RETENTION · MARKETING · OPS · 4 MARCH 2025 · 7 MIN READ
Loyalty and retention: what actually brings people back
Points schemes mostly reward people who were coming back anyway. The things that genuinely drive repeat purchase are duller and harder to install.
Sometimes — but far less often than the software implies, and usually not for the reason the vendor gives. A points programme is good at giving an already-loyal customer a reason to consolidate their spending with you, and poor at creating loyalty where none exists. What reliably brings people back is duller: the product arriving when you said it would, a returns process that does not punish them, a replenishment reminder timed to when they actually run out, and not treating the person who has bought eleven times identically to a stranger. Install those first. If you install a points scheme on top of a mediocre delivery experience, you have added a monthly fee to the problem.
IN SHORT
- Most loyalty programmes pay people who would have returned anyway — that is a discount, not retention.
- Delivery reliability and returns friction move repeat purchase more than any points multiplier.
- Replenishment timing beats campaign timing: send when the product runs out, not when the calendar says.
- Measure cohorts, not a blended repeat rate. A blended number hides the fact that new customers are getting worse.
- Before you buy retention software, find out whether your churn is a product problem, a delivery problem or a memory problem.
What a points programme is actually good at
There is a real mechanism here and it is worth stating fairly. If a customer buys shoes twice a year and three retailers sell the same shoes, a points balance is a switching cost. It gives them a reason to consolidate that spending with you rather than spread it around. That is genuine value and it is why the model persists.
What it does not do is manufacture a relationship. Someone who bought once, had an average experience and has not thought about you since is not going to be retrieved by learning they have 240 points. The programme was never speaking to them.
So the honest framing is: a loyalty scheme concentrates spending you were already partly getting. That is worth paying for — as long as you count it correctly, which almost nobody does.
The measurement problem that flatters every programme
The standard report compares the repeat rate of programme members against non-members. Members always look dramatically better, the programme is declared a success, and the subscription renews.
The comparison is worthless. People join loyalty programmes because they intend to buy again. You have selected for intent and then measured intent. The same report would prove that owning a fridge magnet from your store causes repeat purchase.
What tells you something: cohort behaviour before and after launch. Take everyone who first bought in the three months before the programme existed, and everyone who first bought in the three months after, and compare their second-purchase rate at the same number of days. If the later cohort comes back more often, you have evidence. If it does not, you have a discount programme, which may still be fine — but price it as one.
The three boring things that outperform it
Across the stores we work on, the pattern is consistent enough to state plainly.
- Delivery doing what the page promised. Not fast — predictable. A customer told five days and given five days returns more reliably than one told two days and given four.
- Returns that do not feel like a penalty. The returns experience is the one every customer imagines before a second order, especially in apparel.
- Remembering them. Order history, saved addresses, a reorder button that works. Making a repeat customer re-enter everything tells them the eleventh order counts the same as the first.
Replenishment beats campaigns
For anything consumable, the highest-yield retention work is not a programme at all. It is knowing roughly how long the product lasts and getting in touch near the end of it. A coffee subscriber who buys a 340g bag every three weeks should hear from you in week three, not on the first Tuesday of the month because that is when the newsletter goes out.
This needs no loyalty vendor. It needs the purchase interval per product, a flow that fires on it, and the discipline not to also send that customer the four other campaigns running that week. The reason stores do not do it is that it requires someone to work out the intervals, and buying an app feels like progress in a way that a spreadsheet does not.
Where a programme and replenishment meet is the only place points reliably earn their fee: a small, automatic benefit for being on a repeating order — free shipping, or an amount off — which makes the convenient thing also the cheap thing.
Before you buy anything
Find out which of three problems you have. If customers try the product once and do not come back, it is a product or expectation problem and no amount of email will fix it. If they liked it but forgot you, it is a memory problem, and replenishment timing solves it cheaply. If they remember you and buy elsewhere anyway, that is the only case where a loyalty programme is the right instrument.
You can tell them apart with a survey of a few dozen lapsed customers and an afternoon in the data. That afternoon is worth more than the first year of any subscription, and it occasionally ends with the honest conclusion that you should spend the money on packaging or a better courier instead.
Questions this raises
Do loyalty programmes work in ecommerce?
They work at concentrating spending from customers who were already returning, which is real value. They are poor at creating loyalty where none exists. The usual report — members versus non-members — proves nothing, because people join when they already intend to buy again. Compare cohorts from before and after launch instead.
How do you measure whether a loyalty programme is working?
Compare the second-purchase rate of a customer cohort acquired before launch with one acquired after, at the same number of days since first order. Members-versus-non-members is self-selecting and will always look positive.
What improves repeat purchase more than a points scheme?
Delivery that matches what the product page promised, a returns process that is not a punishment, and remembering the customer — saved addresses, order history, a working reorder. For consumables, a replenishment reminder timed to the actual purchase interval outperforms any campaign calendar.
When is a loyalty programme the right tool?
When your lapsed customers remember you, liked the product, and are buying the same category somewhere else. That is a switching-cost problem, which is exactly what a points balance addresses. The other two failure modes — a product problem and a memory problem — need different fixes.
Should loyalty points be tied to subscriptions?
It is the pairing that earns its fee most reliably: a small automatic benefit for being on a repeating order makes the convenient option also the cheaper one, and it rewards behaviour you actually want rather than behaviour that was going to happen anyway.
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