Customer Loyalty Programs: A Guide For Shopify Marketers

Shoppers love loyalty programs...on paper. The average customer signs up for 16, but actively uses fewer than half. The difference? Structure. Pick the wrong model, and your program collects dust. Pick the right one, and it becomes your growth engine.

Understanding the main types of loyalty programs, points-based, tier-based, paid memberships, and value-driven, can be the difference between a program customers ignore and one they use every time they shop.

We also spoke to Shopify experts about how to structure a loyalty program, and what not to do to ensure your program members feel like they are getting all the perks they could possibly want.

What Is a Loyalty Program

A customer loyalty program is a proven e-commerce marketing strategy for retaining customers. When you build a system to reward customers who keep buying from you, they feel special. Shopify brands reward loyal shoppers with points, discounts, gifts, and gamified offers. Incentives like these encourage customers to continue engaging with your brand.

‍Sephora’s Beauty Insider is one of the most successful examples of a loyalty program.

Why? The loyalty program offers customers a diverse range of rewards without complicating incentives.

Building a customer loyalty program can reap numerous benefits for your Shopify business.

How Do Loyalty Programs Benefit Shopify Brands?

Loyalty programs, when done right, have the following benefits:

Customer Retention

Since loyalty programs rest on frequent incentives and a level of exclusivity, it becomes easier to retain customers. They want to unlock that next reward. The excitement of bonus points or a gift prevails over the usual back-and-forth that comes with deciding on a purchase.

According to Acxiom’s 2025 CX Trends Report, 78% of customers are likely to stay loyal to a brand if they are adequately rewarded. Customers feel like they are getting more than just the product they pay for and will therefore choose you over competitors.

And we don’t have to tell you that focusing on retaining existing customers brings in more ROI than constantly trying to acquire new ones.

It’s not only about how much they buy (although that’s a benefit too). It’s also about the level of brand engagement that loyalty programs bring in. According to a study by Forrester, 77% of adults online in the US are likely to engage with loyalty programs even when they are not spending.

Such dedicated customer behavior increases brand recall and trust.

Higher Average Order Value (AOV) and Customer Lifetime Value (CLV)

When rewards are linked to spending thresholds, customers naturally stretch their carts. A prompt like “Add one more item to your cart for double points” drives higher-order values without pressure.

Customer reward programs influence how much customers spend in one sitting and how long they stay connected to a brand. When shoppers know they are a few points away from a reward, they will often add an extra product or upgrade to a higher-priced item. That lift in order size directly boosts AOV.

Over time, these programs shape consistent habits. A customer who keeps coming back to unlock perks, gain early access, or maintain their tier status is also raising their CLV. They are not making one-off purchases anymore; they are invested in an ongoing relationship with your store.

This is where loyalty programs turn into a revenue engine. You are rewarding customers, but more than that, you are training them to spend more and return often.

First-Party Customer Data and Insights

Well-structured loyalty programs give you the chance to ask your customers detailed questions about them beyond just their email ID. They want to make the most out of the customer loyalty program. so they will be open to revealing their preferences, shopping habits, and motivations if you ask them the right questions. This first-party data becomes the foundation for customer segmentation and more relevant marketing campaigns.

With this data, you can personalize better and create more informed customer segments.

Brand Advocacy

When you gamify “chores” like referrals, social media shares and comments, or scanning QR codes, customers will willingly perform these actions. Tying points to customer actions that relate to spreading awareness about the brand will boost recall and advocacy.

Club Milani, the loyalty program by Milani Cosmetics, offers 100 points for following their social media accounts. This incentive promotes brand goodwill amongst the followers’ social circle while increasing brand metrics.

How To Set Up a Loyalty Program

Follow these steps to set up a customer loyalty program for your Shopify store systematically:

Step 1: Will Your Shopify Brand Benefit From Loyalty Programs?

Answering this question will help you determine whether to invest the effort in setting up a loyalty program in the first place. The general rule? If you sell something with repeat-purchase potential, such as products in the beauty, apparel, or wellness space, a reward program is a good idea.

Inspect your margins and repeat purchase rate to optimize your business. If your customers are returning frequently, loyalty rewards can turn casual one-time shoppers into lifelong buyers.

Stores with products that are infrequently purchased won’t derive meaningful ROI out of loyalty programs. If your store is selling lower-margin products, cheap accessories, or low-value necessities, then a loyalty program may not be a good idea. Rewarding spenders in this case will reduce your profits.

Step 2: Map Customer Journey

Your loyalty program should fit in with how the customers already shop with you. Start by mapping out the journey, from first-time browsers to repeat orders. Identify touchpoints where rewards make sense.

“Shopify stores create generic point systems and hope for the best, but it fails because they don’t consider the real factors that drive their target audience,” explains Muzammil Sayed, the co-founder of NYC Leather Jackets.

The solution? Look at behaviors that are inherently consistent with the goals of your company, Sayed, who has over 15 years of marketing experience, states. “Provide benefits like complimentary alterations or first dibs on limited-edition designs if your main selling point is superior craftsmanship. These rewards serve to remind customers why they initially purchased from you.”

You also need to map rewards across different touchpoints. For example, a first-time buyer may earn points for creating an account. A customer who has bought from you a few times but has not left a review should be rewarded for the same. This ensures rewards feel purposeful, not just to your customers, but to your business goals.

Step 3: Choose the Right Loyalty Program or App

Look for Shopify-compatible tools that integrate with your existing stack, including email, SMS, push notifications, analytics, and reviews.

The right Shopify loyalty app should also let you customize rewards, track customer data, and scale as your business grows. Switching later is painful, so choose wisely upfront.

Take Advantage Of Your Loyalty Program For Free

PushOwl has integrations with loyalty program tools, so we can get you hooked up right away.

Step 4: Define Clear Loyalty Program Rules

A snazzy ecommerce loyalty program name is not sufficient. Define who is eligible, specify which purchases are eligible, and outline the duration of rewards, along with any exclusions. Make these rules easily accessible on the website (and send them via email). The rules should not be complicated, nor should the reward structure.

A confusing loyalty program will disengage customers or, worse, make them feel cheated, leading to poor reviews.

Step 5: Build a Loyalty Program With Tangible + Accessible Benefits

Shoppers will not engage in abstract rewards. Earning “100 points” means little if there is no clear benefit attached to it. The benefit should fall into:

• Savings (for instance, discount codes)
• Exclusivity (such as early access to new launches)
• Convenience (like free shipping).

“Making the rewards either unattainable or the structure overly complex is a mistake. Keep it as simple as possible because the ultimate goal is to make an impression in your customer’s mind so they remember you. If the rewards are too high, it can backfire and cause customers to give up.” - Barbara Casey, CEO at Mobile High 5 and marketing expert with 35+ years of experience

The more concrete the payoff, the more likely customers are to participate and keep coming back.

Step 6: Provide Immediate Benefits on Signup

Give new members an instant reason to join. This bonus signup benefit could be something as simple as a one-time discount or a free sample to create a sense of instant value.

Andy LaPointe, founder of Traverse Bay Farms, a farm-based food brand, wonders why more brands don’t focus on immediate benefits.

“Many brands don't offer genuine value-add within the first 24 hours. We give two immediate unexpected rewards to our customers who sign up for our e-commerce loyalty program. First, we offer a micro-reward as a free downloadable recipe cookbook using our products for every meal of the day. The second is a 5% discount coupon. These small wins keep people engaged,” he notes.

When you set the tone from day 1, you keep your customers primed for future engagement.

Step 7: Incorporate Omnichannel Marketing Channels

Layer relevant communication about your loyalty program across different channels.

For example, you can email the customer about the loyalty program’s rules and eligibility.

Send an SMS reminder when they are eligible to earn a reward.

If their points are about to expire, follow up with a push notification.

Activate Email, SMS, Push, and WhatsApp all at once with PushOwl

Consistency across channels keeps the e-commerce loyalty program at the forefront of your e-commerce customers' minds. However, remember not to overdo the communication.

Doing so also ensures your loyalty program is a part of your larger marketing strategy. Caleb Johnstone, SEO Director of Paperstack, explains:

“A lot of brands treat loyalty programs as if they are an independent tactic as opposed to part of a bigger strategy. When disconnected from email, social, and product campaigns, the program comes off as an afterthought. Integration makes it meaningful and promotes the overall marketing efforts.”

Show up where your customers interact with you, but target them in a relevant manner through omnichannel marketing without spamming them with reminders and notifications.

Step 8: Reward a Range of Consumer Actions

Do not limit rewards to purchases alone. Encourage other consumer behavior that supports the brand. For example, incentivize them to write reviews, refer friends, and follow you on Instagram. Create touchpoints for customers to earn value that builds a deeper emotional connection, rather than focusing on the ones that lead to checkout.

4 Types of Loyalty Programs

You can pick from a variety of loyalty program types for your e-commerce store.

“You do not have to stress about which kind of e-commerce reward program is right for your brand, as long as there is an overall product-market fit, i.e., you are able to present your products and rewards in an engaging manner for customers (and in a profitable way for your brand)” is our classic advice to PushOwl clients.

Here are the 4 types of loyalty programs you can pick from:

Points-Based Loyalty Program

Points-based programs are the most used model. Customers earn points for actions like purchases, referrals, or reviews. Those points can then be redeemed for discounts, freebies, or exclusive perks.

Young Nails has a simple points chart available on their website for loyalty program members:

Why it works: Customers instantly know how many points they earn per dollar spent or per consumer action.

With points-based loyalty programs, you activate competitive buyers who like gamified perks.

Tier-Based Loyalty Program

Tiered programs reward progression. Customers climb through levels, say bronze to silver to gold, by spending more or engaging with the brand more often. Each tier unlocks better rewards, creating a sense of achievement and exclusivity. This model plays on customer psychology. Here is “Neighbor’s Club”, the loyalty program by Pet Sense, a pet accessories brand:

Why it works: It offers progressive rewards across four tiers, and the table clearly lays out the benefits of reaching the highest tier, thus encouraging more purchases.

No one likes to miss out on status, and the FOMO of not getting to the next tier complements your customer retention strategies.

Paid Membership Loyalty Program

Also known as VIP programs or subscriptions, paid membership programs require customers to pay a fee upfront in exchange for loyalty program benefits.

REI, an outdoor gear and clothing brand, offers its customers a paid membership loyalty program for $30. Members receive 10% back on eligible purchases, among various other membership benefits.

Why it works: The members get different kinds of discounts and perks on purchases that clearly outweigh a one-time payment of $30.

Paid memberships can be effective if the perks clearly outweigh the cost, and they are powerful at retaining high-value customers.

Value-Based Loyalty Program

Instead of rewarding purchases directly with discounts and freebies, value-based programs tie loyalty to shared causes or principles. For example, every purchase could fund tree planting donations or community projects.

‍The Body Shop rewards members with points for bringing in plastic empties as part of their Return, Recycle, Repeat Programme.

Why it works: It’s one of the multiple rewards available as part of the loyalty program, so customers are winning points for being environmentally conscious in a low-pressure way.

Customers feel part of something bigger beyond transactions with this type of loyalty program.

Pro-tip: Blend elements of the above types to create hybrid loyalty programs to serve various purposes. But be clear about your brand positioning, product, and audience.

Loyalty Program Metrics

To know whether your loyalty program is working, you need to measure its impact on customer engagement and revenue. The right metrics reveal whether your rewards are reaping the benefits we covered earlier.

Tracking the above metrics helps you answer some key questions, according to the PushOwl sales team. Here is a list of strategic considerations rooted in these loyalty program metrics:

Are the loyalty program incentives….

•  Artificially designed? Low opt-outs and minimal redemption rates signal this flaw.
• Tied to the core offering? Low AOVs and repeat purchase rates would help you indicate this issue.
• Delivering value? If not, the retention rate will be low.
• Visible enough and clear enough? Low enrollment rates would mean that the sign-up benefits aren’t clear or compelling.
• Leading to upsells and bundle buys? Then your loyalty program is doing its job.
• Attractive and achievable? If not, the redemption rate will be low.

Loyalty Programs: Mistakes To Avoid

Ensure that you do not skip out on these mistakes while formulating your loyalty program:

Spamming Discounts

Discounts should not be the only form of incentive as part of your loyalty program.

“The attached points that only lead to discounts turn the loyalty program into a price war rather than a retention program. Customers then treat it like a coupon and start chasing the lowest price without attachment.” - Paul DeMott, CTO of Helium SEO

He further explains that “a loyalty program with only financial benefits might give a sales spike in the short term, but it eats away at margins and does nothing to differentiate your brand in a crowded space.”

A loyalty program should not lead to a series of discounts; instead, it should encourage deep engagement with the brand.

So what should you do instead? Johnstone offers a shift in perspective by looking at rewards as part of the product experience and not just a lower price. “Offering exclusive bundles, early access, or perks that are tied to the core product makes the loyalty feel valuable and authentic. Customers are more responsive to such meaningful benefits.”

Offering a variety of rewards beyond freebies and discounts will build genuine loyalty among your customer base.

Not Doing Customer Segmentation Among Members

Each loyalty program member is drawn to the incentives for different reasons or engages with the program in diverse ways. Segmenting across these habits and preferences is important so that you can target them effectively.

Create Unlimited Segments With PushOwl

Here are some examples of segments you can create:

Not Testing Before Rollout

Loyalty programs are expensive to get wrong.

Launching to your entire customer base without testing is like going live with an unproofed campaign.

You risk hidden loopholes, unattractive rewards, or workflows that frustrate customers. A soft launch, either with a small group of customers or a controlled test, lets you measure redemption, spot abuse, and gather feedback before scaling.

Reel In Your Loyalty Customers With PushOwl

Programs that skip this step often need messy fixes later, damaging both customer trust and profitability.

Your loyalty program is only as strong as your reminders. PushOwl makes sure those reminders hit at the right time without spamming. That’s how you turn loyalty into repeat revenue..

This is where PushOwl comes in. With its omnichannel capabilities, you can promote rewards, remind members of points or tier status, and even highlight value-based initiatives in real time. By integrating PushOwl into your loyalty strategy, you can create a dynamic loyalty program system that keeps customers coming back, month after month.

Try it for free today!