partner and Membership program)

Memberships are the ultimate form of loyalty. Organizations & special interest groups always attract new members because of the main service but these can go intangible (until there is a pressing topic or need). A loyalty program with substantial benefits can be the added value and validation of the membership.

In a partner model, the organization uses co-promotion and discounts of other companies (the partners) to offer exclusive benefits to their members or clients. The partners in return can offer their products and lift on the communication to the loyalty members.

FNV Member benefits

The FNV is the dutch workers union that works for multiple industries in representation, lobby, and individual help around work and income. Their program has been running for over 10 years and offers member discounts in several ways:

• Yearlong discounts, Quarterly, and Monthly promotions keep the program fresh
• Specific segments like Starters or Seniors have discounts and communication tailored to them.
• Omnichannel program communication including website, email newsletters, and a print membership magazine.

What we specifically like is the enormous engagement and use of the program. More than half of all members have made use of the benefits. 71% sees added Brand value based on the “extra cherry on the cake” membership program.

Important for the organization as well, the program can run centralized. Coordinated by external Loyalty Marketing Agency Dunck it is ever so close to budget neutral.

3. The Chivery (Gamified Loyalty program)

Gamification is the application of game-design elements and game principles in non-game contexts. As such, Gamification can offer an extra engagement layer to your loyalty program. Game mechanics commonly found in loyalty programs include tiers/levels, challenges/ missions, badges, progress bars, surprise-and-delight, auctions, and virtual rewards.

CHIVE Rewards
The Chivery sells pop culture merchandise, related to the super popular blog TheCHIVE. The Chivery has a very active customer base on social media. They have over 1,000 products and 1.2M customers.

To increase customer loyalty and engagement they reward purchases, but more than that. Reward actions and gamify the whole experience. They used the LoyaltyLion Shopify app to speed up integration and then customized every element of the loyalty program through editable CSS.

• Earn points for account creation, visits, and purchases.
• Rank on the ‘Chivers’ point Leaderboard for a bit of healthy competition.
• Get even more points for referrals, and activities like photo uploads, scoring, and social sharing.

What we like about this program:
theCHIVE uses the loyalty program to gamify their entire blog. Fans can go from theCHIVE to the Shopify shop via the loyalty program and redeem the points there alongside purchases, thereby turning fans into paying customers. This makes it such an interesting case study. The program works across multiple sites and domains making use of the LoyaltyLion Platform and Shopify Multipass.

4. Amazon Prime (Perks – Join and Enjoy)

Customer loyalty programs don’t always have to be completely free. Taking a walled garden approach you can ask for a monthly or an annual membership fee. Customers can opt for the paid program and become ‘premium’ or ‘plus’ members of the brand.

The Amazon Prime program is an excellent example of a paid perks program. The challenge with the approach is two-pronged: you have to make the offer irresistible and you need to sell it like a product.

5. Toms (Charity and Purpose)

You can communicate with your clients that a certain part of the revenue is donated to charities or good causes, and it gives people joy.

However, something like this needs to be closely related to your brand. Brands like Toms or Patagonia doing it makes sense, as the brand resonates with it. Although it is not always the most direct customer loyalty stimulant.

6. Lego Ideas (Community and Membership program)

Humans are social animals and we yearn for the feeling of belonging. Make the access exclusive and your community becomes even higher rated.

Lego Ideas is also a program you can take inspiration from.

Start building Customer Loyalty!

Customer loyalty is directly tied to your business’s bottom line, retention, and ability to grow. So, get started today by determining which customer loyalty tactics you’re going to tap into and use the examples we reviewed above for inspiration.

There’s isn’t a better way to grow than retaining your best customers. Customer loyalty programs are the most structured and effective way to start and scale it. Start with a strategic and business-oriented goal, choose the right platform, create a reward structure that suits your brand, steal what the successful brands are doing already, and get the ball rolling.

“Satisfaction is a rating. Loyalty is a brand.” – Shep Hyken.

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