Why Loyalty Belongs in Your Stack Now

Nick -

Acquisition is expensive. If you’re buying clicks and not capturing email, SMS, or loyalty data, you’re basically pouring water into a sieve, you’ll pay for the same pair of eyes again next week.

In a recent episode of Chew On This with Mike (CEO & co-founder at Smile.io) and Nihar (Managing Director at Roswell NYC). We covered timing, the right first moves, and a few advanced plays that actually change behavior. “Your biggest competitor is Amazon, the world’s largest vending machine. The only way to compete is to give people a reason to come back.” — Nihar

When’s the right time to add loyalty?

Now. Not “when we’re bigger.” Not “before BFCM.” Now.

Even a simple setup with email + SMS capture, a welcome series, abandoned checkout, and a basic loyalty program will start compounding. You learn who’s coming back, why they buy, and what moves the needle. Turn it on today and your customers actually have points and status to care about by the holidays.

The mindset shift operators are making

The best run brands aren’t just great at creative, they’re running the business like analysts.“Benchmark gross margin and purchase frequency against peers and let that data point you to the workflows, discounting, AOV. Don’t just turn on everything and hope.” — Mike

Nihar’s playbook for loyalty :

  • Returning users should be ~25–30% of traffic and convert at 2× your site average.
  • Healthy list growth adds 4–6% of monthly uniques to email/SMS; a solid welcome converts 3–5% of those signups.

If you’re off these numbers it can be a good starting line.

How to launch without tripping over yourself

Soft-launch to Airdrop. Quietly enable the program and watch what actually changes behavior. Then go loud with a points or status airdrop so loyal customers feel seen. If you’ve been around a while, backdate or approximate a customer's status. No one wants to start at zero the week after they spend big. 

Want a north star? When Kith rolled out loyalty, they credited past spend so fans didn’t start from scratch. People rushed to check their status (and buy more to climb tiers). That’s the feeling you want.

Points that grow AOV, not erode it

More points ≠ better program. Over-awarding can have a negative impact on margins and trains people to wait for redemptions.

Here are some suggestions on how to tune it:

  • Set points per action (purchase, review, UGC, referrals) against AOV and margin so you nudge behavior without shrinking orders.
  • Use points boosters to move categories (“2× points on accessories this week”)—it discounts future orders, not today’s.
  • Make tiers meaningfully different. If “Gold” doesn’t feel like a moment worth posting about, keep tuning.

“Airlines are the masterclass. They dynamically change point values and redemptions to steer behavior—and a huge chunk of their value sits in those loyalty programs.” — Mike

Should points work outside your store?

Sometimes. If you sell coffee or other high-frequency goods, keep value inside the ecosystem to train repeat visits. Long purchase cycles or B2B buyers? External perks can matter more as long as the math works (bulk rates, perceived value > cost). You can also think experiential: founder consults, community access, early drops. Often massive perceived value, minimal cost.

Personalization without going over the top

Batch-and-blast is done. One-to-one everything isn’t practical (yet). Aim for pragmatic personalization:

  • Segment on recency, frequency, value, category interest, and—where you can—motivation.
  • Personalize timing, next-best product, and offer intensity, not just the greeting line.
  • Let AI help you scale variants until you hit diminishing returns. Then stop.

“Getting from segments of a few hundred down to a few dozen can cost a ton of effort for tiny lift. Know when ‘good enough’ is actually optimal.” — Mike. And remember: two “weight-loss” customers can have totally different reasons (wedding vs. postpartum confidence). Speaking to the why converts better than shouting the what.

Your simple, do-it-now plan

  • This week: Turn on capture everywhere (email/SMS). Ship welcome + abandoned flows. Enable a basic loyalty program and plug it into your flows.
  • This month: Run one points booster on a strategic category. Sharpen tier benefits so level-ups feel real. Build 3–5 motivation-based segments.
  • This quarter: Model your points economics vs. AOV/margin and tighten. Add one VIP-only experience. Pick a brand 2–3 years ahead and study their ads, flows, and program moves.

One thing to chew on

“AI won’t take the jobs of people who use AI. It’ll take the jobs of people who don’t.” — Nihar

Start now. Capture value on every visit. Make status feel earned. And let loyalty turn paid traffic into a compounding asset.