Resolutions

We’ve talked in this space before about using loyalty programs as a merchandising lever, and have even illustrated a few examples. Brands, though, appear to be resolving to better promote their loyalty program and use their loyalty programs to drive purchase behavior in 2025.

Just look at these two emails we got this week:

Both are solid examples of merchandising loyalty.

In the first, Lilac St is pushing the value of its loyalty program as a reason to stay engaged—a wise play for an email list that likely has a whole bunch of new customers on it from Holiday shopping. In the second, The Feed is using its loyalty program to deliver value to existing loyalty program members.

Though both are good merchandising plays, they are also noteworthy for another reason. Brands are, admittedly, pretty lazy when it comes to loyalty programs.

“Lazy” loyalty programs are the types of loyalty programs we’ve all grown skeptical of: set-it-and-forget-it, hidden behind an on-site login, and rarely promoted in customer communication channels.

In those situations, loyalty can be cannibalistic, stealing margin away in transactions that would have happened anyway. And, it’s these situations that create skepticism.

The wrinkle here, though, is that—just as the examples above show—not all loyalty programs are built in this fashion.

While we don’t know much about The Feed’s loyalty program (they’re not a Stamped customer), we do know about Lilac St’s.

One of the core benefits of Lilac St’s loyalty program isn’t the traditional store credit; it’s free product.

In a previous analysis we ran last year, returning customers who redeemed one of Lilac St’s free gifts returned within 90 days to make another purchase roughly more than 65% of the time. (Comparatively: returning customers who were eligible for the free gift, but didn’t redeem, returned within 90 days 54% of the time.)

The free product, then, is a lever to improving 90-day repurchase rates. And at a 20% lift in 90-day repeat purchase rate, that can have a material impact on extending customer lifetime value.

We haven’t run the numbers on that piece, but if you assume a 60% gross margin on the free product, and you assume the next returning purchase falls in line with Lilac St’s returning customer AOV, the brand is cashflow positive on the offer, given the lift in repurchase rate—with more upside to come from the LTV gains.

Imagine, too, if the Lilac St. example shown above also included some elements of personalization—the number of points the customer has, what reward (if any) the customer has available to them, product recommendations that fit the reward tier and purchase history …

The list goes on. And all of them, you’d likely agree, can help better merchandise the program.

Before that, though, a customer needs to know about your loyalty program to begin with. Like Lilac St and The Feed, it might be worth adding to your resolutions.