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The State Of Ecommerce Customer Loyalty In 2023

the-state-of-ecommerce-customer-loyalty-in-2023
The State Of Ecommerce Customer Loyalty In 2023

Key Takeaways: 

  • Smile.io has access to the world’s largest loyalty dataset, with over a decade of data from billions of ecommerce orders. 
  • Smile loyalty programs increase repeat purchase rate, average order value, and decrease purchase frequency.
  • Year-over-year comparisons of 6 key retention metrics based on Smile’s network of merchants, categorized by industry and merchant size
  • Maximize your loyalty program through best practices such as meaningful rewards, a branded look, and accelerated earning with bonus points.
  • Smile.io offers features that drive results like points redemption at checkout, embedded content, integrations, VIP programs, and loyalty landing pages
  • Judge.me, Gorgias, and Little Data emphasize the importance of reviews, personalization, and first-party data and offer ecommerce predictions for 2024.

With 10 years as a top ecommerce solution, Smile.io has built up the world's largest dataset of loyalty and retention data. Smile.io has built up a decade of all-time data with over 700 million shoppers and over 800 million point transactions of customers earning and redeeming points with ecommerce brands. Equating to billions of orders analyzed over 10 years. 

A graphic showing 3 metrics about Smile Rewards’ dataset characteristics: 100,000 merchants, 148 countries, and $11.7 billion in sales rewarded in 2023. 
Smile.io has the world’s largest loyalty dataset, with 100,000 merchants. 

For this report, we analyzed over 100,000 merchants in 148 countries over two years and compared various metrics from 2023 to the previous year in 2022. The sample size includes 139 million orders analyzed for this study. 

In this loyalty report, we dig into the growth of ecommerce brands through key indicators such as Smile generated value, customer lifetime value (CLV), repeat customer rate, average order value (AOV), purchase frequency (PF), and loyalty ROI. We break each metric down by industry and merchant size. 


✅ Table of Contents:


Key retention metrics analysis

With our vast network of loyalty data, one thing is certain—loyalty programs increase profitability. And we can prove it. 

Attracting and retaining customers is a top priority for the most successful ecommerce brands because repeat customers are more profitable than one-time customers. Repeat customers are easier to sell to, spend more per purchase, and, most importantly, they’re most likely to have continued loyalty by shopping with you again. 

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35% of an ecomm store’s revenue is generated by the top 5% of customers.

Since repeat customers are more profitable than one-time shoppers, you will want to incentivize repeat purchases. Adding a loyalty program is a simple and effective way to do this. Brands that used Smile.io loyalty programs noticed quite a big difference in repeat purchase rates between their program participants and non-participants. 

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Smile Rewards loyalty program participants have a repeat purchase rate 56% higher than non-participants.

Increasing average order value is one of the most effective ways to increase profitability. And one of the easiest ways to do this is by adding a loyalty program. Loyalty programs encourage increased spending by creating perceived value through points and anticipated rewards. 

🛒

Shoppers using Smile.io rewards coupons have a 16.5% higher AOV than those using non-Smile coupons.

If increasing average order value is one side of the profitability coin, increasing purchase frequency is the other. Adding a Smile.io loyalty program impacts how often your customers buy from you. Reminding customers that they have value sitting on the table through their points is a great motivator to encourage a repeat purchase. 

📆

Shoppers using Smile.io coupons have a 3.3x higher purchase frequency than those using no Smile.io coupons.

Introducing Smile Plus

Introducing Smile Plus a new plan for high-volume brands looking to build customer loyalty effortlessly. Our goal is enterprise loyalty made easy

Loyalty & Reward Program Insights from Smile.ioMike Rossi


2023 Customer loyalty data snapshot 

The study examines key retention metrics year over year by industry and merchant size based on average monthly order count. We studied Smile Rewards’ top 6 industries by annual revenue.

Over two years, comparing 2022 and 2023, we analyzed:

  • 100,000+ merchants
  • In 148 countries
  • Generating over 139 million orders
  • Equating $11.7B+ in sales

This report analyzes these key metrics by industry and merchant size:

  1. Smile Generated Value
  2. Customer Lifetime Value
  3. Repeat Customer Rate
  4. Average Order Value
  5. Purchase Frequency
  6. Loyalty ROI

Smile: Loyalty & Rewards – Smile: Loyalty & Rewards – World’s Most Trusted Loyalty App | Shopify App Store

Increase sales and repeat purchases, save on acquisition costs, and boost customer lifetime value with a points, referral, and VIP program from Smile.io

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Smile Generated Value

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Smile Generated Value is the sum of all orders placed on a site with a Smile.io reward discount code.

Smile generated value totaled $566.4M in 2023, a 9.15% YoY increase from 2022. 

Smile generated value increased across industries in 2023, in line with Smile Rewards’ growing merchant base. Clothing and Jewelry remains the top category in 2023, while Home Goods saw the most significant increase of 20.9% YoY. 

A bar graph showing the year-over-year growth of Smile generated value for 5 main industry categories. A call-out says Clothing and Jewelry tops the chart with $113.5M in 2023. 
Smile Generated Value by Industry.

Smile generated value increased for all merchants with more than 30 monthly orders in 2023. High-volume brands processing more than 30,000 monthly orders saw the greatest YoY growth of 38.7%.

A graph showing the year-over-year growth of Smile generated value categorized by merchant size based on the average monthly order count. A call-out says that Stores with 3,000 to 30,000 monthly orders earned $249.3M in Smile generated value in 2023. 
Smile Generated Value by Merchant Size.

Customer Lifetime Value

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Customer Lifetime Value is the average total value of all orders placed at a store with a Smile.io reward discount code over a customer’s lifetime.

Customer lifetime value largely increased or remained stable across industries in 2023.

Jewelry and Accessories has seen the largest growth of 10.15% YoY, followed closely by Home and Garden with a 9.2% YoY increase.

A bar graph showing the year-over-year changes in Customer Lifetime Value for 6 main industries (Jewelry & Accessories, Home & Garden, Clothing & Fashion, Beauty & Cosmetics, Health & Supplements, and Food & Drink). A call-out says Clothing and Jewelry tops the chart with $113.5M in 2023. 
Customer Lifetime Value by Industry.

Customer lifetime value has decreased for low and mid-volume brands and increased for high-volume brands with more than 3,000 monthly orders in 2023. High-volume brands with more than 30,000 monthly orders saw the highest increase in CLV in 2023 of 3.5% YoY.

A graph showing the year-over-year changes of Customer Lifetime Value categorized by merchant size based on the average monthly order count. There is a call-out that says brands with 300 to 3,000 orders had the highest CLV of $176.55 in 2023. 
Customer Lifetime Value by Merchant Size.

Repeat Customer Rate

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Repeat Customer Rate is the proportion of orders from customers placing at least their second order with a store within the year.

Repeat customer rate has increased or remained constant across industries in 2023, indicating increased customer retention. While Health and Supplements has maintained its lead with a repeat customer rate of 33%, Jewelry and Accessories saw the largest growth of 8.7% YoY. All other industries grew 3.6% YoY.

A bar graph showing the year-over-year changes in Repeat Customer Rates for 6 main industries (Jewelry & Accessories, Home & Garden, Clothing & Fashion, Beauty & Cosmetics, Health & Supplements, and Food & Drink). There is a call-out that says Health and Supplements maintains the highest rate of 33%. 
Repeat Customer Rate by Industry. 

Repeat customer rate increased for high-volume brands with more than 30,000 monthly orders in 2023. While repeat customer rate declined for brands with less than 30,000 monthly orders, it increased from 33% to 34% in 2023 for high-volume brands.

A graph showing the year-over-year changes of Repeat Customer Rate categorized by merchant size based on the average monthly order count. There is a call-out that says high-volume brands with more than 30,000 orders top the chart with 34% in 2023. 
Repeat Customer Rate by Merchant Size.

Average Order Value

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Average Order Value is the average of the grand total USD value of all orders placed on a site with a Smile.io reward discount code.

Average Order Value increased for 4 top industries in 2023. While Health and Supplements and Food and Drink decreased, purchase frequency increased, indicating customers placing smaller orders more often. Home and Garden saw the most significant AOV increase of 10.8% YoY, followed by Jewelry and Accessories, which saw 9.8% YoY growth. Clothing and Fashion and Beauty and  Cosmetics both increased by 2.8% and 2.3% YoY, respectively.

A bar graph showing the year-over-year changes in Average Order Value for 6 main industries (Jewelry & Accessories, Home & Garden, Clothing & Fashion, Beauty & Cosmetics, Health & Supplements, and Food & Drink). A call-out says Jewelry and Accessories tops the chart with an AOV of $105.27 in 2023.
Average Order Value by Industry.

Average order value has increased for all brands with more than 30 monthly orders in 2023, indicating customers are placing larger orders. Stores with 3,000 to 30,000 monthly orders saw the greatest AOV increase of 2.6% YoY, followed by brands with 30 – 300 orders, which grew 2.2% YoY.

A graph showing the year-over-year changes of Average Order Value categorized by merchant size based on the average monthly order count. A call-out says mid-size stores with 300 to 3,000 orders lead with an AOV of $108.39 in 2023. 
Average Order Value by Merchant Size. 

Purchase Frequency

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Purchase Frequency is the average number of orders placed with a Smile.io reward discount per customer.

Changes in purchase frequency varied by industry in 2023. Health and Supplements and Food and Drink increased, and all other industries either slightly decreased or remained constant. Food and Drink saw the largest increase of 6.51% YoY, followed by Health and Supplements with a 2.6% YoY increase. This inverse relation to AOV indicates a consumer preference for purchasing commodity goods in smaller quantities more often.

A bar graph showing the year-over-year changes in Purchase Frequency for 6 main industries (Jewelry & Accessories, Home & Garden, Clothing & Fashion, Beauty & Cosmetics, Health & Supplements, and Food & Drink). A call-out says Food and Drink and Clothing and Fashion top the chart with 1.66 orders per year in 2023. 
Purchase Frequency by Industry. 

Purchase frequency vastly decreased in 2023, except for high-volume merchants with more than 30,000 monthly orders. With AOV trending upwards YoY, customers are placing larger orders less frequently. Purchase frequency grew 3.1% YoY for high-volume brands with more than 30,000 monthly orders.

A graph showing the year-over-year changes in Purchase Frequency categorized by merchant size based on the average monthly order count. There is a call-out that says brands with 3,000 to 30,000 orders top the chart with 1.71 orders in 2023.  
Purchase Frequency by Merchant Size. 

Loyalty ROI

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Loyalty ROI is the median return on loyalty investment. This is calculated by comparing Smile-generated revenue against merchants’ yearly subscription fees.

Loyalty ROI was positive across industries in 2023, ranging from +489% to +863%. Health and Supplements saw the most noteworthy return on loyalty investment in 2023, 863%, followed by Clothing and Fashion with 600%.

A bar graph showing the Loyalty ROI in 2023 for 6 main industries (Jewelry & Accessories, Home & Garden, Clothing & Fashion, Beauty & Cosmetics, Health & Supplements, and Food & Drink). A call-out says Health and Supplements achieved the highest ROI of 863% in 2023.
Median Loyalty ROI by Industry.

Loyalty ROI was positively correlated to the average monthly order count, exponentially increasing for each merchant volume group. Mid and high-volume merchants experienced significant loyalty ROI gains in 2023, with merchants processing more than 30,000 monthly orders earning an ROI of +11,000%.

A graph showing the median Loyalty ROI in 2023 categorized by merchant size based on the average monthly order count. There is a call-out that says merchants with more than 30,000 monthly orders earned a loyalty ROI of 11,000% in 2023. 
Median Loyalty ROI by Merchant Size. 

Ready to start getting some of that ROI?

Launch a Smile.io loyalty program today.


Loyalty program best practices 

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The sole purpose of a loyalty program is to turn one-time customers into repeat customers and build a loyal following. 

So, how can you offer value to customers beyond your product offering and start getting some of that loyalty ROI? Use a loyalty program to give customers a reason to continue shopping with you by making them feel valued and appreciated. Make customers feel that their loyalty is invaluable with exclusive rewards and perks. 

Meaningful rewards

A successful loyalty program needs a strong motivator to join in the first place. Knowing your customers is one of the most vital foundations for launching a loyalty program. Aligning the type of loyalty program and rewards you offer with your ideal customers is critical to a successful rewards program that customers will engage in and participate in. Whether you’re running a points, VIP, or referral program, the idea is the same—offer a reward customers will want to earn. 

With Smile.io, you can make redeeming points special with unique rewards. Choose from meaningful rewards like discounts, free products, free shipping, or gift cards. Or go even further and create exclusive perks for your best customers with a VIP program. The idea is to engage customers with your loyalty program to incentivize them to choose you over a competitor. 

A branded look 

Smile.io offers an endlessly customizable loyalty solution with no coding required. You can create a rewards launcher and panel visible on every website page or an embedded branded loyalty program explainer page. You can fully customize the colors, shapes, and sizes to match your brand and make it feel a part of your whole ecommerce experience for customers. 

5 Loyalty Program Strategies For Shopify Plus Stores

Shopify Plus stores are the perfect candidate for loyalty programs. Discover 5 loyalty program strategies to incorporate using Smile.io.

Loyalty & Reward Program Insights from Smile.ioGabrielle Policella

Accelerated earning with bonus points 

Bonus points events are a fantastic strategy to keep your rewards program top of mind and boost program participation. But it’s essential to launch bonus points events strategically.

‘Bonus Points Events’ are when you multiply the number of points a customer can earn during a specific timeframe. For example, you can offer double the points on all purchases for a single weekend, celebrating a new product release or your brand’s birthday. Customers are incentivized to shop and earn more points, maximizing their reward balance, which can be spent on a second purchase.


Features engineered to drive growth 

Smile.io is the most trusted loyalty platform 100% built for ecommerce brands. Smile Rewards’ standout features have helped more than 100,000 ecommerce brands increase customer retention, average order values (AOV), customer lifetime value (CLV), and more key retention metrics. 

Points redemption at checkout 

Make it easier for customers to collect points by displaying what they earn at checkout. Shopify Plus merchants can add a checkout extension that displays embedded loyalty elements. Depending on their points balance, customers will see how many points they would earn on their purchase or which rewards they can redeem right then. If customers are eligible to redeem, a drop-down menu of their reward options will appear, and they can redeem in a few simple clicks. 

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Shopify Plus stores using the Smile.io checkout extension saw a 15% average increase in redemptions compared to before adding it.

Embedded content 

Providing a seamless experience for customers on your ecommerce site is essential to convert site visitors into customers. Smile.io allows you to embed custom loyalty content throughout your website. Show points info on the product page, account page, checkout page, order status pages, and more! 

This type of loyalty content embeds on any Shopify Plus store theme and is simple to set up with minimal clicks to provide a smooth customer experience. 

Maximizing key integrations

Integrations are essential to utilizing your Shopify apps to their fullest potential. Leverage Smile.io integrations to automate your marketing, collect reviews, provide customer support, and grow your business sustainably, with customer loyalty data embedded every step of the way. Smile.io integrates with the most powerful apps on Shopify, including Klaviyo, Gorgias, Judge.me, Recharge, MailChimp, and many more. 

VIP programs 

VIP Programs allow you to reward your best customers with exclusive rewards and perks, extending customer lifetime value. Launch a multi-tier VIP program to encourage your most loyal customers to spend more to unlock different tiers with more exclusive rewards. With Smile.io, you can build a VIP Program that works for you, customizing every aspect, from tier-earning rules to milestone qualifications. 

Loyalty Landing Pages 

A visual explainer page is one of the easiest ways to drive loyalty program participation and engagement. It tells customers how they’ll benefit by joining. The more visual, the better. With Smile.io, you can create a loyalty landing page in a few simple clicks right within the Smile.io app. Embed an SEO-friendly loyalty landing page directly into your storefront; no coding required. 

Why Waiting to Launch a Loyalty Program is Costing You Money

Did you know you’re losing money by waiting to launch a loyalty program? Find out how your revenue can improve by launching your program sooner.

Loyalty & Reward Program Insights from Smile.ioGabrielle Policella


What’s next? Loyalty and retention strategies for 2024

We tapped into our partner network and asked three major Shopify apps for their takes on loyalty and retention. Hear from Judge.me, Gorgias, and Little Data to discover their ecommerce predictions and insights into how ecommerce brands can maximize essential tools to retain customers and build brand loyalty. 

Loyalty and reviews 

Reviews are significant for ecommerce stores in influencing a customer’s purchase decision. Reviews build trust, which is the basis of brand loyalty itself. Displaying reviews and UGC (user-generated content) not only shows your products in action but also helps acquire new customers.  

Reviews can be incorporated into your loyalty program by rewarding customers who leave a review with points to redeem for a discount, coupons, or any other reward. The team at Judge.me calls for brands to strengthen their product reviews and to become more transparent. 

📣

“If we had to give one piece of advice to store owners who wanted to strengthen their brand with product reviews this year, it’s to put transparency and authenticity at the heart of what you do. If you’re upfront about what your customers think, whether what they think is positive or negative, you’ll be seen as trustworthy, and that’s a very good reputation to have. Allowing photos and videos to be used in reviews can be really helpful here. User-generated media is more relatable, and that’s great for trust.”

Judge.me

Loyalty and personalization 

Personalization in ecommerce looks like providing the best customer experience to every customer that comes across your store. It’s estimated that 71% of consumers expect companies and brands to deliver personalized interactions. And 76% get frustrated when this doesn’t happen. 

Whether that is through being proactive in a support chat, providing omnichannel solutions, or simply anticipating customer needs. Using customer data to improve support is crucial to tailor interactions with customers. The team at Gorgias calls for brands to be proactive in what their customers need. Strategies that focus on anticipating needs, building trust, and efficiently using data lead to more satisfying experiences can ultimately lead to stronger customer loyalty.

📣

“To elevate customer support offerings, brands can implement three crucial strategies. Firstly, brands should offer 24/7 on-site chat to provide customers with a choice of automated or live support, ultimately expanding their support offerings. Second, brands should take advantage of prewritten templates with dynamic variables to improve response times, support team efficiency, and overall customer satisfaction. Lastly, implementing on-site conversion campaigns to educate website visitors can lead to better-informed customers and, in turn, a reduction in ticket volume. By integrating these strategies, brands build a customer-centric support ecosystem based on loyalty and trust.”

Gorgias

Loyalty and data

Data helps you see the full picture of your ecommerce strategy. Utilizing the first-party data you collect through your loyalty program, you can measure and analyze important key metrics. The team at Little Data encourages ecommerce brands to implement server-side tracking to get full metrics. 

📣

“No longer can brands depend solely on client-side tracking (browser cookies), but they must implement server-side tracking to get complete conversion data. Capturing and tracking additional revenue means that brands are able to segment and build out more accurate campaigns based on legit attribution.”

Little Data

Ecommerce predictions for 2024

Judge.me predicts social commerce to be a dominating force this year. 

🔮

“There are a number of trends to watch in 2024. One that excites us is social commerce. Selling products on social media – for instance, via Facebook and Instagram shops – is already possible, but we expect it will get increasingly popular this year. It’s on a steep upward trajectory, and it fuses two hugely popular internet activities: social interaction and online shopping.”

Judge.me

Gorgias predicts personalization in ecommerce will continue to be focused on the individual customer to gain retention. 

🔮

“We’re most excited about the increasing significance of personalized customer service as a leading trend in both retention and ecommerce. We predict a growing emphasis on treating customers uniquely and using data to enhance the overall service experience. With 98% of companies acknowledging the substantial impact of personalization on customer loyalty, we’re preparing for a higher demand for customized interactions. We believe that mixing responsiveness with personalization is the key to meeting customers’ evolving expectations.”

Gorgias

Little Data predicts retention to be the main focus for ecommerce brands and maximizing email and SMS tools brands are already using. 

🔮

“There is a lot happening across the ecommerce industry, and customer-centric marketing will continue to take precedence as acquisition gets harder due to cost, competition, and choice. At Littledata, we are betting on email and SMS marketing. Multi-channel marketing will continue—brands that create retention campaigns that drive attention and incentive will come out on top.”

Little Data

Smile.io predicts loyalty and retention will continue to be the main focus for ecommerce brands. 

🔮

“Loyalty and retention can help businesses in 2024 and beyond. At the end of the day, loyalty is built with just one customer at a time, based on their personal experience with the brand. Once a shopper hears about a brand, makes a purchase, and has a good experience, it’ll be worth more than ever to retain them. Providing the best experience and an incentive to return can help be the difference between customers forgetting about your brand or returning, thus creating brand loyalty.”

Smile.io 

Want results like these?

Unlock the power of loyalty with Smile.io

This originally appeared on Smile.io and is made available here to cast a wider net of discovery.
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