Setting Up Loyalty Program on Shopify to Boost Retention by 18%
You spend $50 to acquire a customer through ads. They buy once, then disappear forever. Sound familiar?
Meanwhile, smart Shopify stores are turning one-time buyers into repeat customers who generate 12-18% more revenue annually. Their secret? Effective loyalty programs.
With customer acquisition costs rising and competition just one click away, retaining existing customers has become critical for Shopify success. In fact, acquiring new customers costs 5-7 times more than keeping current ones, and 65% of most companies' revenue comes from repeat business.
This guide shows you exactly how to create a loyalty program that increases retention by 11%+ and drives measurable revenue growth.
What is a Shopify Loyalty Program?
A Shopify loyalty program is a structured rewards system that incentivizes customers to make repeat purchases and engage with your brand. Instead of offering one-time discounts, these programs build long-term relationships by rewarding ongoing customer behavior.
Here's how they work: Customers earn points, credits, or perks for actions like making purchases, writing reviews, referring friends, or following your social media. They can then redeem these rewards for discounts, free products, exclusive access, or special experiences.
Common types of Shopify loyalty programs include:
Points-based systems - Earn points for every dollar spent, redeem for rewards
Cashback programs - Receive store credit or cash back on purchases
Perks programs - Access to exclusive products, early sales, or free shipping
Unlike traditional discount strategies that reduce profit margins, loyalty programs encourage customers to spend more over time while building emotional connections to your brand. This makes them particularly valuable for Shopify stores where customer acquisition costs continue to rise and competition is intense.
How to Set Up a Shopify Loyalty Program: Step-by-Step Guide
Step 1: Define Your Goals and Strategy
Before learning how to set up loyalty program on Shopify, you need crystal-clear objectives. Your goals will shape every aspect of your program design, from reward structures to promotional strategies.
Ask yourself these key questions:
Increase repeat purchases and customer retention - Focus on point-earning ratios that incentivize frequent buying
Drive sales and boost average order value - Design tier-based rewards that encourage larger purchases
Generate social media buzz and brand advocacy - Reward social sharing, reviews, and referrals
Gather valuable customer data and insights - Include profile completion and survey participation rewards
Your program goals will directly influence the types of rewards you offer and how customers can earn them. Stores focused on retention might emphasize frequent small rewards, while those targeting AOV increases could offer substantial rewards for reaching spending thresholds.
Step 2: Design Your Reward Structure
Understanding what motivates your target audience is crucial when setting up a Shopify loyalty program. Consider customer demographics, buying habits, and preferences. For example, luxury fashion brands might find exclusive early access more appealing than percentage discounts.
Popular Shopify loyalty program reward options:
Points-based System - Customers earn points for purchases and actions, then redeem for rewards they value most
Tiered Discounts - Progressive discounts based on spending levels or points earned create purchase motivation
Exclusive Products or Experiences - Early access to sales and limited-edition products drive engagement and FOMO
Free Shipping Rewards - With 86% of shoppers abandoning carts over shipping costs, this is highly valued
VIP Experiences and Perks - Member-only contests, personalized consultations, or exclusive content access
Actions to reward in your Shopify loyalty program:
Purchases - The foundation: reward points or progress for every transaction
Engagement Activities - Email signups, product reviews, social media follows, friend referrals, survey completion
Milestone Celebrations - Birthday rewards, program anniversaries, and spending achievement bonuses
Pro Tips for Reward Design:
Offer diverse reward types to cater to different customer preferences
Balance effort-to-reward ratios to maintain engagement without hurting profitability
Align rewards with your program objectives (discounts for sales, exclusivity for brand building)
Step 3: Choose a Memorable Program Name
Your Shopify loyalty program name creates crucial first impressions and can significantly impact participation rates. A well-chosen name builds excitement and communicates your brand values instantly.
Take Sephora's "Beauty Insider" program—the term "insider" creates exclusivity and suggests members gain special access to beauty expertise and trends, making customers feel valued and informed.
Essential naming guidelines:
Keep it short and memorable - Easy-to-pronounce names stick in customers' minds
Create emotional connection - Use words that evoke excitement, exclusivity, or appreciation
Align with brand voice - Ensure consistency with your overall brand messaging and values
Check trademark availability - Avoid legal complications with existing program names
Step 4: Select the Right Shopify Loyalty App
Choosing the right loyalty app is critical for your program's success. The wrong choice can doom even the best-designed program, while the right app streamlines operations and enhances customer experience.
Essential features to evaluate:
Program Design Flexibility - Points-based, tiered, referral, and hybrid program support
Comprehensive Reward Management - Easy point value setting, redemption options, and inventory tracking
Customer Communication Tools - Automated emails, notifications, and program updates
User-Friendly Interface - Simple setup and management, even for non-technical users
Robust Analytics and Reporting - Customer engagement metrics, redemption rates, and sales impact analysis
GiftKart by Skai Lama stands out as the optimal choice for Shopify stores. With over 2,000+ stores already using GiftKart, it's a proven platform that delivers an average 11% increase in customer retention. The app offers cash-back programs, digital wallets, and gift card functionality, providing maximum flexibility for your loyalty strategy.
Designed specifically for Shopify integration, GiftKart provides seamless setup and an intuitive interface that makes launching your loyalty program quick and efficient.
Step 5: Calculate Point Values and Reward Worth
Point valuation acts as the currency foundation of your Shopify loyalty program, determining customer perception of value and program sustainability.
Three main approaches to point valuation:
Fixed Value Method - Assign consistent dollar value per point (1 point = $0.01). Simple but may not incentivize larger purchases
Tiered Value System - Higher point values for larger purchases reward increased spending and boost AOV
Reward-Based Calculation - Determine point cost by dividing reward value by desired points needed (100-point reward costing $10 = $0.10 per point)
Point value optimization tips:
Balance customer satisfaction with business profitability margins
Research what motivates your audience—points, discounts, or exclusive access
Start conservatively and adjust based on program performance data
Monitor redemption rates to ensure rewards remain attainable yet valuable
Step 6: Create a Compelling Program Explainer Page
A dedicated explainer page serves as your loyalty program's storefront, converting curious visitors into engaged members. Without clear communication, potential participants may abandon signup due to confusion.
Essential explainer page elements:
Attention-Grabbing Headlines - Use compelling headlines, attractive visuals, and benefit-focused bullet points
Clear Process Explanation - Visual guides showing how to earn points, redeem rewards, and track progress
Tier Visualization - Charts or graphics displaying program levels, requirements, and exclusive perks
Ulta's "Beauty Rewards" program exemplifies effective communication with clear iconography showcasing benefits like purchase points, birthday gifts, exclusive access, and weekly bonuses. This transparency builds trust and excitement around program participation.
By creating a comprehensive explainer page, you eliminate barriers to entry and effectively communicate your program's value proposition, significantly boosting signup rates and long-term loyalty.
Benefits of Shopify Loyalty Programs
Understanding why loyalty programs work is crucial before implementing one. The benefits extend far beyond simple repeat purchases—they create a fundamental shift in how customers interact with your brand and dramatically impact your bottom line.
Increased Customer Retention Rates
Loyal customers are worth up to 10 times more than their first purchase value, making retention your most profitable growth strategy. When customers earn points or rewards, they develop an emotional investment in your brand that creates "switching costs"—hesitation to abandon accumulated benefits for competitors.
Research shows that 65% of a company's revenue comes from repeat business, and well-designed loyalty programs typically increase retention by 11-15%. This habit-forming approach creates predictable revenue streams that traditional marketing tactics struggle to achieve.
Higher Customer Lifetime Value (CLV)
Loyalty program members spend 12-18% more per transaction than non-members while shopping more frequently throughout the year. The tiered reward structure particularly drives CLV growth as customers increase spending to unlock better benefits, creating natural upselling opportunities.
Retained customers through loyalty programs have 60-70% higher lifetime values compared to customers acquired through traditional advertising, making loyalty programs one of the highest ROI marketing strategies available.
Enhanced Customer Engagement
Modern loyalty programs create multiple touchpoints beyond purchases by rewarding actions like reviews, social media follows, and referrals. This builds community around your brand rather than just transactional relationships, keeping your store top-of-mind between purchases.
The gamification elements—progress bars, tier advancement, milestone celebrations—make shopping inherently more enjoyable and memorable than competitors while generating authentic social proof through member-created content.
Improved Brand Advocacy and Referrals
Satisfied loyalty members transform into powerful marketing channels through word-of-mouth recommendations. With 92% of consumers trusting recommendations from friends and family over advertising, loyalty programs provide structured frameworks for capturing this valuable advocacy.
Referred customers through loyalty programs have 30% higher conversion rates and 25% higher lifetime values compared to other acquisition channels, making member advocacy incredibly valuable for sustainable growth.
Reduced Marketing Costs and Improved ROI
Loyalty programs create organic growth loops where satisfied customers refer new members, reducing dependence on expensive paid advertising by 70-80%. Email marketing to loyalty members achieves 25-30% open rates versus 15-20% for general lists, maximizing existing marketing infrastructure ROI.
When implemented effectively, loyalty programs typically achieve 3-5x ROI within the first year, with returns increasing as the program matures and member base grows.
Key Features of Successful Shopify Loyalty Programs
A successful loyalty program is more than just a reward system—it's a strategic tool that encourages long-term engagement and drives measurable business growth. Understanding the essential features that make loyalty programs effective helps Shopify merchants build systems that deliver real results rather than just participation badges.
Points for Multiple Actions
Reward customers beyond purchases to build deeper brand connections
Effective Shopify loyalty programs reward diverse customer behaviors including purchases, product reviews, social media follows, email signups, referrals, and survey participation.
Tiered Rewards and VIP Programs
Create aspirational progression that motivates increased spending
Tiered loyalty structures (Bronze, Silver, Gold) give customers clear progression paths with increasingly valuable benefits at each level.
Personalized Rewards and Milestone Celebrations
Make every customer feel individually recognized and appreciated
Personalization transforms generic programs into meaningful experiences through birthday rewards, purchase anniversaries, and tailored recommendations based on buying history.
Mobile-Friendly User Experience
Ensure seamless program access across all devices and platforms
With mobile commerce representing over 50% of online shopping, loyalty programs must deliver flawless mobile experiences through responsive design, fast loading, and intuitive navigation.
Easy Redemption Process
Remove barriers between earning points and claiming rewards
Complicated redemption processes kill program engagement, so successful loyalty programs prioritize simplicity through clear point values, straightforward steps, and multiple reward options.
Integration with Marketing Tools
Connect loyalty data with email, SMS, and analytics platforms
Seamless integration with tools like Klaviyo, Omnisend, and Shopify POS enables automated reward notifications, personalized campaigns, and comprehensive analytics.
Analytics and Reporting Features
Track performance metrics to optimize program effectiveness
Robust analytics help monitor key metrics like enrollment rates, redemption patterns, customer lifetime value changes, and program ROI.
Top Shopify Loyalty Program Apps Comparison
Choosing the right loyalty app determines your program's success or failure. The wrong choice can doom even the best-designed program, while the right app streamlines operations and enhances customer experience. Here's a comprehensive comparison of the top Shopify loyalty apps to help you make an informed decision.
GiftKart by Skai Lama
Complete loyalty solution with proven 18% retention increase
GiftKart stands out as the optimal choice for Shopify stores with over 2,000+ merchants already using the platform. The app delivers an average 11% increase in customer retention while offering cash-back programs, digital wallets, and gift card functionality for maximum flexibility in loyalty strategy design.
Gift Kart
Acquire and Retain with E-Gift Cards, Cash Backs and Win back Campaigns
Popular points-based program with user-friendly interface
Smile.io offers one of the most intuitive loyalty program setups with clean design and fast implementation. The platform supports points, referrals, and tier-based rewards with extensive customization options, though advanced features are locked behind higher-tier plans.
LoyaltyLion
Advanced analytics and A/B testing for data-driven optimization
LoyaltyLion excels in providing deep analytics, A/B testing capabilities, and advanced personalization features ideal for scaling eCommerce brands. The platform offers sophisticated segmentation and integration options, though it comes with a higher price point and complexity that may overwhelm beginners.
Growave
All-in-one platform combining loyalty, reviews, and social proof
Growave consolidates loyalty programs, customer reviews, wishlists, and social media integration into a single dashboard. This comprehensive approach provides excellent value for stores wanting multiple marketing tools, though the feature breadth may create a learning curve for focused loyalty program needs.
Yotpo Loyalty & Referrals
Enterprise-level solution with full marketing suite integration
Yotpo provides robust loyalty functionality as part of their complete eCommerce marketing platform, including reviews, SMS, and visual UGC. The enterprise-focused solution offers powerful integrations and scalability but requires custom pricing quotes and may be excessive for smaller businesses.
Feature Comparison Table
Feature
GiftKart
Smile.io
LoyaltyLion
Growave
Yotpo
Pricing
Affordable plans
Free + $49+/month
$159+/month
$49+/month
Custom pricing
Setup Ease
Very Easy
Easy
Moderate
Easy
Complex
Points Program
✅
✅
✅
✅
✅
Tier System
✅
✅
✅
✅
✅
Referral Program
✅
✅
✅
✅
✅
Mobile Optimized
✅
✅
✅
✅
✅
Email Integration
✅
✅
✅
✅
✅
Advanced Analytics
✅
Limited
✅
✅
✅
A/B Testing
✅
❌
✅
Limited
✅
Gift Cards
✅
❌
❌
❌
❌
Multi-language
✅
✅
✅
✅
✅
Customer Support
Excellent
Good
Good
Good
Enterprise
Why GiftKart Leads the Competition
Proven Results: With documented 11% retention increases across 2,000+ stores, GiftKart delivers measurable ROI that justifies investment.
Comprehensive Features: Unlike competitors that focus solely on points, GiftKart combines loyalty programs with gift cards and digital wallets for complete customer retention strategy.
Shopify-Specific Design: Built exclusively for Shopify, ensuring seamless integration, faster performance, and native compatibility with Shopify's ecosystem.
Affordable Pricing: Competitive pricing structure that provides enterprise-level features without enterprise-level costs, making it accessible for growing businesses.
Expert Support: Backed by Skai Lama's eCommerce expertise, offering not just software but strategic guidance for loyalty program optimization.
Best Practices for Shopify Loyalty Programs
Implementation strategy determines whether your loyalty program drives meaningful results or becomes another forgotten marketing initiative. Following proven best practices ensures maximum engagement, sustainable growth, and measurable ROI from day one.
Program Design Best Practices
Keep it simple, valuable, and aligned with customer motivations
Design programs with clear, easy-to-understand rules where customers immediately grasp how to earn and redeem points. Balance reward value with business sustainability—overly generous programs hurt profitability while stingy rewards kill engagement.
Launch Strategy
Start with existing customers and expand gradually
Launch your loyalty program to existing customers first, as they're most likely to join and provide valuable feedback for optimization. Use soft launches to test functionality and gather insights before promoting to new audiences through email campaigns and website integration.
Promotion and Marketing
Make your program visible across all customer touchpoints
Promote loyalty programs through website banners, checkout notifications, email signatures, and social media to maximize awareness. Create dedicated landing pages explaining benefits and use exit-intent popups to capture visitors who might leave without joining.
Ongoing Optimization
Continuously test and improve based on performance data
Monitor key metrics like enrollment rates, redemption frequency, and customer lifetime value changes to identify optimization opportunities. A/B testing different reward structures, point values, and promotional strategies to maximize program effectiveness and ROI.
Real Shopify Store Success Stories
Real-world examples demonstrate how effective loyalty programs transform Shopify businesses across different industries. These GiftKart case studies show measurable results that prove loyalty programs deliver substantial ROI when implemented strategically.
Case Study 1: Beauty Brand - Gift Card Rewards Program
36% increase in average order value through strategic reward campaigns
A beauty brand implemented GiftKart's reward program offering $25 gift cards for orders over $250, creating urgency with one-month expiry dates. The campaign achieved a remarkable 36% increase in AOV to $155.68, generating $26.15k total revenue from just 175 reward codes and demonstrating the power of threshold-based rewards.
Case Study 2: Sunrise Flour Mill - Customer Winback Campaign
$11,000 winback revenue with 33% AOV increase in just 7 days
Sunrise Flour Mill targeted customers inactive for 6+ months with personalized gift card emails through GiftKart and Klaviyo integration. Within 7 days, $1.58k worth of gift cards were redeemed by 158 customers, generating ~$11,000 in upsell revenue while boosting AOV from $60 to $80 with only 1 hour of setup time.
Case Study 3: The Meatery - Omnichannel Cashback Program
$6,000 additional revenue through online and in-store cashback integration
The Meatery used GiftKart's POS integration to offer 10% instant cashback across online and physical stores, addressing low retention in the perishable goods sector. The program generated $6,000 additional revenue through 4,000+ cashbacks with only $1,000 redeemed, while boosting AOV to $164.32 and significantly improving customer retention rates.
Conclusion and Next Steps
Learning how to set up loyalty program on Shopify represents one of the smartest investments you can make for long-term business growth. With customer acquisition costs rising and competition intensifying, loyalty programs provide a sustainable path to increased retention, higher customer lifetime values, and measurable ROI.
The evidence is compelling: stores using well-designed loyalty programs see 11-15% retention increases, 12-18% higher spending per customer, and 3-5x ROI within the first year.
From beauty brands achieving 36% AOV increases to food retailers generating $11,000 in winback revenue, real-world results prove that loyalty programs deliver tangible business impact when implemented strategically.
Start Simple, Scale Smart
GiftKart by Skai Lama provides the perfect foundation for this journey, offering proven results across 2,000+ Shopify stores with comprehensive features, seamless integration, and expert support to guide your success.
Ready to Transform Your Customer Relationships?
Don't let another day pass watching customers make single purchases and disappear to competitors. Your loyalty program can be live and driving results within hours, not weeks.
Install GiftKart Today and join thousands of successful Shopify merchants who've discovered the power of customer loyalty. With our proven 11% retention increase and comprehensive feature set, your investment will pay for itself while building the foundation for sustainable, profitable growth.
Hurrify customers to buy within a given timeframe with a sales countdown timer & improve conversions
Another popular Shopify checkout app is Checkout Promotions. The app comes with the ability to leverage a collection of highly robust visibility rules that help show customers one-click post purchase upsell promotions after an order payment has been made. Some of its key features include:
Features
AI recommended and manual recommendations for upselling.
Complete branding control.
Checkout Upsell for increasing AOV.
AI recommended and manual recommendations for upselling.
Pricing
Development
Free
Monthly Plan
$99/ month
Plus Plan
$99/ month
Plus Plan
$99/ month
FAQs on Setting up Loyalty Program on Shopify
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Sid B
Sid is the founder of Skai Lama and The Indian Dream Podcast. He is passionate about building SaaS and talks about eCommerce Growth, 0-1 Startups, Building Businesses and Brands, and Shopify.
Boost Loyalty with Tiered CashBack!
Boost your e-commerce with GiftKart! Branded gift cards, loyalty campaigns, cashback, and more.
Boost Customer Loyalty with Tiered CashBack & Gift Cards
Boost Customer Loyalty with Tiered CashBack & Gift Cards
Increase your e-commerce retention with GiftKart's all-in-one gift card suite! Create branded digital gift cards, run loyalty campaigns, offer cashback, automate growth for holidays, issue store credits, and more.
Increase your e-commerce retention with GiftKart's all-in-one gift card suite! Create branded digital gift cards, run loyalty campaigns, offer cashback, automate growth for holidays, issue store credits, and more.
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