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Loyalty Programs: How Much Should Your Rewards & Points Be Worth?

This guide will help you determine the optimal value for loyalty points. We’ll dive into essential pricing principles, effective strategies, real-world...

Francesca Nicasio

Content Strategy Manager

Fun fact: 20% of customers stated that rewards programs influence their choice of where to shop. 

There are clear benefits to having a loyalty program. However, there are also some hard truths: Just because it’s driving customers doesn’t mean it’s making bank. Businesses that fail to recognize they’re overspending on rewards or misjudging their importance are more likely to suffer losses. 

To create a successful loyalty program, be sure to check whether its benefits outweigh the costs right from the outset. This means taking the time to calculate loyalty points accurately and making sure that you’re valuing your program’s points in line with your business goals and targets. 

This comprehensive guide will help you determine the optimal value for loyalty points. We’ll dive into essential pricing principles, effective strategies, real-world examples, and common challenges.

By the end of this guide, you'll be able to set yourself up to achieve consistent and lucrative returns from your loyalty marketing strategy.


 

What are loyalty rewards?

Loyalty rewards are incentives offered by businesses to encourage and reward repeat purchases by customers. They can come in the form of:

  • points
  • discounts
  • exclusive benefits

…all of which are designed to build and maintain a strong, loyal customer base.

Think of it this way: loyalty rewards are the currency of customer appreciation, and that’s why some of the world’s most customer-centric brands — including Starbucks, Sephora, and Amazon — invest a great deal in their loyalty and rewards initiatives. 

These companies know that loyalty programs encourage repeat purchases while nurturing relationships with their customers. 

Rewards programs also have a tangible impact on sales metrics. Some programs require reaching a specific cash or credit card spending threshold for loyalty points. This encourages higher splurging in a single transaction to increase basket size and average transaction value. 

In fact, our research shows that on average, a loyalty member spends 72% more than an anonymous shopper.

Principles of pricing rewards

Pricing customer loyalty rewards requires a balance between attraction and sustainability to ensure immediate engagement and long-term profitability. Your rewards must be enticing enough to capture attention without compromising your profit margins or undervaluing your products.

Giving back value in a loyalty program-1

You can achieve this balance by keeping the following in mind:

Considerations when pricing rewards

To calculate loyalty points more accurately, consider the following factors when designing your program.

1. Customer Lifetime Value (CLV)

CLV is the overall expected revenue from customers throughout their engagement. Thus, it helps you determine the maximum reward program investment while maintaining profitability.  

Customers with a CLV above your average CLV indicates that they are long-term customers who are engaged and loyal. You can offer them high-value rewards, such as VIP events, limited-edition products, or loftier monetary rewards. Conversely, lower CLV shoppers can enjoy modest rewards like free shipping on certain thresholds to encourage ongoing engagement while retaining positive ROI.

2. Cost of rewards

Cost of rewards is a key metric to avoid overspending. Your total loyalty point rewards cost mustn’t exceed the incremental benefits generated by increased customer spending. 

Note: Incremental benefits don’t only mean higher sales. It can also include non-monetary benefits like increased customer retention, improved brand loyalty, and more word-of-mouth referrals.

Add the product/service, fulfillment, and administrative expenses associated with granting rewards to get your total cost of rewards. Then, compare that against the benefits to analyze the potential return on investment for different reward options.

For example, if offering a free product as a reward incurs a direct cost of $5 to your business, you should ensure this cost is more than covered by the additional spending or engagement the reward generates.

3. Competitive positioning

This factor influences your offering’s perceived value relative to competitors. If your competitors offer similar rewards at a lower price point, you may need to tweak your pricing strategy to stay competitive. Otherwise, you can justify a premium price with unique, high-quality rewards.

You can even go a step further by identifying areas where competitors fall short and strategizing to fill those gaps. Conducting market research analysis can be helpful in such a case. 

"On average, transactions made by loyalty members are worth over 60% more than anonymous transactions. Imagine even just 5% of your customer-base joins your loyalty program, and spends 60% more per transaction. Think what that would do to your bottom line."

- Rory Moss, Loyalty Expert

4. Economic conditions

Economic conditions can intensify market competition. During downturns, shoppers become more price-conscious and seek value for money. You can choose to engage in price wars or offer aggressive pricing strategies (i.e., offering higher-than-normal loyalty points) to gain customers.

Since this external factor is inevitable, you can only mitigate their effects to some extent. Leverage predictive analytics to anticipate shifts in demand and adjust your pricing like you would for competitive positioning.

5. Market demand

Responding to market demand for loyalty program rewards involves monitoring purchasing patterns, survey results, and industry trends. Insights from these activities shed light on which reward types appeal the most to your customer base.

When market demand for exclusive events is high, customers perceive these offerings as valuable and are willing to pay premium prices for them. Thus, you can charge more for experiential rewards.

Pro-tip: Market demands fluctuate. Continuously monitor your pricing strategy’s performance and adjust it as needed.

Point structuring

Customers may perceive the program as less valuable if it doesn’t meet their expectations or if the loyalty point bonus takes too long to accumulate. It can lead to decreased participation and engagement. 

Altering value perception

Here are two ways to structure a well-designed points system that serves your (and your customers’) needs:

Point Valuation

Set a monetary value for each loyalty point. It can be a fraction of the average profit margin per transaction or your CLV. 

For instance, if each loyalty point is valued at $1.00, the program becomes straightforward and highly perceivable in terms of value, making it easy for customers to understand how much they’re earning with each transaction.

It’s best to start with a conservative point value. After monitoring customer response and performance metrics, make adjustments to obtain the optimal point value.

Point-to-spend Ratio

Specify the number of loyalty points‌ customers will earn for every dollar spent on purchases. A higher ratio encourages more frequent purchases to accrue points faster. Meanwhile, a lower ratio delays point accumulation but helps reduce program expenses. 

Industry benchmarks are a good reference point, but maintain it in line with your objectives. For instance, if the goal is to increase customer retention, opt for a higher ratio to encourage repeat purchases and ongoing engagement.

Refer to these price structuring options when deciding on the reward types you’ll offer. But before we get into these, here are more strategies to calculate loyalty points more accurately.

4 steps to sustainable rewards pricing

Follow these practical strategies to optimize your reward pricing while keeping the loyalty program compelling and aligned with your financial goals.

1. Understand cost-based pricing vs. value-based pricing

Cost-based pricing focuses on covering loyalty program expenses and guaranteeing profitability, while value-based seeks to connect rewards with perceived customer value.

Cost-based pricing calculates the direct costs associated with providing rewards. It’s a safer option for startups or small businesses with limited resources. It sets prices based on tangible costs rather than uncertain market factors or vague perceived value. 

Here’s a simplified illustration without factoring in retention rates, seasonal fluctuations, competitor strategies, and other pricing factors. 

You’re running a loyalty program, costing you $22 per individual ($15 for reward product costs, $5 for marketing expenses, and $2 for administrative overhead). If you aim for a 20% profit margin, you should be earning $27.60 per customer enrolled ($22 total cost per customer / 0.8 profit margin).

Value-based pricing, on the other hand, doesn’t focus on cost recovery. You calculate loyalty points pricing based on its impact on customer satisfaction and loyalty. It’s ideal for businesses that value brand reputation, such as luxury goods and high-end technology.

For instance, you could offer personalized services or products not available to the general public. This approach enhances their perceived value and can justify a higher points requirement, encouraging more purchases and engagement from members.

2. Incorporate customer feedback and insights from your data

Feedback lets you understand what your customers truly value. Solicit their ideas through surveys, reviews, and direct communication channels. 

In addition, data analytics can help you see exactly what works and what falls flat in your program. It tracks key metrics like CLV, redemption rates, and engagement levels. Use these insights to tweak your offerings and personalize rewards based on each customer base’s behavior and preferences.

3. Define your objectives

Your loyalty program’s objectives ensure that each reward contributes to attaining your bigger goals. Specify your target goals, whether it’s increasing customer retention or boosting sales.

Review your current reward offerings and assess how well they support these goals. Suppose your initial objective is to boost customer retention, but you notice that reward redemption rates are low. You can adjust your reward structure to include more experiential rewards or exclusive perks to pique more interest.

4. Analzye competitors and position yourself strategically in-market

Your competitors can overlook market gaps — and that’s where you come in. Study their offerings, including their reward types, pricing strategies, and program features. Recognize their shortcomings and make them your strengths.

Let’s say your findings show competitors lack flexibility in redeeming rewards. In this instance, having multiple redemption channels (e.g., online, in-store, and mobile) can help make your program stand out in a crowded market.

3 examples of successful rewards pricing structures

Check out these three brands that have captivated customers and driven business growth through their loyalty programs. Here are their real-world success stories:

American Airlines

american airlines rewards program structure

The American Airlines AAdvantage® program offers elite status to frequent flyers with exclusive privileges such as priority boarding, systemwide upgrades, and extra baggage allowance. AAdvantage members can also earn bonus miles with partner airlines with every purchase using any Citi®/AAdvantage® Aviator® credit card.

Anyone can enroll with no annual fee, suggesting that value-based pricing can be as profitable as cost-based pricing. The AAdvantage® program’s longevity speaks volumes about its success. The increased engagement and revenue from more airline bookings and card purchases outweigh the reward costs, resulting in a favorable bottom line.

Neal's Yard Remedies

Screenshot 2024-03-21 at 9.36.25 AM

After decades of successful sales, Neal's Yard Remedies wanted to take the next step. It was time to undergo a digital transformation to offer a truly omnichannel experience. Unfortunately, their old POS was complicated to use and lacked an open API. Neal’s Yard Remedies wanted to find a POS and loyalty solution that worked seamlessly with their ecommerce platform to deliver that omnichannel experience.

Now, Neal’s Yard Remedies run an easy-to-use loyalty program across all their sales channels. It’s clear how to earn points, and there are multiple ways to earn. For a purchase, their points to spend ratio is set at 5:1 (customers earn 5 points when they spend £1). They’ve opted for a simple framework for rewards too: 500 points are worth £5.

Alpha60 

Screenshot 2024-03-21 at 9.43.24 AM

Alpha60 takes a different approach. Brand Manager Kelvin explains that Alpha60's loyalty program is about 'surprise and delight', rather than a promotional tool used to incentivize sales.

As part of the customer-first approach, ALPHA60 decided to make the loyalty program as simple as possible. Spend a thousand dollars, get a thousand points (a 1:1 points-to-spend ratio), get a $50 voucher.

“We try not to complicate it too much and add different things in, and that really works for us. I think it’s because it’s simple for people. It’s easy for customers to understand.” Kelvin believes simplicity helps customers get more invested with their points: they always know when they have a voucher ready to redeem.

Challenges in pricing rewards

The most common types of loyalty rewards include:

  • Percentage-based discounts
  • Fixed dollar discounts
  • Free shipping
  • Free products
  • VIP experiences

Each ​​loyalty program reward has its cost implications. For instance, percentage-based discounts work well with price-sensitive customers or low average order values. They encourage larger purchases or more frequent visits, although they could hurt your bottom line if applied to high-value items.

If shoppers mostly have higher and varying average order values, setting fixed dollar discounts on specific thresholds or repurchase intervals can make pricing predictable.

E-commerce and online businesses benefit from free shipping because it eliminates potential barriers to online purchases. But you’ll have to set an average order value before you hand it off to your customers. Otherwise, it’ll erode your profits.

Offering free products or samples can boost product discovery and your loyalty program's perceived value. But like free shipping, the total cost shouldn't exceed the incremental revenue or engagement they generate.

VIP access or experiential rewards are an excellent option for building a loyal customer base. It helps enhance brand trust and differentiation by fostering a sense of belonging among top-tier loyalty members. To ensure profitability, only offer this reward when increased engagement and CLV can justify the expenditure of delivering such experiences.

Here’s a table to simplify your comparison:

Reward type

What

Good for

Consider

Percentage-Based Discounts

Customers receive a certain percentage off their purchase.

Businesses with a low average order value (AOV) or those selling commodity products where customers are price-sensitive. This can encourage larger purchases or more frequent visits.

It might eat into margins if not carefully managed, especially for high-value items.

Fixed Dollar Discounts

Offers a fixed dollar amount off, which could be on the next purchase or once a certain points threshold is reached.

Businesses with higher and varying AOVs, as it provides a predictable cost that doesn't fluctuate with the price of the cart. It's also appealing for businesses that want to encourage a minimum spend.

Ensuring the discount threshold doesn't undercut profit margins is essential. It's also less enticing for low-value purchases.

Free Shipping

Free shipping on orders after reaching a certain points number or as a tiered benefit.

E-commerce businesses or those with a significant online presence. It's particularly effective if shipping costs are a known barrier to purchase.

Should be balanced with shipping costs to avoid eroding margins, especially for low-margin products or very distant shipping destinations.

Free Products or Samples

Offering free products or samples once customers reach a certain tier or points level.

Retailers with high-margin items or those looking to introduce new products. It encourages exploration of your product range and can enhance the perceived value of the loyalty program.

The cost of goods given away should be carefully considered against the incremental revenue or engagement they drive.

VIP Access or Experiential Rewards

Providing access to exclusive events, products, or experiences for top-tier loyalty members.

Brands with a lifestyle component or those looking to build a community among their customers. Works well for businesses aiming to enhance brand loyalty and differentiation.

The cost of creating these experiences should be justified by the increased engagement and customer lifetime value they generate.

To minimize costs while maintaining attractive rewards, don’t put all your eggs in one basket. Spread your investment across multiple reward types to target diverse audience segments. It won’t alienate customers who may not prefer a particular reward type. If you still can’t decide, talk to an expert for tailored advice.

Free Download: PDF and calculator for structuring your points and rewards

For more loyalty program optimization insights and tools, download our new PDF and calculator on pricing points and rewards. 

Download ebook on structuring your loyalty program

Notable trends in loyalty rewards

60% of brands claim experiences are indispensable for their success. Consider delivering experiential loyalty program perks they can’t get elsewhere to drive stronger brand advocacy.

Cutting-edge AI and analytics tools are another innovation that can help refine your reward pricing strategies. With online shopping, AI algorithms can track the most viewed, added to cart, and purchased products. Understand these patterns to maximize your pricing strategy on popular items.

Businesses also gather and analyze customer data in real time, urging more personalization and dynamic pricing. That way, you can streamline the redemption process with reward recommendations or one-click redemption. Implementing dynamic pricing could mean offering personalized discounts or bonuses tailored to individual customer profiles.

With so many emerging trends, it can be difficult to know where to begin. So, start with investing in the right loyalty software to harness these innovations and create highly effective reward systems.

Optimize your loyalty program today

Well-priced rewards inspire more loyal customers, reduce churn rates, secure repeat business, and differentiate your brand. All these benefits rely on how you calculate loyalty points and manage reward offerings.

With smart loyalty software like Marsello, customer-centric rewards with consistently high ROI are now more feasible than ever. Here’s our detailed guide to building a loyalty program that resonates with your audience.

 


 

Get advice from a loyalty expert and start driving repeat sales.

Book a demo

 


 

Read more: 7 Steps To Building A Profitable Loyalty & Rewards Program

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    Whether you're a brick and mortar shop looking to go online for the first time or have already run eCommerce sites in the past, you'll get the hang of BigCommerce in a snap. 

     

    The platform also offers an expansive selection of apps that easily integrate to support merchants – no matter whether they need solutions for accounting, inventory, or sales. 

     

    An expansive selection is great, of course, but of the hundreds of apps in various diverse categories, a little guidance can go a long way in selecting those that are going to best support your retail business.

     

    To save you hours sifting through reviews and user information, we've gone and done it for you and found the best BigCommerce apps to meet your store's needs.

     

    Lightspeed-Logo 1. Lightspeed

    Point of sale, inventory, and reporting tools are a must for every merchant, both online and offline, and Lightspeed brings users all of those tools – POS, inventory, and reporting, as well as customer engagement – to remove the hassle of managing a business. 

     

    The Lightspeed app makes it easy to manage sales, customers, products, and inventory from one easy to use platform. BigCommerce merchants can integrate with Lightspeed, so their sales, inventory, and customer data are synced seamlessly across both platforms. 

     

    Lightspeed and BigCommerce give you everything you need to power your retail business online and in-store.

     

    With these two solutions, you can remove the complexity out of going omnichannel. You can on top of your sales, stock, and customers while Lightspeed POS and BigCommerce stay perfectly in sync. You can even sell on your favorite social media and marketplaces!

    - Francesca Nicasio, Content Marketing Manager, Lightspeed Retail

     

    Engaging and communicating with your customers is a MUST if you want to keep them coming back, and this one of the reasons why you want to have Marsello in your retail toolkit. 

     

    Marsello is marketing automation and loyalty software that enables you to run personalized, data-driven campaigns at scale with added tools like customer segmentation and feedback collection. You can use Marsello to create email and SMS campaigns tailored to each user based on their purchase history, behavior, and previous interactions with your brand. 

     

    On the loyalty side, Marsello lets you create a rewards program that works seamlessly across your eCommerce and brick and mortar shop, so your customers can earn and redeem perks no matter where or how they're shopping!

     

    Accounting is a task that very few business owners enjoy. However, thanks to the beautiful integration of Xero Accounting on the BigCommerce platform, accounting need not be a chore. 

     

    Your store can be easily connected with your accounting software for a seamless flow of information, with your online and offline data and accounts perfectly in sync. Xero covers payments, payroll, inventory, invoicing, expenses, and performance reporting, which is all mobile compatible for quick insights. 

     

    Importing, managing, and shipping orders is an arduous process that requires tech power to reign in and refine. ShipStation is just the tool to cover BigCommerce users.  

     

    With ShipStation, eCommerce merchants can import orders from all selling channels into a single platform, manage them with custom automation, and ship through all the best carriers. The platform also makes returns easy, allows for next-level branding and marketing, and offers first-class user support. 

     

    With ShipStation, you can say "goodbye" to copying and pasting. Seamlessly sync your orders from BigCommerce and all your selling channels into a single platform to automate nearly every step of your shipping process. Save time and money with the fastest, easiest way to get products to your customers and provide an exceptional post-purchase experience and a little peace of mind with your own branded tracking page. 

    - Adam Foster, Content Marketing Director at ShipStation

    Shogun  5. Shogun

    Successful eCommerce stores need sites that visually stun and captivate audiences. Shogun enables BigCommerce users to create this through their powerful page builder and content management system. 

     

    BigCommerce users can build landing pages, blog pages, product pages, and more with the intuitive Shogun drag and drop page builder. These pages are then easily optimized to perform through AB testing, and once in use, the system also provides analytics and marketing features to schedule campaigns, and measure performance.

     

    Bigcommerce merchants have discovered that the simplicity of using our page builder not only gives them control over their storefront, but it's also helping them save on costs by greatly reducing development hours and time to market. It's empowering their marketing teams to maintain and implement site changes quickly without having to submit engineering tickets.

    - Phill Moorman, Director of Marketing, Shogun

     

    Understanding why your visitors don't convert is the most valuable tool to enable you to make changes to your business to ensure that they do. Lucky Orange helps you to do this. 

     

    Lucky Orange eliminates guesswork and gives merchants clear insight into how to optimize their site for more sales. They do this by tagging and tracking visitor behavior in all areas of the site's usability with Sales Chat, Recordings, Form Analytics, Dynamic Heatmaps, Polls, and more.

     

    “BigCommerce merchants use our software every day to find ways to turn more visitors into customers. The most important thing we want merchants to understand is that getting more people to “add to cart” isn’t guesswork. You don’t have to rely on assumptions to find the problems people are running into on your website when you can watch a session replay of exactly where a person clicked and scrolled on your site or look at form analytics to see where most people are getting stuck and abandoning your website.”

    - Danny Wajcman, Chief Operating Officer, Lucky Orange

     

    Order and inventory management, when done well, significantly increases business performance. While it's the universal goal of merchants to boost business performance, managing orders and inventory can require a helping hand. 

     

    Integrated with BigCommerce, Pulse Commerce helps merchants with real-time visibility and control of their inventory, orders, and customers across all sales channels – i.e., in-store, eCommerce website, and marketplaces.  With a 360-degree view of each customer order and interaction history, modifications are easy, and issues resolved quickly. 

     

    Dealing with customers abroad can prove challenging, but there are tools like Zonos Checkout to simplify the process for merchants and make international transactions and interactions much more streamlined. 

     

    The Zonos BigCommerce integration makes cross border transactions simple with landed cost, localization, and compliance to enhance the buying experience for international customers. The Zonos app covers duties and taxes, currency conversion, payment solutions, and fraud coverage. 

     

     

    Without backups, an unexpected crash or hack can bring down your entire eCommerce business. Without a backup, there is nothing to bring back, and a new build may be required. To ensure that never happens to your store, you can leverage Rewind Backups.  

     

    Rewind Backups on BigCommerce completes daily, automated backups to keep essential data stored, secure, and retrievable should something unexpected occur. It also allows you to quickly undo unwanted changes in just a few clicks, eliminating the need for CSV exports and saving significantly on downtime. 

     

    Rewind® protects the data that runs your eCommerce business. BigCommerce backs up its platform – not your store. This means product catalogs, pages, themes, and more can be lost should something go wrong. Human error, malicious attacks, or third-party apps can all compromise or accidentally delete your data. And recreating a store can take hours, even days. With Rewind, you can quickly undo unwanted changes and never worry about making an irreversible mistake again.

    - Ryan Gibson, Content & Comms Manager at Rewind.io

     

    AfterShip 10. AfterShip

    In need of shipment tracking and delivery updates software? Look no further than the Aftership app for BigCommerce users, which supports all your carriers, including UPS, FedEx, USPS, DHL, and 400 more.

     

    The free Aftership app allows BigCommerce users to track all of their shipments in one place while giving their customers a powerful delivery experience where they can check the delivery status, and submit requests in just a few clicks. Tracking pages can also be customized with the merchant's logo, store URL, and imagery to boost brand recognition.

     

     

    Printful.com 11. Printful

    Want to sell custom-designed apparel and other goods but don't want to hoard stock? Printful, through BigCommerce, is a print-on-demand dropshipping app that allows merchants to print branded products, without needing ever to have them in-house. 

     

    Printful helps with free design templates, warehousing, order fulfillment, and discounted samples so that merchants can try products before they sell them, as well as 24/7 customer support. 

     

     

    Kudobuzz 12. Kudobuzz

    Positive product and brand reviews have the power to boost conversions and compel new customers to buy. It makes sense, then, to use them on your eCommerce site, wherever possible to influence your customer to act. 

     

    Kudobuzz makes this process easy. Through the Kudobuzz app, BigCommerce users can collect reviews from social channels like Facebook, Twitter, Yelp, and more, to then show them on the eCommerce site via clean, customizable widgets. Reviews from other apps are easy to import into Kudobuzz for future use.

     

    Pixlee 13. Pixlee

    Customer content is a powerful tool to harness in the exercise of branding. Just as customers trust the reviews of their peers, they also trust the social pictures of their peers using products that they are considering. 

     

    Pixlee helps BigCommerce users to connect with and leverage customer content to deliver personalized content in any marketing channel. The platform allows merchants to connect with their customers, collect customer-created content identified through tagging or hashtags, gain permission, and publish, all from one place. 

     

    Skubana 14. Skubana

    Skubana is a distributed order management platform that facilitates fulfillment, inventory, and business intelligence for brands operating across multiple channels. 

     

    Through BigCommerce, Skubana synchronizes data from sales channels, warehouses, 3PLs, POS systems, and wherever else it can be found, so that merchants can focus on what matters: customer experience. With Skubana, merchants can sell direct-to-everywhere, automate operational responsibilities, and transform multi-channel complexity into singular clarity.

     

    LiveChat 15. LiveChat

    Instant customer service chat is powerful to resolve questions and help customers move through to make purchases. The LiveChat chat widget for BigCommerce makes it incredibly easy to set this up and go live. 

     

    LiveChat allows brands to communicate with shoppers while they browse, answering all incoming sales and support questions, and even making product recommendations in the live chat widget. The app comes with a pre-installed chat dashboard and lets merchants monitor the results of the chat activities, right in the BigCommerce dashboard.

     

    Affirm 16. Affirm

    Alternative payment solutions are becoming increasingly more common across the world, and of them, buy now, pay later (BNPL) is one of the most widely adopted by both customers and merchants. 

     

    Affirm is one such app that integrates with BigCommerce and allows shoppers to pay their goods off over time, giving merchants the ability to secure more sales, while offering more agile solutions to their customers. The Affirm app shows customers what their payments could look like based on their shopping cart price. And on the backend, it provides merchants with insights into their customer's journey and preferences.

     

    Final Words

    While there's no magic bullet that can solve all your retail problems, the apps mentioned in the post can certainly help you take your business to the next level. Whether you have a brick-and-mortar store, an eCommerce site, or both, you can use the solutions mentioned above to streamline your operations, increase customer loyalty, and boost your bottom line 

    SEO Series Part 3: Common Mistakes SEO Mistakes for Retailers to Know

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    Solve common SEO mistakes before ever even making them with Part 3 of our SEO mini-series.

    In this article, we’ll be talking about the common mistakes online retailers make when optimizing their websites for search. Many eCommerce retailers make errors during their quest to improve their SEO without realizing it. They end up sabotaging their own efforts in small ways; small errors can build up over time to become a major barrier to their top-of-page-one aspirations.

    How to improve your retail store SEO ranking

    Fortunately, fixing these isn’t as complex as you might think; a few quick adjustments will have you on the way to a higher ranking in no time.

    Read the points below and see if you’re making these mistakes on your website:

     

    Mistake 1: Not optimizing your product URLs

    URLs might seem like a minor consideration, but they are extremely relevant to eCommerce SEO; this is because they play a significant role in how Google indexes each page of your site.

    The URLs of your product pages should help search engines to work out how the different parts of your site relate to each other. This is especially important for your broader product categories (e.g. ‘dresses’). You want these categories to rank well because this is how your potential customers can access your catalog from the search engine results page (SERP).

    Even the biggest eCommerce sites still make persistent errors in this area. See below this link from the clothing giant H&M:

     

    H&M product page url

     

    Would you be able to tell what the item was by looking at this URL? No chance. It contains no keywords, so it’s only by clicking that you’d know the item is a V-neck dress. This is exactly the kind of link you want to avoid; it looks messy and chaotic, so no one is likely to click on it.

    A messy URL also makes your site more difficult to navigate. If your customers can’t retrace their steps back to other parts of your site by reading your URLs, there’s a good chance that Google will struggle as well.

    What to do instead: focus on website hierarchy

    Your links should be offering a solid road map of your site. An optimized link would follow this structure:

    https://example.com/category/sub-category/product

    The pet care retailer Bobbie Dogs has a great URL structure – their URLs have a logical flow from the broader elements of the website (e.g., homepage, category pages, etc.) to the more specific parts (e.g., the product in question).

    As such, both Google and shoppers alike will find it easier to understand what the page is all about. Check out their URL below and note the logical mapping of data within the URL; it’s easy to follow, understand and remember.

    Bobbie dogs url
     
     

    Mistake 2: Keyword stuffing your product titles and descriptions

    In SEO, keywords make the world go round, so it’s a smart idea to incorporate them into your web copy. And since product descriptions make up a sizeable chunk of your on-site content, it makes sense for you to optimize them with the right search terms.

    Product descriptions help Google determine the relevance of your pages in response to a search query, so it’s vital that they show up on the search engine’s radar.

    But trying to write for Google instead of your customer through keyword stuffing will make your copy look stilted and awkward. Plus, the practice can really hurt your rankings because the clunky sentences make it look like you aren’t trying to be informative.

    Here is a prime example from a listing on Etsy:

     

    Keyword stuffing in an Etsy store product listing

     

    This description is very wordy and dense, using the keyword ‘top’ multiple times. It also uses far more descriptors than necessary, making it more likely to confuse customers than inform them.

    What to do instead: Sprinkle in keywords and don’t overdo it

    Use your keywords moderately and only in places where it’s natural to do so. Try putting yourself in the position of your customer when you read your copy. Is it relevant, useful and compelling? If so, that’s what will make them want to stick around – and Google, in turn, will reward your website for it.

    Check out this example from Triangl, a highly successful Australian swimsuit brand. In the following product page, you’ll notice that Triangle lightly sprinkles relevant keywords (e.g., ‘bikini’) throughout the content without going overboard.

    Triangls product listings are concise, clear, and helps to sell their products

    Mistake 3: Not having an internal linking strategy for your product pages

    What often gets overlooked in discussions about algorithms is that site ranking really boils down to usability.

    Translation: your site architecture needs to be on-point, and this is judged in part by how easy your site is to navigate. The purpose of an eCommerce site is to have customers buy products, so you need to gear your link structure to this end. There’s no point in only having navigational links to your site’s ‘about us’ and ‘contact’ pages. This won’t take your customers anywhere near the shopping cart! If your customer is looking for something specific, the links they come across in their searching need to be relevant and useful.

    What to do instead: Improve your site’s usability with the right internal links

    Internal linking really boosts your site usability. If you link between ‘similar’ product pages, whether they be companion products or products with similar features, this massively improves the user experience of your site. Keeping your customers browsing between products for longer periods sends positive ranking signals to Google, which helps you in the SEO department.

    Take this example from women's fashion store, Osmose:

     

    Osmose's product recommendations listed below their product pages

    On this page, Osmose has included a plug-in that recommends similar products to customers as they browse This aids a customer’s shopping experience because they’re able to find relevant products much easier.

     

    Mistake 4: Not optimizing your site for mobile

    Having a site that isn’t mobile-optimized may not be killing your SEO rankings just yet, but in July 2019, Google will begin using a ‘mobile-first’ indexing system – this means that your site will get judged according to its mobile-friendliness. Google’s new system replaces a previous update in 2015, which used a mix of mobile and desktop signals to dictate search results.

    So even though it currently makes no difference if the majority of your traffic still comes from ‘desktop-based’ searching, Google has basically confirmed that mobile is king. Moral of the story? If your site isn’t mobile-optimized, your ranking could be taking a hit in a few months’ time.

     

    What to do instead: Implement responsive web design

    Rather than having your mobile customers struggle with a shrunken version of your desktop site, you should install a responsive layout. Responsive Web Design (RWD) is the approach recommended by Google because it doesn’t create separate URLs for desktop and mobile, which can get confused as duplicate content (a real SEO headache). RWD instead adjusts to the layout needed for each user, whether it be mobile, tablet, or desktop.

    Google’s free mobile-friendly test allows you to analyze each page of your website by entering the URL, providing feedback on any issues.

    And here’s the good news: some of the best eCommerce platforms, including Shopify and BigCommerce, now provide responsive themes. So, it’s worth checking if you need to update to the latest version, or else switch to a custom theme.

    Mistake 5: Publishing low-quality content


    It’s easy to fall into the trap of ‘content for content’s sake’ to improve your ranking, particularly when it comes to your blog.

    Many SEO experts agree that having a blog is an important part of SEO strategy because they’re a great tool for adding more indexed pages to your site. Google’s ‘crawlers’ treat pages as individual search results that show up if they match a query. The more indexed pages you have, the more queries that your brand will get associated with. So, it’s tempting to churn out tons of short, hastily-written content each week, simply to get your indexed page count higher.

    But Google is well-aware that this strategy is used to ‘trick’ its algorithm, and the search engine penalizes websites with a high number of pages ‘thin’ content.

    What to do instead: Choose quality over quantity

    Switch to a strategy that prioritizes high-value content that engages, informs, and entertains your readers.

    In terms of the content itself, your focus needs to be less about the semantics of SEO. Being perfectly optimized for keywords isn’t what makes a blog interesting! So, what does? Content that is well-researched and contains insights that people can use or learn from.

    Check out the skincare specialist, Sigi Skin. Many of their posts are highly actionable and contain pointers that their customers can do on their own.

     

    Sigi Skin Blog
     

    Mistake 6: Not optimizing your images for SEO

    There are a number of key errors that eCommerce merchants make when it comes to images. They include:

    • Using larger-than-necessary images - It's a known fact that page speed is a ranking factor for Google. Using large images increase a page's load time, which in turn hurts your rankings.

    • Not having the right image titles and tags - Search engines crawl image file names and alt text to figure out what image is about, so by failing to optimize these components, you're missing out on giving Google valuable information about your images.

    • Using images to replace text - Some merchants use images that contain words, to avoid dealing with text formatting issues. While this may seem like a smart shortcut, it does nothing for SEO. Again, this practice prevents you from fully communicating with search engines, thereby hurting your rankings in the process.

    What to do instead: Always consider SEO when using images

    Optimize your image file names and alt-tags by using descriptive words. Let's say you're posting an image of a red party dress. Instead of naming it "IMG_0321111.jpg" use the file name "red-scoop-neck-dress.jpg".

    The same thing goes for your alt text. According to BigCommerce, in addition to serving as "an alternative when websites can't render the image for some reason," alt text "describes the image to search engines so they can understand them."

    The best thing you can do to optimize your alt text is to sprinkle in keywords that clearly communicate what the image is. Just make sure not to overdo it by keyword stuffing.

    As for your image sizes, BigCommerce recommends keeping your images under 70KB. Also opt for JPEG instead of PNG or GIF, because it “allows higher quality with a smaller file size.”

    Finally, avoid using images as a replacement for text. Remember, search engines determine your rankings primarily by crawling the text on your website, so make sure you have enough word-based content on there to give Google a clear idea of what each page is about.

     

    Creating a webpage as an image

     

    Final words


    SEO can feel like a real minefield for both new and experienced eCommerce merchants. Ultimately, though, the most important thing to keep in mind is that both you and Google have the same goal; to give your customer the best user experience possible. Focus on that and you’ll be on your way to better SEO rankings.

    Have you seen the rest of the SEO Series? Check out Part One and Two in the links below.

     

    Take me to part 1Take me to part 2

    SEO Series Part 2: Making Search Engine Optimization More Affordable

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    Part 2 of our SEO series gives you actionable tips on getting started with eCommerce SEO while taking the DIY route!

    Marsello's SEO blog series Part 2

    Welcome to the second instalment of Marsello’s eCommerce SEO series. In our previous article, we talked about the basics of Search Engine Optimization and the initial steps you should take to kick off your efforts.

     

    This week, we’ll be discussing the costs of Search Engine Optimization and the things you can do to get more bang for your buck.

     

    A 2018 study by Ahrefs found that the most popular hourly rate for SEO professionals ranges from $101-150 per hour. For those that charge monthly retainer fees, the range of $500-$1,000 per month was the most popular pricing tier.

     

    And while those figures aren’t surprising, they’re far from being chump change, especially if you’re a small business.

     

    So what does an SMB to do?

     

    While your exact steps will depend on how much SEO work you need, we’ve put together some expert-backed pointers on how you can save money on search engine optimization costs.

    Let’s have a look.

     

    Educate yourself

    If you have some time on your hands and don’t have the budget to pay someone $100+ an hour for SEO services, then going the do-it-yourself (aka DIY) route could be a good way to go. Just remember, though, that your results from your DIY efforts will only be as good as your SEO knowledge.

     

    That’s why if you’re not well-versed in Search Engine Optimization, the first thing you should do is educate yourself.

     

    “There are so many resources available online now to do your own SEO, even for online merchants,” says Ben Hanzel, chief editor at BestCompany.com

     

    He adds that eCommerce-centric SEO is different from the average website, which is why he recommends consuming SEO resources specifically for eCommerce merchants.

     

    Alex Ratynski of Make Bank Blogging echoes this advice. “In my years of experience as a professional SEO, I have worked with a number of brands and businesses big and small. For those smaller businesses in eCommerce, I think a lot can be done by just simply educating themselves beforehand. This will help whether they work with a consultant or not.”

     

    To start with, Alex suggests the comprehensive eCommerce SEO guides from Ahrefs, Backlinko, and Neil Patel. Guides such as these give a good grounding for the information eCommerce retailers need when getting started with SEO and it’s a great idea to get this base-understanding as early as possible.

     

    Hire a consultant who can offer advice

    If you have funds to spare, Hanzel recommends using it on a consultant. But rather than paying an SEO specialist to work on your site for 20+ hours a month for a year, you can choose to spend a fraction of the cost by consulting with an expert who can tell you what to do.

     

    “It may be worth getting an hour consultation, to know where to start,” he says. “Some SEO companies even offer this for free, as long as you're willing to sit through a sales pitch at the end of it.”

     

    Another option is to hire someone as an ’overseer’ rather than a full-fledged service provider. According to Ratynski, one thing you could do is bring in someone "for a few hours every few months to do full audits, give clear actionable improvements, reasons for those, and then give you the option to do it yourself.”

     

    With that said, if you decide to hire a consultant or advisor, make it a point to take action on their recommendations. “SEO does take time, so make sure you're putting in the effort and time to fully dedicate yourself to it, and you'll reap the benefits for years,” says Hanzel.

     

    To reiterate Hanzel’s point, SEO can take months even to seem to make a difference, and even then it’s not static. You will need to update your store, information, and content frequently to be sure that it’s relevant. The basic idea is that Google and other search engines see your site, process that information as valuable to the search requests of your potential customers, and prioritizes your site in the search results. The higher your store appears in that list; the more likely a customer is to click on it and convert to purchasing with you. SEO is a long game, but it’s undeniably important.

     

    Marketing professional uses diary and computer to make SEO plan.

    Go the DIY route

    Once you have the SEO info you need (either by reading up on Search Engine Optimization or consulting with an expert), it’s time to take action on what you’ve learned. The specifics will vary, depending on your site, but generally speaking, the success of your SEO efforts will hinge on how well you do the following:

    • Keyword research

    • Content creation

    • Link building

    Let’s look at each of these components in more detail.

     

    Keyword research

    As we mentioned in our previous post, keyword research is the cornerstone of any Search Engine Optimization strategy. Before getting to the ‘optimization’ part of SEO, you first need to identify the keywords that your customers are searching for.

    As we mentioned previously, the best keywords are the ones with a high search volume (because it means many people are searching for it) but with a competition level low enough for you to compete with.

    But there's another key component that makes a search term worth targeting, and that's intent. When doing your research, you need to discern whether or not a keyword is backed by a consumer's intent to buy.

    For example, a person searching for keywords like ‘where to buy a coffee mug’ or ‘travel porcelain mugs’ likely has a stronger buying intent than someone who's looking for information on just ‘coffee’ or  ‘how to clean a coffee mug.’

    When identifying keywords to use in your copy, ask yourself: "does this search term reflect an intent to buy?". If the answer is no, then it's not a good keyword to target.

     

    How to find keyword ideas

    There’s no shortage of SEO tools dedicated to keyword research. Some of the industry’s favorites include Ahrefs, SEMRush, and Mangools, though we should note that these come with a subscription fee.

     

    And since this guide is for merchants looking to save on SEO costs, we’ll be focusing on the free tools you can use to find keywords.

     

    Google Keyword Planner

    Google’s Keyword Planner is a great starting point for search term ideas. Simply enter keywords related to your product, and the tool will make numerous suggestions based on what others are searching for. Google will also display a search volume and competition level for each keyword.

    For instance, when you enter the word ‘mug’ into Google’s Keyword Planner, it’ll serve up nearly a thousand relevant ‘mug’ related keywords you can sift through.

     

    Google Ads keyword planner

     

    Ubersuggest

     

    Online marketing guru Neil Patel created a nifty tool called ‘Ubersuggest’, which can be an excellent source for ideas. Much like Google Keyword Planner, Ubersuggest displays search volume estimates and competition info. Even better, Ubersuggest offers keyword difficulty insights that can estimate your chances of ranking in the top 20 search results.

     

    Ubersuggest keyword search volume

     

    Amazon

     

    Another easy way to surface the right keywords is to use Amazon. Just start typing your keyword into the search box and take note of what the autocomplete feature will display.

    What’s great about this method is that since Amazon is already a shopping site, most (if not all of the keywords) it suggests would be high-intent search terms.

     

    Amazon search suggestions

     

    Google

     

    Google (the search engine) also has a great autocomplete feature that you can mine for keyword ideas. Again, just type in a search term and see what the tool suggests.

     

    Google search suggestions

     

    Do note that that with the last two suggestions (i.e., Amazon and Google) you won’t get any data on search volume and competition. That’s why if you’re using these sites for keyword ideas, you’ll need to take note of the keywords you want to target and enter them into a tool (like Google Keyword Planner) that shows you how many people are searching for the term and what the competition looks like.  

     

    Content creation

    Once you've figured out the best keywords to target, start incorporating them in your copy. There are a number of key places to do this, including your title tags, meta descriptions, headers and subheads, and product and category descriptions.

     

    A great example of a website that does all of the above is Zazzle. Their website is one of the top search results for ‘funny mugs’ and for good reason. As you’ll see below, all the key areas of Zazzle’s category and product pages are optimized for search.

     

    Title tags – In addition to telling search engines what the title of a page is, the title tag is also text that shows up on search results, so it's also one of the first pieces of information that potential visitors see. In eCommerce, the best places on which to optimize your title tags are your category pages and product pages.

     

    Meta description – As we mentioned in our previous post, meta descriptions don’t directly affect your rankings. However, they still show up in search results, so they can influence a searcher’s decision to click through your site. For this reason, it’s important that your meta description still contains relevant keywords

     

    Zazzle meta description

     
    Headers and subheaders – Headers and subheaders can have a lot of SEO value, as Google factors them in when determining if a page is relevant to a particular search term. From user's perspective, headers can act as signposts that help visitors easily skim your content or jump to the section that's relevant to them. In the world of ecommerce, your headers usually come in the form of your product titles and subtitles, so make sure they're optimized for search.
     
    Creating webpage headers and subheaders

     

    Product or category descriptions – Your product and category descriptions essentially tell customers and search engines what your merchandise is all about. In addition to peppering in relevant keywords, you want to make sure your descriptions are unique. Google doesn’t like duplicate content, so using the product descriptions of your manufacturers – or worse – copying another website’s description, will lead to poor rankings.

     

    Creating SEO-optimized product titles

     

    Link building

    After you’ve optimized your content for SEO, the next step is to build links for your site. While no one knows for sure how Google's algorithm works, pretty much everyone agrees that links are a critical ranking factor.

     

    According to Search Engine Journal, “Backlinks remain an important Google ranking factor, but over the years, Google has learned to weed out the bad links from the good. More links will still result in a higher score, but only if they’re from a number of diverse and authoritative domains.”

    In short, the more high-quality links pointing to your site, the better your chances of ranking.

    So, how do you build those precious backlinks? Consider the following ideas:

     

    Get featured on relevant blogs

    Build relationships with bloggers in your niche and see if they can feature you on their site. An effective tactic here is to send them a free sample in exchange for an honest review. You could even assign a promo code or affiliate link that allows bloggers to earn a commission when someone buys your product through their site.

     

    For instance, when Tarashaun Hausner reviewed Daily Harvest on her blog Blender Babes, she included a special promo code that gives readers 3 free cups when they sign up. Her post also contains affiliate links, so she can earn revenue for each signup.

     

    Daily Harvest used influencer marketing for SEO

     

    Do press outreach

    Connecting with members of the press is another great way to obtain backlinks. Find journalists who are writing a story relevant to your industry and volunteer yourself as a source for their article.

     

    You can easily do this using a tool called HARO. Short for “Help a Reporter Out,” HARO is a service that lets journalists submit queries asking for expert input for their articles. When you subscribe to their service, HARO sends you daily queries from journalists, which you can then respond to. If the journalist likes your input, they’ll include it in their article and will often link back to your website.

     

    Here’s an example of what query looks like. The journalist sends in a description of an article that they’re writing along with a request for sources. Members subscribers receive the query in their inbox and can choose to respond if they’re a good fit for the article.

     

    Marketers can use Haro to submit and create research requests

     

    Create share-worthy content

     

    Another way to gain backlinks? Produce link-worthy content. Create a piece of content (e.g., guide, video, blog etc) that’s so engaging that people would naturally want to link to it.

     

    Dollar Shave Club is a master at this strategy. The company regularly creates useful and entertaining content for its website; in addition to helping DSC engage their followers and subscribers, all that content is also helping them gain backlinks.

     

    For example, DSC’s ‘Original Content’ homepage currently has 285 backlinks, many of which are from high-quality sites.

     

    Dollar Shave Club's backlinks

     

    DSC is also doing well with video. The company has produced several hilarious videos about their product, which earned them backlinks from the likes of The Wall Street Journal, Vox, Entrepreneur, and more.

     

    One of their top videos currently has more than 25 million views and over 53,000 backlinks.

    As you can see, effectively gaining backlinks doesn’t just happen. Getting others to link to your site requires active outreach and content creation, so it’s critical to incorporate these tasks into your SEO strategy.

     

    Take advantage of free or affordable tools

    Depending on the SEO tasks that you’re doing, you can save a lot of money by choosing your tools wisely. We’ve already mentioned several free tools above, but here are additional SEO solutions you can use to optimize your website:

     

    Yoast – Yoast is a plugin made for WordPress. The free version enables you to optimize your blog posts through tools like keyword optimization and Google preview. Yoast can also check your content for readability and make on-page recommendations on how to improve.

     

    Keywords Everywhere – This is a free browser plugin for Chrome and Firefox that displays search volume, CPC, and competition data for the keywords that you search on sites like Google, Amazon, YouTube, Answer the Public, and more.

     

    LinkMiner – Another Chrome extension, LinkMiner helps surface broken on any website. Broken links can be harmful for SEO, so this tool makes it easy to find those pesky links so you can fix them.

     

    Can I Rank? – Can I Rank is an AI-powered tool that analyzes your website and gives you insights on what you can do improve? It provides insights like which pages are ranking well (and why) and you'll get suggestions for content ideas, link opportunities, and more.

     

    SERP Preview Tool – Curious about how your website will appear in search results? Portent's SERP Preview Tool can help. Just enter your title tag, meta description, and URL and the tool will generate Google search result preview for you.

     

    The tools mentioned in this guide are just the tip of the iceberg, though. If you’re looking to dive deeper into various SEO tools, we recommend the following resources:

    If you must outsource, know which tasks to do yourself and which to leave to a pro

    If you have a full plate and don’t have the capacity to fully shoulder all things SEO, consider adopting a hybrid approach where you do some tasks yourself while outsourcing others.

     

    How do you determine the right balance? Start by making a list of the SEO tasks that need to be addressed (e.g., link building, creating content, creating a site map, etc.). From there, figure out your strengths and focus your efforts on the things that you’re good at.

     

    As Catherine Giese, SEO associate at Fundera puts it, “SEO encompasses a lot of time-consuming techniques such as keyword research, site structuring, and link building. That's why it's often at least one person's job, if not that of an entire team,” she says.

     

    Giese continues, “take stock of your strengths to determine how to prioritize. For example, if you're an engineer, you may be able to do site structure, but may not be comfortable with doing outreach for link building purposes.”

     

    Follow her advice when you’re mapping out your strategy. Before diving into various SEO tasks, iron out the specific jobs that need to get done, figure out what you can do yourself, and then outsource the rest.

     

    Visual business chart with an agent showing how to interpret marketing metrics.

     

    Be smart about working with agencies and freelancers

    If you decide to outsource your SEO, do your research and make sure you select a reputable agency or freelancer who can optimize your site using ethical and white hat tactics. One of the best ways to go is to ask for referrals from merchants you know that are ranking well on Google. Then once you have a handful of prospects, request for case studies and references so you can see the results they’ve achieved with other businesses.

     

    In terms of working arrangements, we recommend avoiding long-term contracts, as the last thing you want is to be tied down to an agency or freelancer who isn’t a good fit.

     

    As Matt Antonino, Head of Operations at the marketing agency Digital Eagles points out, “many agencies have 12-month contracts but if they don't perform you are stuck with a long-term relationship that costs and has little value.”

     

    Antonino adds that “long contracts don't create an incentive for the agency to continuously help improve your business... thee and six-month deals may make more sense.”

     

    Once you know who you want to work with, be smart about the tasks you assign to the agency or freelancer. You want to make sure you get the most value out of their efforts, so figure out the best use of their time and resources.

     

    “The trick to keeping costs down is to ask yourself if what you want that expert to do is their highest and best use,” says BJ Enoch, VP of Enterprise Accounts for SocialSEO. “If you're looking for someone to do alt image tags across 1,000 products or fix internal broken links, is that something you really need to pay an expert, or could you be doing it yourself?”

     

    Enoch adds that you can lower your costs even more by taking care of content yourself.

     

    “Content is one of the most labor intensive and expensive parts of an SEO strategy (and one of the most important). There are some content elements that should have some expert insight, but making sure you've got unique product descriptions and resolving duplicate content on your own can save a surprising amount of money with a consultant or expert.”

     

    SEO doesn't have to be expensive

    While search engine optimization requires an investment (in both time and money), you can lower your costs significantly by being smart about the tasks you take on and the SEO experts that you hire.

     

    With the right SEO education, some patience, and competent experts on your side, it’s totally possible to take your SEO game to the next level.


    Have you seen the rest of the SEO Series? Check out Part One and Part Three in the links below

     

     

    Take me to part 1Take me to part 3

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