Mar 1, 2023

How Investment in Customer Loyalty Increases Revenue and Lowers Costs

Kai Jensen
March 1, 2023

The benefits of itself help create a strong bond between the brand and consumer. Take this to an even deeper level by using your first-party data to create a personalized customer experience. provides user-friendly solution features to set up, manage and test your loyalty strategy with ease.

Reward Strategy

Customer loyalty programs are a tried and tested strategy, proven to drive sustainable growth for eCommerce brands. If you’re on the fence about whether or not to invest, here’s a closer look at why they’re so effective and the positive impact they have on your bottom line.

An eCommerce loyalty program is a long-term strategy focused on customer retention. Its primary aim is to foster profitable relationships with existing customers through recognition, reward and ongoing engagement.

A well considered program also looks to attract a new audience through referral marketing, leveraging customer loyalty for the purpose of acquisition. Those new customers then become enrolled in the loyalty program themselves, and the cycle continues.

It all sounds great in theory, but what does it actually mean in terms of sales and revenue? And how does it contribute to long term growth?

Where is the Value in a Customer Loyalty Program?

Retention Costs Less than Acquisition

A purchase made by a new customer brings the same sales revenue as an equivalent purchase made by an existing customer, but there’s a key difference. The costs associated with the latter are far less. 

To win over a first time buyer you need to capture their attention, entice them with relevant offers, and earn their trust over your competitors. With an existing customer that expensive leg work has already been done.

Yes you need to invest in continued engagement, but long term strategies that encourage loyalty are far more cost effective than paid ads, one-off sales and other acquisition efforts. On average, it’s five times more expensive to gain a new customer than it is to keep hold of an existing one.

Loyal Customers Spend More, And Spend More Often

When you run an eCommerce loyalty program you do several things at once. You show you value your customers, you incentivise repeat purchases through rewards and benefits, and you build emotional connections.

All these things combined translate into higher purchase frequency, higher AOV, and subsequently an increased lifetime value.

In fact, research shows that customers with a loyal connection to a brand are worth a whopping 306% more across their lifetime than non-loyal customers - who might return but are likely to purchase infrequently and in smaller quantities. 

Loyalty Programs Drive Profitable Personalization

A loyalty program in itself helps create a strong bond between brand and consumer, but you can take this to an even deeper level by using the data your program provides to create a personalized customer experience.

Loyalty data like age, gender and birthday can help you tailor communications at a basic level, but with a loyalty solution in your tech stack you can also track buying habits, favorite products and purchase frequency over time.

Feed this data into your ESP to create targeted campaigns and personalized touch points across the entire customer lifecycle.

Loyalty Encourages Brand Advocacy

Perhaps the greatest return is when a loyal customer becomes a brand advocate. Not only do you benefit from their increased LTV, you also gain a new salesperson - someone happy to share their experience with others and publicly sing your praise.

This kind of authentic promotion is exactly what draws new customers in. They trust it far more than any form of brand marketing, giving a boost to your reputation and assisting further with cost effective acquisition.

Why a Loyalty Program is More Effective than Sales and Discounts

One off sales and discounts might seem like a logical way to bring new customers on board, but they have a fair few disadvantages and fall far short of the return that a loyalty program offers:

They’re a short term fix: sales and discounts tend to attract opportunists on the lookout for a steal. These consumers have no interest in your long-term value proposition. They want the cheapest deals and will only shop with you when you offer them.

They devalue your products: when you reduce the price of your products, even if it's only for a short while a few times a year, you permanently lower their perceived value. Customers will start to avoid full price purchases, and instead wait for your next price drop.

They drag you into price wars: sales and discounts prompt competitors to match you pound for pound, inciting a price war. You might win more short term custom by being the cheapest, but your profit margin and long-term growth will suffer as a result.

Get Started With a Flexible Loyalty Solution

Now you know the benefits of a loyalty program, you need a user friendly solution to implement one. gives you the features you need to set up, manage and test your loyalty strategy with ease.

We’re also adding new features and integrations all the time to meet the needs of our own customers. Sign up for our free Start Up plan to try us risk free - and if there’s a feature you’re after that we don’t yet offer, let us know and we’ll get our development team right on it.