Brands with a loyal customer base seem to play on easy mode. They’re less dependent on paid advertising, new drops sell out fast, and brand advocacy brings in new customers on autopilot. This speaks to the customer loyalty profitability relationship.
Customer retention statistics show that a 5% increase in customer retention can boost profits by 25% to 95%. That’s pretty incredible. The best part? It’s fairly easy to increase customer loyalty and profitability. You just need the right Shopify loyalty program.
We’ll share some of our favorite strategies to increase customer loyalty below, from leveraging personalization across every touch point to leaning on data to nurture high-value customers and win back those who are lapsing.
It starts with getting set up with the best Shopify loyalty app, Rivo. Over 9,000 brands are currently using our solution, and some are seeing a 52x return on investment, a 3.1x repeat purchase rate, and 4% of revenue being driven by Rivo. Request a demo today to learn more!
What is Customer Loyalty?
Customer loyalty speaks to an ongoing relationship between a brand and its customers - one built on trust, satisfaction, and repeated positive experiences.
It’s not just a shopper coming back once or twice to support an eCommerce brand. True customer loyalty creates a meaningful bond. They continuously choose YOU over your competitors, even if you’re not the cheapest option.
It goes beyond transactions, too, as loyal customers engage with your brand across channels, whether through reviews, referrals, or even following along on social media. They’re advocates.
Membership and loyalty programs are common tools for fostering that relationship, but loyalty itself is rooted in consistency and recognition. Customers want to feel that their purchases matter and that they’re part of something bigger than a one-off sale.
The Connection Between Customer Loyalty and Profitability
Getting loyalty right can be a powerful thing, and you’ll see why once you understand the link between customer loyalty and profitability. It’s direct and measurable. Loyal customers cost less to retain, spend more per purchase, and bring in new shoppers through advocacy.
Customer Retention vs Acquisition Costs
Earning customers today is harder than it’s been in the past, with rising ad costs and competition leading to higher customer acquisition costs (CAC). In fact, some studies show that it costs between 5 and 7 times more to acquire a new customer than to retain an existing one.
This is profound for eCommerce brands because it means you can get off the hamster wheel of constantly trying to bring in new customers (and offset churn). Instead, your marketing budget stretches further because repeat buyers are already primed to purchase.
Loyal Customers Spend More
Not only is it cheaper to retain existing customers than to acquire new ones. Loyal customers spend more frequently, and they spend more money per order. They’re also more likely to engage with higher-margin products, limited editions, or upsells.
For example, a skincare brand might find that a loyal customer upgrades from a single cleanser purchase to an entire product bundle. This incremental growth compounds as customers build trust and confidence in your brand, raising their overall lifetime value (LTV).
Word-of-Mouth and Referral Power
Loyal customers can quickly become a growth driver for your brand, allowing you to feel less dependent on paid ads. This is best seen through a Shopify referral program.
Referrals carry more weight than paid advertising, since personal recommendations come with built-in trust. In fact, referred customers typically convert faster and spend more than those acquired through ads.
Your brand can tap into this powerful growth channel at minimal cost by rewarding referrals through a loyalty program. Word-of-mouth not only reduces dependency on ad spend, but it also broadens reach to new audiences who may have otherwise never discovered your store.
How to Increase Customer Loyalty and Profitability
Customer loyalty (and the increase in profits that come with it) doesn’t happen just because you create great products and provide excellent service. You need to treat loyalty as a business strategy, and that’s what we’re here to help you do.
Here’s how to increase customer loyalty and profitability with Rivo.
Building Emotional Connections Through Brand Values
Before we get into launching and marketing a loyalty program, let’s take a step back. Shoppers today buy into more than just products. They’re genuinely invested in what a brand stands for.
A clear set of values gives customers a reason to stick with you beyond price or convenience. For example, a beauty brand committed to cruelty-free sourcing will attract and retain shoppers who care deeply about ethical practices.
Customers are more likely to form lasting bonds, forgive occasional missteps, and advocate for your business when they see their values reflected in your mission.
So, get really specific about who your ideal customer is, and make sure you’re nailing the branding aspect first. It makes it much easier to earn the loyalty program ROI you’re aiming for!
Designing a Loyalty Program That Drives Revenue
The obvious way to increase customer loyalty and profitability is to build out a well-structured rewards program for your customer base. There are quite a few different types of customer loyalty programs, including:
- Points-based: Customers earn points for actions, ranging from purchases to reviews, social media interactions, referrals, and more. Those points can then be redeemed for rewards, like free shipping, discounts, etc. The most basic form of loyalty.
- VIP tiers: Customers can work their way into increasingly higher tiers by upping their loyalty status. This could involve free shipping on every order, exclusive products, or early access to sales.
- Memberships: A Shopify Plus membership program is great because you get a recurring revenue stream. A customer pays once a year or monthly for access to perks.
You might find that the best approach is a combination of these, so you can appeal to different types of customers. The key is to make sure you’re rewarding your customers in ways that actually matter to them.
Rivo makes it easy to build a loyalty program that feels on-brand. It syncs with your Shopify storefront to pull in customer data and allow for effortless setup and management of points/tiers and rewards.
More importantly, you can tailor messaging and rewards to customer preferences through Shopify customer accounts. Speaking of which…
Leveraging Personalization to Increase Engagement
Generic rewards don’t cut it anymore. Setting up loyalty segmentation allows you to deliver more meaningful interactions to your customer, tailored to their account history. A few practical ways Shopify brands are applying this today:
- Behavior-triggered rewards: Instead of static discounts, use Shopify purchase history to trigger tailored incentives. For example, if a customer abandons a cart with a specific item, you can automatically send them bonus points or a reward reminder tied to that exact product.
- Milestone recognition: Customers want to be acknowledged for their unique journey with your brand. Offer personalized rewards on the anniversary of their first purchase or the date they joined your program.
- Dynamic VIP tiers: Rather than one-size-fits-all tiers, dynamic programs adapt to each customer’s pace. A high-frequency buyer could unlock perks faster, while a slower but high-value shopper still sees progress that keeps them motivated.
- Customized experiences: A skincare brand could offer “double points this month on your usual cleanser” if the data shows it’s a recurring purchase. You can use AI to recommend a customer’s next purchase. The possibilities are endless with personalization!
The power of personalization is well-documented in our list of customer retention statistics. Users are 60% more likely to become repeat buyers when they see personalized experiences. And, customers who improve personalization can see up to a 10% growth in retention!
Using Data to Identify and Nurture High-Value Customers
Not all customers contribute equally to profitability. The top 20% often generate 80% of revenue.
That’s why you need to keep track of loyalty program analytics. Purchase frequency, average order value, and referral activity clue you into high-value segments so you can invest more in retaining them.
For example, offering VIP perks such as early access to launches or white-glove support creates exclusivity that keeps these customers loyal. At the same time, data can highlight at-risk segments, giving you a chance to re-engage before churn happens. On that note…
Reducing Churn Through Proactive Engagement
Some level of churn is normal. Every customer, even your most loyal, eventually makes their last purchase. But there are usually signs a customer is at risk of churning, and you can be proactive in winning them back before you actually lose them!
That might look like sending replenishment reminders for consumable goods, nudging inactive members with bonus point offers, or providing helpful content tied to their past purchases.
The Role of Exceptional Customer Support in Loyalty
Your loyalty program will go a long way in helping you increase customer loyalty and profitability, but doing the basic stuff right is just as important - like providing exceptional customer service.
Fast, empathetic responses turn potentially negative situations into positive brand stories. For Shopify brands, this might mean integrating loyalty programs with helpdesk tools like Gorgias so agents can see loyalty status and offer tailored solutions.
Think about it like this. A Platinum-tier member shouldn’t get the same scripted response as a first-time buyer - you need to recognize and acknowledge their stage in the customer lifecycle with personalized care.
Wrapping Up Our Guide to the Customer Loyalty Profitability Relationship
Customer loyalty and profitability go hand in hand. Loyal customers cost less to retain, spend more over time, and bring in new business through word-of-mouth. This is an area worth focusing on, just as much if not more so than acquisition.
The key is pairing great experiences with smart data and the right technology to scale impact. Request a demo today to learn how Rivo can help you earn higher profits through loyalty. Or, see how our solution stacks up to the alternatives below.
