Marton Kosdi-Kovacs: Loyalty and customer retention for Shopify brands

Recorded in English and published on 14 May 2025, so Shopify features and app details reflect that time; where something has changed, we add a dated 2026 update. We leave out the teaser at the start of the video and filler words.

Why are brands going back to physical stores?

Maciek: Hello, and welcome to the very first Flying with Shopify episode that we'll do in English, since my Hungarian is probably about as good as my guest's Polish, meaning we know a few words. Today's episode is all about customer retention and loyalty. My guest is Marton Kosdi-Kovacs, founder of the Love Loyalty app. Marton, welcome to the show. I hope I've got your last name right.

Marton: Yeah, thanks a lot for having me. I really appreciate it, and I'm happy to be here. You got it right.

Maciek: I had a quick tutorial from you, and it wasn't as difficult as some names. Marton, I'd like to start with a story I already told you last time we spoke, because I think it shows why today's subject is so critical to merchants. I was at a Shopify meetup in Stockholm and talked to some agencies that support local brands and merchants there. They shared a story that was kind of shocking to me: the cost of acquiring an e-commerce customer in Sweden or Finland is at the moment so high that brands are turning to opening physical stores and doing proper brick-and-mortar retail. That's how high this cost can be. Some people may think it's an edge case, but the reality is that acquisition costs keep getting higher in e-commerce. And e-commerce is no longer something we add to a regular business; it's driving most retail businesses now.

Marton: Yeah, I was super surprised to hear that as well, that it's such a radical increase and change. But that's the case. We hear from many merchants that acquiring new customers is super expensive. One statistic I learned is that in the last two years, customer acquisition cost in e-commerce increased by between 40% and 50%. That's quite a huge increase, and I think it's partly why there's a lot more focus on retaining customers now.

Maciek: Exactly. It's not like 20 years ago, when you could start an e-commerce business and target only new customers. Aware brands know they need to take care of existing customers and that it's cheaper to sell to them than to acquire new ones. But I believe there are still a lot of things you can do to get the most out of retention and loyalty.

What does building customer loyalty look like today?

Maciek: Marton, when we think about loyalty and retention, I believe most listeners picture collecting points and exchanging them for goods, or using points at checkout. But I think this picture isn't up to date, and loyalty systems have evolved over time.

Marton: Yeah, definitely. There's nothing wrong with traditional points programs, and for some brands they work really well. But what we always try to do is look at this whole area from the end customer's point of view. The first step that is super important for customers is being able to connect with the brand and buy a good product. That's the basic. After that, they want a seamless and flawless purchase experience. Just providing a simple points program and trying to make them come back because of it is super hard in today's world, as customers have many choices. You really have to be smart about how you think about loyalty.

Even if you start with a simple points program, brands really have to experiment with what matters to their customers. At which steps are customers interested in signing up for a loyalty or membership program? Brands need to understand what value to provide: discounts, free products or early drops of specific products? So over the last few years it has definitely got more complex, as brands need to make real connections with their customers to make them want to stay.

Memberships: the newest loyalty model

Maciek: Are there any innovations in this area recently? I believe memberships might be something new that we haven't seen before.

Marton: Yeah, I think it comes from the same fact that customers really want to connect with brands. Once they connect with a brand, they don't care about a points program as much as about the brand itself. Paying for a membership plan means being part of a smaller community connected to the brand. In today's landscape, I think the whole area of loyalty and retention really leans towards memberships, which basically means selling customers yearly or monthly membership plans that give them benefits. It could be discounts, but it could also be customised perks, early access to products or access to products only members can buy. So this is an innovation that is starting to make its way nowadays.

Maciek: I feel it makes a lot of sense. We recently had a conversation about branding and being a brand advocate, and I believe being a member of a brand's club is something people might aspire to, a statement that confirms their identity. It's a very interesting angle. So we have memberships, we have points programs, and we have tiers as well, right?

Marton: Yeah.

Points, VIP tiers or memberships: which should you choose?

Maciek: So how do I know which one to choose? You said it's worth experimenting.

Marton: I think the right setup can be different for each brand. Obviously there are industry differences, and it can also depend on the size of the brand and how well known it is. But I think all brands should experiment with what kind of loyalty program to use: a points program, VIP tiers, memberships, or, many times, a combination of these tools. For a brand that has recently started out, I think introducing a simple points program that is easy to understand is the easiest way to go. Let's say you spend $1 and get one point, or something like that. Then see how your customers really use it, whether they redeem their points, whether they come back at all, and change the program based on these insights. You really need to experiment.

How do you know if a loyalty program is working?

Maciek: That brings me to another question, because the obvious one is: how do I know if a loyalty program is working for me? What metrics and key factors should I consider when evaluating its effectiveness?

Marton: If it's really effective, you're going to see your sales numbers grow, so you'll have higher revenue. But usually loyalty tools, or any kind of retention tools, have an analytics page where you can check how much revenue they generated. Based on that, you can check what percentage that is of your total revenue, what percentage comes from returning customers, and whether those returning customers are redeeming their points or signed up for the loyalty or membership program at all. With memberships, you can check how many of your customers are members and how many of them pay for a membership. That's obviously super important to check.

So: the generated revenue and the return on investment, which these programs usually show as well. If it's a points program, then the point redemption rate. A 10% point redemption rate after two or three weeks is actually not bad. It's a good benchmark.

There's also a bit more manual analysis: using screen recordings to check what customers with points actually do. Are they using their points, checking their point balance on the account page, reading about the points program or checking what rewards they could earn? I think this is super important, as is talking with the customers who come back and redeem their points to see what their real motivation is, and then changing the program based on that.

What return can you expect from a loyalty program?

Maciek: I believe talking to your customers is always the most valuable source of information and insights, so I agree 100%. One more question along these lines: can you share some stats on the average return on investment from implementing a loyalty program? And what is a healthy share of customers enrolled in the program?

Marton: It's hard to tell at the moment, because with Shopify now using new customer accounts, almost everyone who purchases on the site signs up as a customer, and many of them get loyalty points just for signing up. So it's a bit hard to measure. I'd rather talk about what a good result is for getting customers to come back with a loyalty program.

2026 update: Shopify deprecated legacy customer accounts on 26 February 2026. They are no longer available to new stores or to existing stores not already using them, Shopify no longer gives them feature updates or technical support, and a final sunset date is to be announced later in 2026 (changelog.shopify.com). The measurement problem Marton describes therefore applies to more stores now: counting every account as a loyalty member says little, so it's more useful to track members who earn or redeem points.

Marton: Currently, the average share of repeat or returning customers across e-commerce is between 10% and 30%, depending on the industry. If you get your loyalty program right, I think this can even be doubled, to a 50% to 60% repeat purchase rate. That's a great goal to have. But even increasing it by 20% with a loyalty program makes a big difference. For example, a brand with a 40% returning customer rate can make 50% more revenue than a brand with only a 10% returning customer rate, without any new customer acquisition costs. So in my opinion it's really worth putting effort into setting up the right retention tools.

How to set up a loyalty program the right way

Maciek: I'm glad you used that word. What does setting up a loyalty program right mean? What's the framework, the playbook, for someone who wants to do it correctly? I don't mean the technical part of implementation, but the steps.

Marton: When a brand hasn't had a loyalty program before, it has no data on what works and what doesn't. I think trying a simple points program with VIP tiers is a great way to get started. First, you'll have to add rules for what you give points for to your signed-up members. Here I usually recommend that brands starting out with a loyalty program give points for actions that don't require a purchase: signing up to the newsletter, following the brand on Instagram or any other social media, or adding your birthday to your account. Seeing my point balance go up even before I make a purchase can be super motivating. When customers get to their first purchase, they already have points, and if you've set up redemption, they can use them for a discount on that very first purchase. That's super motivating for them and makes them more likely to come back.

Memberships belong to a more mature stage of a brand's life. But even with memberships, what we usually do is that, say, Shopify Plus brands can upsell a membership right at checkout. If the membership means a 10% discount on all products, we apply that 10% to the purchase where they buy the membership as well. My point is that it's super important for customers to see the value of the loyalty program already at the first purchase.

As for a benchmark for setting up the app: obviously you'll need to experiment, but in general, the first setting we usually suggest is that after the first purchase, a customer should get an amount of points worth a 5% to 10% discount on the next purchase. I think that's a good standard.

How to optimise a loyalty program after launch

Maciek: That's really interesting. I really like what you said about asking customers for non-purchase actions. It gives you additional value: it can generate user-generated content for your marketing or give you insights. You can ask customers to answer a survey, for example, gather information and improve some area of your store. So we have this covered. What are the next steps? Let's say you know your program is set up right and you want to double down on it, increase the number of members or activate those who are idle. What tactics can you share?

Marton: First, once you set up a loyalty program, you should definitely wait a few weeks to see how it goes. For example, we had a brand that started with a loyalty program, and after two weeks the redemption rate was half a percent or 1%, and we didn't understand what the problem was. It turned out they had set up the app so that it only made sense for customers to redeem points on their fourth purchase. So it was all a settings problem. That's why it's important to have a good setup first, and I really suggest brands do it together with the company that provides the retention tool.

Once it's set up, wait a few weeks and then analyse the results. As I said, these tools usually show some analytics, and even if something isn't there, you can ask the tool provider for it. Then you can see where the problem is: the redemption rate, people not opening the emails about their point balance, or not many new members. Based on the analytics, you can see which step of the customer journey isn't working well when it comes to loyalty, and change things based on that.

For this it's also important to talk with customers: "You signed up, so why didn't you redeem your points?" So it all comes down to a lot of analytics and talking with customers. And I'm not just saying this because I work in this area, but I think sitting down for a meeting with the provider of your retention tool is super important. They see the industry standards and what worked and didn't work for brands of a similar size, in a similar industry and location, so they can build a loyalty program for you based on that and suggest changes. For example, with many of the big brands we work with, we do monthly audits where we check their metrics, and if there are problems, they aren't satisfied or we think things could be improved, we come up with a plan and change the program based on it. So even if you get it right, it's super important to keep analysing and adjusting.

When do loyalty program implementations go wrong?

Maciek: Very interesting. Can you share some stories or cases where the implementation didn't go well, and the reasons behind it?

Marton: Yeah. There's this brand I don't want to name, the one I mentioned before. They were excited to have a loyalty program and decided to set it up themselves. They wanted results in one to two weeks, and the revenue generated by the app after three weeks was only $800, which is super little for a brand of that size. They were wondering what the problem was, and we were also thinking, oh, maybe it doesn't work for this kind of brand. What we saw was that in their settings, customers could only start redeeming points once they had spent around $130, even though their average order value was between $20 and $30. So if you think about it, a customer had to come back four or five times before they could even start redeeming points. That's why their redemption rate was so low and the app wasn't generating much. It was a setup problem, and this is why it's super important to get the basics right and think them through.

Other than that, to be honest, and it's already solved and working now: once a customer migrated a million customers at once, and the app stopped working for them or started giving errors.

Maciek: It gave you some trouble, right?

Marton: Yeah. But obviously this wasn't the brand's fault. It was on our side, and we fixed it, and now it works with as many users as you can imagine. So those are the two mistakes, or two examples, that came to my mind.

Maciek: Thanks for the honesty, by the way. That's very valuable. I believe technical issues like this are very common when building a product, and it's not only a problem of new brands or new products. It happens at all stages. We've seen worse than this.

Which industries are loyalty programs best for?

Maciek: Marton, one more thing came to mind when you talked about these cases. Are there industries or types of brands that are the perfect fit for loyalty programs, and some that won't see any results, where this kind of solution makes no sense?

Marton: Of course. Since many of these solutions aren't that expensive, I believe it's usually worth implementing them for all types of brands, because in every sector you can find something that works and retains people. Even if customers only come back twice a year, if you sell them a membership, they won't switch stores. So I think it makes sense for every sector, but obviously there are sectors where it makes more sense and where most of our customers come from: usually beauty, health, cosmetics, fashion, supplements, food and beverages. Basically where you can imagine people buying at least once a month. Those are the sectors that mainly use loyalty programs. We don't see many from electronics or electrical goods, like phones.

Maciek: Probably furniture too.

Marton: Furniture.

Maciek: Or products bought once in a lifetime, maybe cars.

Marton: Sauna stores, that kind of thing. Before we built Love Loyalty, we had a product options app that helps brands sell highly customised goods, and those brands were selling things like pools, saunas and customised furniture. Then we started Love Loyalty, and you can imagine how hard it was to get those customers to use our new app, because it was the complete opposite.

Maciek: I'm not an expert, but for pools and saunas there are probably complementary products you need to refill.

Marton: Yeah, the brands in this field that use our app probably use it because of that.

Can you combine online and in-store loyalty?

Maciek: What about combining online and offline? Can you use your physical stores to build loyalty as well?

Marton: Yes. Our app supports POS. With the most innovative solutions, you can not only earn points when you buy something in a store but also redeem in-store the points you earned online. Most brands that take loyalty seriously offer their loyalty program in physical stores as well. The points program part works seamlessly. One drawback is that currently Shopify doesn't support brands selling memberships in physical stores. So if you already have a membership because you bought it online and then buy something in a physical store, you get the discount or any perk your membership includes, but you can't purchase the membership there. I hope there will be a workaround, because we see many clients who need this.

2026 update: since October 2025, merchants using the Shopify Subscriptions app can sell subscriptions in store with Shopify POS (changelog.shopify.com). Shopify's developer documentation says POS stores that don't use Shopify Payments can't sell subscriptions (shopify.dev), and in Poland Shopify Payments supports online sales only, not in-person payments (help.shopify.com). Whether a loyalty app's paid membership can be sold at the till depends on how the app builds it, so check with the provider.

Why build another loyalty app? The story of Love Loyalty

Maciek: I'd like to switch gears and talk about choosing the right loyalty app or solution. Off the top of my head I can list at least five loyalty apps our customers use, like Yotpo, LoyaltyLion, Growave and Smile, and there are dozens if not hundreds in the Shopify App Store. When we first talked and you told me about your app, I thought: you have a couple of thousand customers and 200 five-star reviews. My first thought was that you're either crazy or very brave, or both. Then I thought these results show you must be doing something right. What's the story behind your product, and how did you come up with the idea that there was still room for a loyalty app in such a crowded market?

Marton: Thank you. We're a bit crazy, for sure. As I mentioned, we had previously built another app, and we knew we wanted to build something for a bigger market. So we searched the market on purpose and checked where there was still room for improvement. It started with talking to the customers of our previous app, and we also have two Hungarian apps, so we talked with those customers as well. The problem we discussed at the beginning came up a lot: customer acquisition costs keep getting higher. We asked these brands what they did about it, and they said they were using loyalty programs. We checked with the brands close to us how loyalty programs worked out for them, and for most of them they hadn't. They were either too expensive and didn't generate as much revenue as hoped, or the customer support didn't help them, and as I said, I believe the best way to get it right is to work together with the loyalty provider.

From the end customer's point of view, it was super hard to understand how the loyalty program worked. We talked with brands' customers, and even returning customers didn't find their point balance. They didn't know how to redeem points or what their points were worth. Then we tried the solutions ourselves, and it seemed most of them were not the right fit for most brands. Most used pop-up widgets. Let's say you're a customer going through the flow of buying a product. It doesn't make sense to have to click a small bubble at the bottom of the page, open it, click five times to get to a code you can copy, and then apply it at checkout. It was just too complicated. That's why we came up with the idea of doing something in this area. We talked with a lot of brands and a lot of their customers, sketched ideas, and arrived at Love Loyalty.

The main thing we do differently is adding loyalty placements throughout the entire customer journey. Brands can choose from more than 15 placements on the storefront to experiment with what works best for them: on the product page, in the cart, at checkout, on the thank-you page, the account page and the loyalty page. So there are many touchpoints on the storefront where customers can understand the value and meaning of the whole loyalty program, and brands can test what their customers respond to. This turned out to work well. Instead of pop-up widgets and inefficient UX, we made it simple, so it makes sense to the customer how it works.

One of the most important things for brands that aren't on Shopify Plus is that we let customers redeem their points in the cart with just two clicks and see their point balance there, and that makes a lot of difference. We follow the same approach with memberships, which we launched recently: putting them in front of customers where they see the value, like the one-click membership upsell at checkout I told you about. We're trying to simplify the whole process, and brands really understand that this is what their customers need to stay.

Maciek: That's both inspiring and impressive. To be honest, I can't believe it's not the standard in this industry. Not breaking the user flow is a no-brainer, right? So how come most loyalty apps work this way?

Marton: I think maybe ten years ago, when the first loyalty apps came out, they just started like that, and basically everyone thought, yes, this is the standard for loyalty, so we should do loyalty like this. We simply follow a different approach.

What features should you look for in a loyalty app?

Maciek: One more thing comes to mind: are there other features one should look for in a loyalty app? What triggered this question is that I would like my loyalty program integrated with Klaviyo and other tools in the Shopify ecosystem.

Marton: Yeah, of course. First, if you're looking for a loyalty tool, there should be a points program, a VIP tiers program and usually a referral program. Memberships are a good choice too. Other than that, I think it's super important that it integrates well with other apps, especially email tools like Klaviyo, or Shopify Flow. Our app does this, and email is obviously super important.

What's also important, if you want your app to work smoothly, is choosing an app that keeps up with Shopify's latest technologies. For example, our app is completely embedded in Shopify, uses Shopify's UI components and its latest technologies. We use metafields to store loyalty data, which makes the app super fast, so it loads instantly on the storefront, and it makes it safe and reliable. So: get the basic features right, find an app that integrates with many other apps, not only email but also review apps, subscription apps and so on, and make sure it works well within Shopify. Many apps aren't focused on Shopify but are multi-platform solutions, and I think if you're on Shopify, it's always better to find a solution that really focuses on Shopify.

2026 update (as of 7 November 2026): Love Loyalty's Shopify App Store listing shows a 5.0 rating from 426 reviews and the Built for Shopify badge. Points and referrals are available from the free plan, POS support and the Klaviyo and Shopify Flow integrations from the Professional plan, VIP tiers and paid memberships from the Growth plan, and checkout extensions on the app's Plus plan (apps.shopify.com). Klaviyo's product page describes loyalty events from a connected loyalty app, such as points earned, tier upgrades and expiring rewards, as triggers for email and SMS messages (klaviyo.com). The flows we build on such events are covered in our episode Best Klaviyo flows for e-commerce, and how to segment customers by purchase behaviour in RFM analysis in Shopify.

Maciek: I can confirm that from my own background. As an agency, we do Shopify only, and it works well for our growth and for our customers. Having this focus clearly defined definitely accelerates growth.

Three things merchants can do right away

Maciek: Marton, as we come to the end of this conversation, could you share three action points or most valuable insights, things merchants can do right away when building a loyalty program?

Marton: Yeah. The first is to find customers who have already come back and talk with them. Ask them why they came back and try to find out what would motivate them to come back even more: discounts, specific products, free products and so on. If you follow the strategy that made them come back, more and more people will come back.

Second, test what type of loyalty program you need. Even if you already have a points program set up, trying out different solutions may help you improve your retention metrics. Experiment with which combination of points program, VIP tiers or memberships works well for you.

The third one is also about finding the right solution: find a tool whose customer support really cares and takes you seriously. If you really want to succeed with your retention metrics, I think it's a must to be as close to the tool provider as possible, because they understand this area better.

A counterintuitive tip: test far-fetched perks

Maciek: One thing I'd like to ask before we go: is there a counterintuitive piece of advice you could share? Something that doesn't come to mind so obviously.

Marton: Experiment with, or test, every far-fetched loyalty or retention idea you have. That can mean offering your members a really interesting perk. Just as an example, if you're a fashion brand, a perk could be a ten-minute chat with one of the brand's designers. It's unusual, but it might work for members. You might see a 20% or 50% increase in member numbers if you offer perks like that. So try every idea you have until you get it right.

Where to find Marton and Love Loyalty

Maciek: Marton, if somebody wants to learn more about Love Loyalty or get in touch with you to talk details, how can they reach you?

Marton: I'm easy to find on LinkedIn if you search for my name, and I always try to share information about our app or tips that might be helpful there. Or just install Love Loyalty and write to the chat support. We get back instantly and are happy to set up a call with anyone to suggest the right loyalty program for them, and we do these calls for free. We also set up the app free of charge for merchants. So LinkedIn and live chat are the best ways.

Maciek: All right, Marton, thank you very much for the conversation. I hope to talk to you again soon. It was really insightful and inspiring, and I think not only merchants but also people who want to build their own product in the Shopify ecosystem can benefit from it.

Marton: Hopefully. Thanks a lot for having me.