Go Back Quickstart Guide to Loyalty

The Shift from Acquisition to Retention

Acquisition costs are rising, and customers are more willing than ever to switch brands. It’s time to double down on keeping customers around.

Thank You!
Loyalty points

Send this guide to your inbox.

Thank You!

Customer retention is paramount to long-term brand success. Why? Because acquisition costs are higher than ever. In fact, according to ProfitWell, CAC has risen by 60% in the past six years. Showing appreciation for your existing customers incentivizes repeat purchases, increases AOV and customer lifetime value (LTV), creates organic brand advocates, and boosts brand trust.

While you shouldn’t abandon your customer acquisition strategy, you should start investing more in customer retention strategies. And the best retention strategy is building a loyalty program.

Why customer retention drives ROI

It’s simple. Customers will return to — and pay more for — a brand that goes the extra mile. Yotpo’s 2021 The State of Brand Loyalty survey found that those willing to spend more on a brand, even if cheaper options existed, skyrocketed from 35% in 2019 to 56% in 2020.

Nurturing existing customer relationships pays off in dividends. According to Harvard Business Review, brands with strong loyalty marketing programs grow revenues 2.5x faster than their competitors.

Loyalty programs increase customer retention

With an increasing number of brands competing for shoppers in online and offline channels, consumers are more willingly switching from one brand to the next, according to McKinsey. In fact, McKinsey also found that in the past year alone, 35% of American buyers have tried a new brand, and 77% have also tried a new way of shopping.

If you want to build high-value relationships that drive ROI, you need to provide your customers with an on-brand, personalized experience in exchange for their loyalty.

According to Bond, 79% of consumers say loyalty programs make them more likely to continue doing business with brands. Why? Because loyalty programs make consumer experiences better — they create community, offer exclusive perks, and provide a direct line of communication between a brand and its customers.

Loyalty programs also boost customer acquisition

With a robust loyalty program, you won’t just increase customer retention rates — you’ll also acquire new customers. According to Bond, 73% of consumers are more likely to recommend brands with good loyalty programs.

If you’re delivering superior customer experiences and rewarding your loyalty customers with perks, those customers will share their experiences through reviews, referrals, and word of mouth.

Read the next lesson to find out how to get started with building a loyalty program and why it’s easier than you think.