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 Littledata 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. 

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  
• 2023 Customer loyalty data snapshot 
  • Smile Generated Value 
  • Customer Lifetime Value
  • Repeat Customer Rate
  • Average Order Value
  • Purchase Frequency 
  • Loyalty ROI
• Loyalty program best practices
• Features engineered to drive growth
• Loyalty and retention strategies for 2024

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. 

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. 

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. 

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. 

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 Generated Value

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. 

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%.

Customer Lifetime Value

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.

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.

Repeat Customer Rate

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.

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.

Average Order Value

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.

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.

Purchase Frequency

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.

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.

Loyalty ROI

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%.

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%.

Loyalty program best practices 

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. 

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. 

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. 

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 Littledata 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. 

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.

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 Littledata encourages ecommerce brands to implement server-side tracking to get full metrics. 

Ecommerce predictions for 2024

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

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

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

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