How to use customer loyalty programs to increase LTV

Jade Tremblay
Jade Tremblay
popular e-commerce items

With an increasing number of brands competing for shoppers on online and offline channels, investing in a customer retention strategy is now more important than ever. According to McKinsey, 35% of American buyers have tried a new brand in the past year alone, and 77% have also tried a new way of shopping—whether that’s shopping online for the first time, making a purchase via your smartphone, or most likely, a combination of the two. 

We’ve entered the era of the empowered consumer, and brands need to offer shoppers clear value for their repeat business. So how do brands achieve the gargantuan feat of keeping repeat buyers coming back for more? By creating seamless loyalty experiences for their customers at every touchpoint. 

Why invest in customer loyalty programs?

Investing in customer retention and, in turn, increasing lifetime value (LTV) can lead to incremental revenue growth that will define a brand’s long-term success. But it goes beyond the bottom line. With increasingly ineffective paid advertising efforts and skyrocketing customer acquisition costs, it isn’t sustainable for brands to solely focus on getting new customers. Not only does doubling down on retention efforts future-proof your brand, but it also organically introduces new customers via referrals. 

Customer retention at a glance...

  • A study conducted by Bain & Company and Harvard Business School reported that increasing customer retention rates by 5% increases profits by 25% - 95%.
  • According to Bond, 73% of consumers are more likely to recommend brands with good loyalty programs. 
  • Also according to Bond, 79% of consumers say loyalty programs make them more likely to continue doing business with brands. 

How to build a customer loyalty program

Product quality and customer service are important pieces of the puzzle, but retaining shoppers comes down to offering clear value for their repeat business. The easiest way to create this type of value is to build a loyalty program.

Our customer retention expert and partner, Yotpo, offers a number of tips when it comes to finding success with a loyalty program:

Revolution Beauty: A case study 

The beauty industry is certainly no stranger to customer loyalty programs. When UK-based beauty brand Revolution Beauty set out to create a loyalty program for their customers, they knew they wanted to accelerate their D2C growth and boost customers’ repeat purchase rate. 

By partnering with the digital agency Astound Commerce and Yotpo Loyalty, they created RevRewards, a loyalty program that incentivized incremental behavioural change in exchange for points, experiential benefits, and more. Unsurprisingly, loyalty members quickly became the brand’s best customers. In fact, Revolution Beauty saw a +378% increase in lifetime revenue per member and a 44% increase in average order value (AOV).

quote from Revolution Beauty and Sally Minto

Accelerate your growth with Yotpo

Yotpo, a leading eCommerce marketing platform and Clearco partner, helps thousands of forward-thinking brands like Patagonia, Rebecca Minkoff, MVMT, Tweezerman, and Bob’s Discount Furniture accelerate direct-to-consumer growth. Yotpo’s single-platform approach integrates data-driven solutions for reviews, loyalty, SMS marketing, and more, empowering brands to create smarter, higher-converting experiences that spark and sustain customer relationships. More information can be found at www.yotpo.com.

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