How do you Amazon-proof your e-commerce business?  Social loyalty software company 500Friends has just received an extra $4.5M in funding to show you how.

It can be difficult to compete with the big A on price, presence and product range, and with comparison shopping built into Google search results, selling at the best price is becoming a prerequisite to selling at all.

500Friends provides a solution to help e-commerce businesses Amazon-proof themselves without killing margins; a software-as-a-service customer loyalty program that not only rewards customers for coming back, but also for sharing the word.  Think of it as a loyalty program and a referral program rolled into one.  Forbes reports that online perfume site, has seen double digit increases in profitability by using 500friends.

We think social loyalty could represent the next phase of social commerce.  Why? Because social loyalty is more customer-focused than traditional social commerce.  In traditional social commerce it’s all about driving transactions by helping people connect where they buy or buy where they connect.  Social commerce with a loyalty focus is all about driving total customer value over time, purchase value plus referral value.  It’s about relationship value, not transaction value.

In typical Forrester speak, Forrester define social loyalty as “Brand affinity built on the connection of customers to the brand itself as well as to each other”.  We prefer “propensity to repurchase and recommend” as a more simple and actionable definition of social loyalty.

We caught up with 500Friends CEO Justin Yoshimura, with the challenge that today’s social loyalty programs are just social spam machines, the new scourge of the Internet filling up feeds with check-ins, tweets, pins, +1s and likes…  The answer is no.  Social loyalty is not about social media flotsam and jetsam, it’s about offering your best customers a remarkable experience so they not only come back for more, but they bring their friends with them.  Justin offers three recommendations for building loyalty that builds this kind of infectious customer enthusiasm:

  1.  Build a Roadmap: Approach social loyalty as you would any other marketing initiative. Begin by defining objectives and measures of success. It is important to assess what behaviors matter most and how much each of those behaviors is worth. For example, a product review might be worth more than a tweet. Take a look at one of our partners, Their primary objectives were to: (1) increase repeat purchases, (2) increase referrals, and (3) use points as a promotional tool to reward loyal customers (rather than coupons to reward bargain shoppers).
  2. Deliver a Seamless Customer Experience: Customers engage with your brand in many ways. Use your loyalty program as a way to track, reward, and recognize top customers and influencers across your digital properties.
  3. Test Prior Assumptions and Incorporate Additional Incentives: Don’t be afraid to go back and adjust the approach to meet changing needs. Offer customers rewards that are unique to your brand; discounts and gift cards should not be the only option. Incorporate experiential or service-based rewards, and recognize top customers onsite and via social media channels.

So is social loyalty for you?  Here’s a useful infographic from loyalty consultants for the airline business, Simpliflying, on the social future of loyalty.