So you’re considering implementing customer loyalty strategies to boost retention, raise customer lifetime value (LTV), and increase referrals. You’re not alone - our research on customer retention statistics shows that loyalty programs have seen a nearly 25% growth.
It’s not hard to see why, either. The customer acquisition cost is continuing to climb for Shopify sellers, which means finding ways to nurture an existing customer base is more profitable than consistently focusing on bringing new customers into the ecosystem.
That’s not to say a loyalty program isn’t without its own set of costs, though. So how much does a loyalty program cost? There’s no one-size-fits-all answer. It depends entirely on the platform you choose to build it on, the size of your business, and a few other factors.
We’ll walk you through a quick loyalty program cost calculation below to help you set your expectations for this investment, but let’s make one thing clear right away - the cost of implementing a loyalty program pays for itself!
Don’t just take our word for it. Brands that leverage our Shopify loyalty program have seen up to a 52x ROI, a 3.1x increase in repeat purchase rate, and a 4% increase in revenue. The best way to know for sure what a loyalty program will cost you is to get in touch with our team today.
What Goes into the Loyalty Program Cost Calculation?
Setting up a loyalty program can be really simple when you choose the right platform, but there are quite a few moving pieces that you need to consider - especially if you’re trying to run a loyalty program cost calculation. Here’s a brief look at everything that plays a part in pricing.
Software and Technology Costs
The backbone of any loyalty program is the technology platform that supports it. Different providers will have their own unique pricing.
If you weigh your options, Loyalty Lion, smile.io, Yotpo, and Rivo, you’ll find that some solutions offer better functionality at a fair price even if it’s more expensive. Always consider the total value you’re getting from a platform rather than looking at price in isolation.
Subscription-based loyalty platforms like ours are most often priced with monthly or annual fees. This will get you access to not just the platform itself but also customer loyalty analytics dashboards, rewards management, and loyalty segmentation tools.
If you’re not operating on Shopify or you need unique features to bring your loyalty program vision to life, expect to pay more for custom development. This will likely be a one-time investment rather than an ongoing cost you need to account for.
There may be other integration-related costs to consider too, such as integrating with CRMs, POS systems, and email marketing tools. Ideally, you’d choose a platform that supports all these integrations for free.
Staff Training and Onboarding
Your whole team needs to buy into the loyalty program in order to maximize its full potential. This means you may need to invest in training, such as workshops that teach employees how to manage the program, answer customer queries, and troubleshoot issues.
Developing training materials such as guides or videos is an upfront cost that pays off long-term. Anytime you make a new hire or introduce new features to your program, there may be additional training costs.
Reward Fulfillment
The visible and variable cost of your loyalty program is the actual rewards you offer. There’s a balance to be struck here between making the rewards enticing enough that customers actually want them while keeping your program as profitable as possible.
Discounts or cashback on purchases are two of the most common types of rewards, but some brands choose to offer free products or services in some cases as well. Even a simple reward like free shipping will add fulfillment expenses to your program’s bottom line.
Marketing and Promotion
One of the most common reasons why loyalty programs fail is customers simply don’t know they exist. This is because businesses believe if you build it, they’ll come flocking your way. But you need to invest in marketing and promoting the program too!
Email blasts, social media posts, and on-site content creation for the program all have their own costs that will add to the initial launch. There may be recurring marketing costs associated with ongoing promotion too, be it win-back campaigns or seasonal deals.
Customer Support
There are few better ways to build loyalty than offering exceptional customer support, and this becomes even more important when you roll out a loyalty program.
Customers are inevitably going to have questions about the program, and you need to make sure you have plenty of ways for them to reach your support team. This goes beyond email - a dedicated live chat or loyalty hotline is worth investing in.
You might decide it’s worth creating FAQ pages or self-service portals that reduce reliance on live support as well. These will have costs upfront but will save you money and provide better customer experiences in the long run.
Hidden Costs to Consider
It’s hard to account for every cost of implementing a loyalty program, because some things might pop up out of nowhere. Here are just a few other things you might want to consider in your loyalty program cost calculation:
- System Maintenance and Updates: Software requires regular updates to remain functional, secure, and competitive.
- Fraud Prevention: Monitoring for misuse or exploitation of the program can require additional tools or personnel. Some tools, like Rivo, have this built in.
- Data Management and Privacy Compliance: Collecting and storing customer data responsibly isn’t cheap, but you need to be compliant with GDPR or CCPA regulations.
- Customer Exit Costs: What happens when customers want to leave your program? There may be exit costs in clearing unused points or handling dissatisfaction.
There are so many moving pieces, but how much does a loyalty program cost on average?
How Much Does a Loyalty Program Cost?
Like we said from the start, the only way to know for sure what you can expect to pay for the cost of implementing a loyalty program is to request a demo and have a conversation about your specific situation. Here are the three different tiers we offer:
Scale Plan ($49/Month)
Our starter plan is ideal for small brands doing between 200-2,500 orders monthly. You gain access to 50 unique features such as:
- Dedicated Loyalty and Referrals page
- Embedded account page widget
- Shopify POS integration
- VIP Tiers based on spend, points or orders
- Shopify Flow and 50+ integrations
- Loyalty email campaigns
- Basic Klaviyo integration
- Pay as you go pricing
The specific number of orders you process monthly will influence the cost of implementing a loyalty program, though. So how much does a loyalty program cost at 400 orders? $79.
What about 2,500 orders? It scales up to $499. At that point, your brand is likely much better suited for our Plus Plan anyway.
Plus Plan ($499/Month)
Brands doing up to 2,500 orders a month will find our Plus Plan more in line with their needs. It caps at $499 but offers far more features that you wouldn’t get on the Scale Plan, including:
- 6+ Loyalty checkout touchpoints
- Page builder with custom CSS and fonts
- Custom email sending domain
- Developer Toolkit Access
- Custom earning actions & email settings
- Passwordless account activation
- Custom Actions and Ways to Earn
- Enhanced Reports and Analytics
- Advanced Klaviyo integration
- Over 150 loyalty & retention features
But how much does a loyalty program cost over 2,500 monthly orders? At this threshold, you’ll want to have a conversation with our team about our Enterprise Plan.
Enterprise Plan (Custom Pricing)
Brands scaling on Shopify Plus that want white glove support and enterprise-grade features will fall under this umbrella, at which order volume is unlimited.
You also gain access to Rivo accounts which is how you really unlock personalization in your program. Here are some other features that make the Enterprise Plan so compelling:
- Dedicated Account Manager
- Priority 24/7 technical team support
- Unrestricted Developer Toolkit access
- Slack Connect Channel
- Prioritized features on roadmap
- Monthly strategy sessions with CSM
- Internationalization and expansion stores
- Customizable checkout components
We encourage you to learn more about our pricing here. But let’s take a closer look at some of the other aspects of our loyalty program cost calculation to help you set your expectations.
Estimating the Costs of Other Aspects of Loyalty Programs
The software you use as your platform is just one aspect of the loyalty program cost calculation - you should also make sure you’re budgeting for:
- Implementation Costs: Custom programs may need additional development to integrate with existing software. API integrations, custom UI/UX design, and feature add-ons can run you anywhere from $5,000-$50,000, depending on complexity
- Rewards Budget: This is the variable cost tied directly to customer participation, and we’ve seen that budgeting 1-3% of annual revenue is a good rule of thumb here. So if you’re doing a million a year, expect to pay anywhere from $10,000-$30,000 annually in rewards.
- Marketing Spend: There are two things to consider here - launch budget and ongoing promotion. We recommend setting aside anywhere from $2,000-$10,000 for email campaigns, ads, influencers, and content creation for launch, and between $500-$5,000/month depending on customer engagement strategies.
- Ongoing Maintenance: This accounts for software updates, performance optimization, and fraud monitoring. It’s a bit tougher to estimate, but $100-$1,000 a month is a safe buffer for most SaaS tools.
- Support and Training Costs: Depending on the platform you choose, this may not even be a cost you need to consider. Just to give yourself a more conservative budget, though, assume somewhere between $500-$1,000 annually.
Remember, more than 7,000 brands are currently using Rivo - some small, some huge. We say this to say that connecting with our customer service team is a better way to get a sense of what you can expect to pay, as we’ve seen it all.
Regardless of your budget you can justify the cost of implementing a loyalty program. It’s quite literally going to pay for itself over the course of time!
How the Cost of Implementing a Loyalty Program Pays for Itself
There are plenty of customer retention examples showing why this is a great investment.
Fresh Chile saw a 156% lift in AOV while adding $40k in ARR by setting up a loyalty program. Ultra Football brought in over $800k in revenue in the first 6 months after setting its program up, and AOV shot up 150% as well.
While these are certainly some of the most powerful success stories, there are thousands of others that aren’t getting talked about. The common theme is that loyalty programs can boost retention. LTV, and even work as an acquisition channel.
Increased Customer Retention
In comparing customer acquisition vs retention, it’s clear that nurturing an existing customer and getting them to place additional orders is more profitable than trying to acquire a new customer.
Loyalty programs are all about retention. They give customers something to keep coming back for and a reason to stick around. This not only adds to your bottom line but builds deeper emotional connections with your brand.
Whether it’s rewarding repeat purchases or saying thank you for leaving a review, loyalty programs create consistent touchpoints that keep your brand top of mind. It’s not just about the transactional benefits.
Improved Customer Lifetime Value (LTV)
Given all the costs throughout the customer acquisition journey, it’s worth trying to maximize the value of every customer. Whether it’s through encouraging higher AOVs or more frequent purchases, a loyalty program can help improve LTV.
Take VIP tiers, for example. Customers strive to unlock higher rewards by spending more, creating a cycle of incremental spending that grows LTV. Personalized perks also keep customers coming back for more, be it tailored discounts or early access to product launches.
Boosted Referrals and Advocacy
Satisfied customers can be your biggest brand advocates, sometimes even turning into an acquisition channel. A well-designed loyalty program does more than just nurture existing customers, it incentivizes referrals.
Offering rewards for bringing in new customers allows your most loyal supporters to actively contribute to growth and feel like they’re part of the team - while getting discounted or free products along the way.
These referrals often convert at higher rates because they come with built-in trust. Customers who are referred by something they know tend to spend more over their lifetime with your brand as well.
You can learn more about setting up a Shopify referral program or how to reward customer loyalty in our blog if you’d like. At this point, though, it’s time we wrapped up this loyalty program cost calculation guide with a few parting thoughts.
Bringing Our Loyalty Program Cost Calculation Guide to a Close
So, how much does a loyalty program cost? In closing, the cost of implementing a loyalty program will vary based on the number of orders you’re processing, the specific rewards you offer, and a multitude of other factors.
But the key takeaway from this loyalty program cost calculation conversation should be that this investment will pay for itself time and time again. This can be a powerful growth engine that nurtures lasting relationships, fosters brand loyalty, and drives revenue.
So, what are you waiting for? Get a better sense of the cost of a loyalty program by reaching out to the experts at Rivo today. Take the first step in building a program that pays for itself.
