You are spending budget acquiring new customers and most of them never buy again. The second purchase is where ecommerce stores become profitable, because the acquisition cost is already spent. If your repeat purchase rate is below 25% in the 90 days after first order, you are leaving significant revenue on the table and a loyalty programme is one of the most direct ways to change that number.

The challenge is that most loyalty programmes are set up badly: too complex to understand, rewards that take too long to earn, and no integration with your email marketing so customers forget the programme exists. Here is how to build one that actually influences purchase behaviour.

The three loyalty programme models

Before choosing an app, decide which loyalty model fits your product and customer behaviour.

Points-based loyalty: Customers earn points for purchases (and sometimes for other actions like reviews or referrals). Points accumulate and can be redeemed for discounts, free products, or store credit.

Best for: Stores with mid-range price points and repeat purchase cycles of 30-90 days. Points work because each purchase is visible progress toward a reward. Food, supplements, cosmetics, and pet products are classic points-loyalty categories.

Risk: If the earning rate is too slow, customers disengage before reaching a redemption threshold. A common mistake is setting the redemption threshold so high that customers never reach it.

Tiered loyalty (status-based): Customers are assigned a tier (Bronze, Silver, Gold) based on their cumulative spend. Higher tiers unlock better rewards, exclusive access, or enhanced service.

Best for: Stores with a clear customer hierarchy and high-value top customers worth retaining. Works well for fashion, premium consumables, and any brand where "status" as a customer has appeal.

Risk: Tiers only motivate customers who are close to the next tier boundary. A customer in the middle of a tier has little incentive to increase spend until they approach the next threshold.

Paid (subscription) loyalty: Customers pay a monthly or annual fee for membership benefits: free shipping, exclusive discounts, early access to launches.

Best for: Brands with very loyal audiences and high purchase frequency. Amazon Prime is the clearest reference model. In the Shopify space, this works best for subscription-adjacent products or brands with strong community appeal.

Risk: The value proposition needs to be immediately obvious. A paid programme that takes several purchases to pay for itself will have low take-up.

For most Shopify merchants starting their first loyalty programme, points-based is the right model. It is the most widely understood, the easiest to communicate, and the most compatible with standard purchase behaviour.

Loyalty app comparison for Shopify

App	Free Plan	Paid Plan	Key Strengths	Best For
Smile.io	Yes (limited)	Starter £50/month, Growth £200/month	Clean UI, easy to set up, widely used	Merchants starting out or with moderate volume
LoyaltyLion	No	Starter ~£160/month, Enterprise custom	Deep Klaviyo integration, tier flexibility, full API	Merchants who want rich email automation
Yotpo Loyalty	No	Custom (from ~£200/month)	Tightly integrated with Yotpo reviews and SMS	Merchants already on Yotpo's platform
Growave	Free plan available	From £25/month	Combines loyalty, reviews, wishlists	Budget-conscious merchants wanting multiple features
Stamped.io	Free plan available	From £29/month	Combined reviews and loyalty	Merchants wanting reviews and loyalty in one app

For most merchants, the choice comes down to Smile.io versus LoyaltyLion.

Smile.io is the easier starting point: quicker to set up, more self-explanatory, and the Starter plan at £50/month is reasonable for stores under 500 orders/month. The main limitation is that Klaviyo email integration depth is more limited on the lower-priced plans.

LoyaltyLion is better for merchants who want loyalty-triggered email automations in Klaviyo from day one. Its integration with Klaviyo allows you to send highly specific emails based on points balance, tier status, and reward availability, which significantly improves programme engagement. The higher entry price reflects this depth.

Designing your earning rules

Earning rules determine how customers accumulate points. The design decisions here directly affect whether the programme motivates behaviour.

Purchase earnings (the base rule): Set a points-per-pound-spent rate that makes the effective discount rate approximately 3-5% on a reasonable accumulation timeline. If you set 1 point per £1 spent and 100 points = £1 off, the effective reward rate is 1%. Most customers will not find this motivating. Increase the rate to make it feel rewarding.

A cleaner structure: 5 points per £1 spent, 500 points = £5 off. Same economics, but progress feels faster and the redemption threshold is reachable in fewer orders.

Non-purchase earning actions: Points for additional actions increase programme engagement outside of purchases:

Creating an account: 100 points
Writing a review: 50 points
Following on social media: 25 points
Referring a friend (first successful referral): 200 points
Birthday bonus: 100 points on account birthday

These actions increase the number of touchpoints the loyalty programme has with customers and create programme engagement between purchases.

Limiting non-purchase earnings: Non-purchase points should not be so generous that customers can reach significant redemption thresholds without buying. Keep non-purchase earning to a maximum of 10-15% of the total points a typical customer would earn through purchases in a year.

Designing your redemption rules

Redemption rules determine when and how customers use their points. Poorly designed redemption creates frustration or devalues the programme.

Set a meaningful minimum redemption threshold: Too low (50 points = £0.50) and customers redeem constantly on tiny orders, increasing your effective discount rate. Too high and customers never feel close to redeeming. A threshold equivalent to roughly 15-25% of your AOV in reward value is a good starting point.

Choose what points redeem for: Most programmes offer a direct discount at checkout. Some add options for free products or free shipping. Free shipping as a redemption option can be effective for customers who abandon at the shipping cost stage.

Consider points expiry: Setting points to expire after 12 months of inactivity creates urgency and encourages re-engagement from dormant customers. Without expiry, your points liability grows indefinitely and programmes can become financially challenging to sustain.

Redemption caps per order: Setting a maximum redemption per transaction (for example, maximum 20% of the order value can be covered by points) prevents customers from using the programme to get products essentially free on high-point balances, which can create margin issues.

Launching to new customers vs existing customers

For existing customers: Email your entire customer base when the programme launches. Seed each customer with points based on their historical spend (for example, credit them with the points they would have earned if the programme had existed for the past 12 months). This makes existing customers immediately engaged with the programme rather than starting from zero. Announce the programme as a reward for loyalty.

For new customers: Add loyalty programme information to your post-purchase confirmation page and your welcome email sequence. Frame it as "you just earned X points on your order" immediately after purchase so the programme is part of the first brand experience.

Klaviyo integration for loyalty email triggers

Whether you use Smile.io or LoyaltyLion, Klaviyo integration allows you to build loyalty-specific email automations that are far more effective than in-app notification emails.

Key flows to build in Klaviyo:

Points milestone email: Triggered when a customer reaches a specific points threshold (for example, 80% of the way to their first redemption). Subject line: "You're nearly there." These emails have high open rates because the offer is specific and relevant.

Unused points reminder: Triggered 30 days before points expiry for customers with unredeemed points above a minimum threshold. Urgency-driven and measurably effective at recovering dormant customers.

Tier upgrade notification: For tiered programmes, an email celebrating a customer's tier upgrade increases brand affinity and highlights the new benefits they have unlocked.

Post-redemption email: After a customer redeems points, acknowledge it and tell them how many points they earned on that order. Closes the loop and reinforces the programme's value.

Measuring loyalty programme ROI

The primary metric for a loyalty programme is repeat purchase rate lift. Measure the 90-day repeat purchase rate for:

Customers enrolled in the loyalty programme
Customers not enrolled in the loyalty programme (your control group)

A well-run points programme typically lifts 90-day repeat purchase rate by 5-15 percentage points for enrolled customers versus non-enrolled. At scale, this is the clearest financial measure of programme impact.

Secondary metrics to track monthly:

Points redemption rate (the percentage of earned points that are actually redeemed)
Programme enrolment rate (the percentage of customers who sign up)
Revenue from members vs non-members as a share of total revenue
Average order value of members vs non-members

A redemption rate below 20% typically means the programme is not driving enough purchasing motivation. A very high redemption rate (above 60%) may indicate your reward rate is too generous.

Key actions to take now

Decide your loyalty model before installing an app: Points-based is right for most merchants. Write down your earning rate, redemption threshold, and intended redemption value before opening any app settings.
Install Smile.io on a free plan and configure the basics: Use the free plan to build your earning rules, redemption structure, and widget appearance. Upgrade to a paid plan once you are ready to add email integration and more advanced features.
Seed your existing customers with historical points at launch: Calculate what each existing customer would have earned under your new programme based on their historical spend. Upload these opening balances via the app's bulk import feature. This is the single most impactful launch action for an established store.
Connect to Klaviyo from day one: Even on Smile.io's Starter plan, set up basic Klaviyo triggers for the points milestone and expiry reminder flows. These two automations alone will recover a meaningful number of dormant customers per month.
Add a loyalty programme widget to your product pages and account pages: Do not let the programme exist only at checkout. Make points balance visible to logged-in customers as they browse to connect the earning and spending behaviour.
Review at 90 days and compare repeat purchase rate for enrolled vs non-enrolled customers: This is your proof of concept. If enrolled customers are buying again at a meaningfully higher rate, scale the programme. If not, adjust your reward structure before investing further.

Frequently Asked Questions

How much does a loyalty programme cost to run? The direct cost is the app subscription (£50-£200/month depending on the platform and plan) plus the cost of rewards redeemed. The reward cost depends on your earning rate and redemption rate. A programme with a 3% effective reward rate on £50,000/month in sales would cost £1,500/month in rewards, but if it generates an incremental £5,000/month in repeat orders, the ROI is strongly positive.

Should I offer points for social follows and reviews? Yes, but make sure these non-purchase earning actions are not too generous relative to purchase earnings. They are useful for building programme engagement and generating early traction but should not allow customers to accumulate significant redemption credits without buying.

What is the difference between Smile.io and LoyaltyLion? Smile.io is simpler to set up and has a lower entry price. LoyaltyLion has deeper Klaviyo integration (allowing more sophisticated loyalty-triggered email automations) and more flexibility in tier and rule design. For most merchants starting out, Smile.io is the right choice. LoyaltyLion makes sense when you have an established programme and want to leverage Klaviyo more deeply.

Will a loyalty programme cannibalise my margin on orders that would have happened anyway? This is a valid concern. Points redemptions reduce revenue on the orders where they are applied. The net result is only positive if the programme increases purchase frequency or AOV enough to offset the redemption cost. Track incremental revenue from the programme (using enrolled vs non-enrolled repeat purchase rate as the primary measure) rather than just looking at the discount cost of redemptions in isolation.

How to Set Up a Shopify Loyalty Programme That Drives Repeat Purchases