Loyalty programmes as effective acquisition tool
Everyone talks about acquisition like it’s still 2016. Brands are burning money on paid social just to stay visible. Performance is volatile. CAC keeps creeping. And yet, a lot of DTC brands still treat loyalty as a glossy retention lever you turn on after someone converts.
But the smartest brands flip that logic. Today's most effective acquisition strategies aren’t always found in your Meta dashboard; they’re built into your ecosystem. Loyalty programs, done right, can do both: keep your best customers engaged and bring in new ones.
In this post, we’ll look at how to reframe your loyalty program as a growth engine. We’ll cover tactics that tie loyalty to acquisition, unpack program mechanics that drive referral and repeat simultaneously, and share what to track if you're aiming to scale sustainably.
Why do I need a loyalty program?
Loyalty is lucrative. According to a Harvard Business School study, increasing retention by just 5% can lift profits by up to 95%, and returning customers spend around 67% more than first-time ones.
This sort of loyalty isn’t built by half-buried points widgets in your email footers or the occasional double-points promo. When we talk about loyalty programs, we mean loyalty as infrastructure. A loyalty experience fully integrated across your email flows, lifecycle touchpoints, and broader retention strategy.
In a world where CAC has surged by 60% over the last five years and retaining an existing customer is 5–7x cheaper than acquiring a new one, there is simply no good reason not to dial in your approach to loyalty.
Increase how long a customer stays with your brand and how much they spend and you don’t just grow CLV, you multiply it.
What is a loyalty program, really?
Spoiler: Loyalty programs aren’t just points-for-purchase transactions.
A real loyalty program is a system. A set of incentives that rewards behaviour you want to see more of: buying again, referring friends, leaving reviews, subscribing, sharing, or just sticking around.
At its core, a loyalty program does three things:
Incentivises action (with rewards that actually matter)
Creates identity (so customers feel like they’re part of something)
Builds habit (by making the next purchase easier, faster, or smarter)
The best programs don’t feel like programs at all. They feel like VIP access. Like you're in on something. Like being a regular at your local, and they love you.
That’s why slapping on a points exchange isn’t enough. You need clear tiers, segmentation, thoughtful rewards, and a plan to show up at the right moments. A loyalty program should touch your entire customer experience from welcome emails to post-purchase, from onsite modals to SMS flows.
At its heart, loyalty is about brand engagement. It’s not just about nudging a follow-up purchase, it’s about making customers feel like they belong. That kind of engagement builds community, deepens trust, and reduces purchase friction over time.
When built into your broader marketing stack, loyalty is acquisition, retention, LTV expansion, and brand moat… all in one.
Loyalty Program Best Practices
A strong loyalty program doesn’t sit in a silo. You want it to flow through every customer touchpoint, from first click to long-term advocacy. These are the components we think a loyalty program needs to do more than retain:
1. Clear value prop & naming
Make it feel like a club, not a coupon.
Your loyalty program should have a name, an identity, and a reason to exist. This isn’t just semantics, it’s branding. Would you rather join a “Points Program” or “The Inner Circle”?
Best practices:
Include a clear emotional hook (e.g. status, exclusivity, lifestyle).
Define and communicate the why: what makes this worth paying attention to?
2. Tiers that motivate
People love progress.
Tiered programs reward customers more the deeper they go. Think: base > insider > VIP. Done well, this also adds a gamified element to your brand and nudges higher spend and repeat orders.
Best practices:
Base tiers on spend, number of purchases, or engagement (e.g. referrals, reviews).
Make the perks tangible: free shipping, early access, gifts, and exclusive content.
Visually show progress in account dashboards and emails (e.g. “You’re 2 orders away from VIP status”).
3. Multi-channel integration
Loyalty should live everywhere.
Your program isn’t doing its job if it only shows up in a post-purchase email. Every channel should reinforce the value of staying close.
Best practices:
Email: Build loyalty logic into flows (e.g. loyalty-specific winbacks, birthday emails, milestone nudges).
SMS: Use texts to announce early access or drop exclusive codes.
Onsite: Add personalised bars, program dashboards, and checkout perks.
Social: Make members feel special with shoutouts or members-only content.
4. Referral loops
Let your best customers bring in the rest.
Loyalty is just as much about multiplying as it is “holding on”. Referral functions get your most engaged shoppers to self-fund acquisition.
Best practices:
Offer double-sided rewards (e.g. $10 for them, $10 for their friend).
Time referral nudges post-delivery (when brand love is highest).
Tie referrals into tiers to reward your best ambassadors.
5. Experiential & surprise elements
Unexpected = unforgettable.
Transactional rewards are table stakes. But emotional rewards, the “wow, they thought of me” moments, are what cement brand love.
Best practices:
Send surprise gifts at key milestones (e.g. 5th order, 1-year anniversary).
Give loyal customers early access before major drops or sales.
Create members-only experiences (e.g. Zoom events, beta products, meet-the-founder content).Personalise rewards, communications, and touchpoints based on preferences, behaviour, or purchase history.
6. Feedback & optimisation
Loyalty is iterative.
Too many brands launch loyalty programs and just walk away. A great loyalty engine is monitored, tested, and refined like any other performance channel.
Best practices:
Track redemption rates, participation by tier, and incremental revenue per cohort.
A/B test program language, reward types, and tiers.
Ask your top customers directly what they love and what’s missing.
7. Lifecycle fit
Meet them where they are. Nurture accordingly.
Don’t treat all loyalty members the same. Use behaviour and lifecycle stage to personalise how you show up.
Best practices:
New customers: focus on onboarding and explaining the program.
Mid-tier: push toward the next milestone or tier.
Lapsed VIPs: offer exclusive winbacks or time-sensitive perks.
You don’t need a separate team to run a high-performing loyalty program, you just need the right tools that talk to each other, and help you build, automate, and scale a loyalty experience that feels seamless.
LoyaltyLion is one of the most robust options for scaling. Offers deep Klaviyo integration, advanced tiering, points for reviews/referrals, and personalised incentives.
Smile.io is easy to implement and ideal for growing brands. Supports points, referrals, and VIP tiers, with user-friendly onsite widgets and flexible reward rules. Integrates well with Shopify and Klaviyo.
Yotpo Loyalty & Referrals is powerful if you're already using other Yotpo products like reviews or SMS. Great for creating unified retention experiences and offers strong analytics + Klaviyo sync.
Okendo’s Attributes and Connect can reward customers for reviews, UGC, survey responses, and more—plus, the Klaviyo integration lets you automate follow-ups and build smarter segments.
Final Thoughts
With CAC climbing and paid channels getting more unpredictable by the day, brands that win are the ones building the deepest relationships with their customers.
Loyalty shouldn’t come as a post-purchase afterthought that has your customers feeling like their repeat business is just a transactional arrangement. Real loyalty reduces churn, boosts LTV, and turns your best customers into your best marketers.
Retention is the new acquisition, and a stellar loyalty program is just one of the cogs in a well- oiled marketing machine to get you there.
So while everyone else is burning money at Meta and hoping for the best, you can be scaling sustainably.
