If there’s one theme we keep hearing over and over on our conference circuit this year, it’s that the obsession with customer acquisition is costing marketers more than they realize.
Programmatic inventory is more expensive than ever. Average customer acquisition costs have risen by 60% over the past five years. Just last year, Meta CPMs went up 28% and CPCs increased by roughly the same amount.
As one Redditor in r/digital_marketing puts it:
“When scaling your business, you're bound to hit a point where your ROAS tanks. Most people would start looking to squeeze out better ad performance by changing campaign structure, experimenting with cost caps, or some fancy meta ads tactic. While it can be done, it’s ineffective in the long run. At the end of the day, the costs are still going to rise, and there's only so much you can do to keep the cost down."
At the same time, consumers are getting savvier about cookies, making it harder to prove ROI on digital campaigns. It’s no wonder brands lose $29 for every new customer acquired.
Instead of over-indexing on new user growth, why not try a more profitable lever?
Below, we share 6 reasons why retention should be your next growth play, and shed light on some strategies to boost your LTV.
6 Reasons why LTV matters more than CAC
1. The math maths
According to Yotpo, returning shoppers make up roughly one-third of all online shopping revenue. More importantly, they spend 3x more than one-time shoppers on average. If you can convince those shoppers to buy with you, you’ll be sitting pretty.
And you don’t have to bust your budget doing it.
G2 reports that a 5% increase in customer retention is cheaper than acquisition. Chris Di Censo, Merchant Sales Director at Kard, is finding that some brands are waking up to this reality, prioritizing retention instead:
“Brands are beginning to analyze purchases over 12 months instead of just initial conversions. They’re realizing that increasing frequency, average order value, and engagement have a bigger impact on margin than shaving a few dollars off CAC.”
2. Digital shoppers expect it
The digital native buyer doesn’t want to be sold to. They skip ads, block pop-ups, and ignore CTAs — they expect value in return for their attention.
Research from PYMTS shows that 59% of Gen Z and 64% of Millennials say they are interested in personalized rewards programs. So interested, that nearly half of millennials and 43% of Gen Z say they’d be highly likely to apply for a new credit card if it offered their preferred type of reward.
That same expectation applies to how they engage with brands.
Always-on rewards like 5% cash back for returning customers (or higher cash back offers for first-timers) can drive repeat purchases and build long-term loyalty without feeling like a traditional promotion.
When rewards are baked into the experience, not tacked on, you create the kind of relationship these shoppers actually want, and hook them in for life.
3. High LTV customers stay sticky in economic uncertainty
In a rocky economy, high LTV customers are your most valuable asset. They’ve already had great experiences with your brand, so when they need to buy something, they’re more likely to keep spending with you.
At eTail West, Ministry of Supply shared how they use targeted discounts to get new shoppers to try their products. Once customers experience the quality and fit for themselves, they come back again and again.
To be clear, retention isn’t just for downturns. It’s a way to create stability year-round, especially in Q4 when competition heats up.
For example, one lifestyle brand used Kard’s rewards-based ads to target folks on their customer list who hadn’t purchased in a while. This served as a gentle reminder about how great their previous purchase was.
And it worked. The brand gained 13% market share during November and December — the most expensive time of the year for traditional performance marketing campaigns.
4. Loyalty is critical for subscription businesses
If you run a subscription business, you already know customer retention is everything. Customers who don’t see value will churn fast.
Rewards-based strategies can reinforce retention behavior, especially when offers are tied to billing cycles or monthly usage patterns.
Using a platform like Kard, you can send targeted rewards to people who upgrade their plan, or even as an incentive to pull them away from a competitor.
Dana Field, Kard’s Ad Operations Project Manager, points out:
“If consumers have been thinking about buying from a new brand, a reward can give them the push they need. Rewards can be a play for the entire consumer lifecycle, not only helping you acquire new customers, but convincing old customers to come back and upselling existing customers with higher order value offers.”
One streaming service used Kard to increase subscriptions by 410%. Even better, 19% of campaign purchasers previously subscribed to streaming competitors.
5. Some retention strategies can double as acquisition strategies
We alluded to this in #4, but the beauty of retention-based strategies (like rewards-based advertising) The beauty of retention-based strategies is that they aren’t just for driving loyalty. They can also expose your brand to new audiences.
As we mentioned, younger, ad-immune audiences like Gen Z and Millennials are notoriously hard to reach. But 5% or 10% cash back offers that nudge existing customers to make another purchase don’t feel like ads. They feel like coupons.
When customers get a “deal” on something, they tell their friends. And then their friends come to check out (and buy) your amazing products.
Plus, if you use a rewards platform like Kard, your cash back offers (even if they’re meant for returning customers) show up in the banking platforms that other parts of your target audience see, piquing their interest and pushing them to explore your brand, too.
6. It improves your omnichannel plan
Long-term customer engagement requires integration with your broader media mix. The good news about retention campaigns is that the data you collect can inform other aspects of your go-to-market — particularly if the tools you’re working with track first-party data.
Kard reward campaigns, for instance, can tell you:
- What other stores your ICP shops at
- When your customers spend (down to the day of the week)
- What categories your customers prefer
This data gives you a springboard for A/B testing creative, copy, and placement to optimize overall marketing performance.
By the way: We’ve even packaged up our data from over $3B transactions last year into a digestible consumer report, giving you 4 proven strategies to win high-intent digital-first buyers. Get your copy here.
What it takes for retention to really work
Chasing new customers might look good on a dashboard. But real growth comes from the customers who stick around.
Rewards-based marketing generates the kind of loyalty you’re looking for. And at Kard, we make sure it’s measurable.
We’ve helped leading brands like Fazoli’s, TurboTax, Dell, and TicketSmarter incrementally boost AOV, increase spend, and take market share away from their competitors — with the lift studies to prove it.
Ready to build customer loyalty that lasts?
Book time with our team to see what Kard’s offers can do for your LTV.
