The Ultimate Guide to Increasing Conversion, Retention, and LTV for Skincare Brands on Shopify

You’re a skincare brand decision maker on Shopify. You're constantly looking for ways to stand out in a crowded market and build lasting relationships with your customers. But with limited resources and a lean team, where do you start?

The answer is: Start with a comprehensive, custom loyalty strategy that goes beyond just points and rewards.

In this guide, we'll walk you through the process of conducting a thorough loyalty audit and creating a retention roadmap that will help you increase conversion rates, boost customer retention, and maximize lifetime value (LTV). We'll draw insights from real-world examples and provide actionable strategies you can implement right away.

How a Loyalty Audit Unlocks Growth for Skincare Brands

In the competitive world of skincare e-commerce, a well-executed loyalty program can be the difference between one-time buyers and brand advocates. But before you can create an effective program, you need to understand your current state of affairs.

A loyalty audit is a deep dive into your brand's entire customer experience, spanning all sales channels and marketing funnels. By identifying gaps and comparing them with internal metrics, you gain invaluable insights into the current state of your retention strategy.

Here's what a comprehensive loyalty audit can uncover for your skincare brand:

1. Immediate Actionable Insights: Discover quick wins that can immediately improve your customer experience and boost sales.
2. Smarter Program Design: Whether you're refining an existing program or creating a new one, audit insights ensure your loyalty strategy is both profitable and differentiated.
3. Clear, Measurable KPIs: Establish specific, relevant KPIs to track your loyalty program's success and overall business growth.
4. Personalization Opportunities: Identify ways to tailor your offerings and communications to individual customer needs and preferences.
5. Channel Optimization: Understand which channels are most effective for acquiring and retaining customers, allowing you to allocate resources more efficiently.
6. Revenue Forecasting: Building a detailed, cohorted growth model is the best way to predict how your brand can grow. When you understand your current retention trends (AOV, frequency, and profitability metrics) you can then understand the potential impact of optimizing your customer journey.

In other words: You’ve got to deeply understand your present to change your brand’s future

The Anatomy of a Comprehensive Loyalty Audit for Skincare Brands

Let's break down the key components of a thorough loyalty audit, using real examples from skincare brands we've worked with.

1. Brand Story & Differentiation

Start by immersing yourself in your brand's unique story and positioning. For example, we worked with a data-driven, medically oriented skincare brand, founded by a board certified medical professional.

The brand’s pillars and differentiators include:

• Evidence-based skincare solutions
• A focus on confidence and self-care
• Direct access to the founder's expertise

A founder with a data-driven, medical approach and background was critical to the company’s story and to their loyal customers. Pillars like these set them apart from their competitors and are foundational to every choice they make for their brand.

Understanding these differentiators is critical before launching any major initiative. In terms of loyalty, it specifically helps shape a program that resonates with your target audience and reinforces your brand values. Your loyalty program shouldn’t feel like some inauthentic appendage; it should feel like a natural, logical extension of the story you are already telling your customers.

2. E-commerce Customer Experience

Put yourself in your customers' shoes and audit the entire shopping experience.

We typically begin our audits on mobile devices and follow the various paths to purchase; through social media shops all the way to post-purchase audits of email and SMS marketing follow ups.

Here are some example insights we’ve uncovered for clients in the past:

• Mobile Optimization: We found that the "Add to Cart" button was covered by a customer service pop-up on mobile devices, potentially hindering conversions.
• Discount Code Application: The process of applying discount codes was cumbersome, requiring manual copy-pasting. Implementing auto-apply links could streamline this process.
• Value Proposition Clarity: The landing page focused on product bundles rather than key benefits like "Confidence" and "Aging Gracefully." Adjusting imagery and copy to highlight these core values could improve conversions.

Though our focus is loyalty, it’s impossible to separate a loyalty program from the purchasing process (or at least it should be). By uncovering friction and bottlenecks, we provide our customers with quick wins and set the loyalty program up for success.

3. Sales Trends Analysis

Before adding a loyalty program to drive incremental revenue, dive deep into your analytics. We make it a point to fully audit our customer’s sales data to establish benchmarks and uncover crucial insights about customer acquisition sources and trends in key metrics.

For one skincare client, we found:

• E-commerce accounted for 91.2% of sales but Instagram sales seemed relatively sluggish, indicating room for growth (or potential bottleneck worth investigating).
• New customer growth had slowed significantly since the COVID-19 pandemic.
• Customer Acquisition Cost (CAC) was approximately $90.
• First-order Average Order Value (AOV) was $168, providing a 1.87x return on CAC.
• 12-month Customer Lifetime Value (LTV) was around $240, resulting in an LTV/CAC ratio of 2.66.

These insights essentially provide a starting point, a baseline against which to measure the incremental lift provided by a loyalty program. This piece of the audit also helps identify areas for improvement and inform your loyalty program design.

4. Sales Forecast Modeling

You’ll want to create a detailed financial model to pinpoint the most impactful KPIs for your loyalty program design and ongoing measurement. This step is crucial for ensuring your program drives profitable growth.

Flaunt provides a customizable Google Sheets template that allows you to input your data and forecast your business growth. Key metrics to focus on include:

• Customer acquisition rates
• Retention rates by cohort
• Average order value trends
• Repeat purchase frequency
• Customer lifetime value projections

By modeling these metrics, you can set realistic goals for your loyalty program and measure its impact on your bottom line. You can also hone in on the KPIs that actually matter for your brand.

5. Product Deep Dive

Understanding your product lineup is crucial for designing a profitable loyalty program. Analyze:

• Gross margins for each product
• Sales dynamics (bestsellers, seasonal trends)
• Cross-sell and upsell opportunities
• Impact of discounts on profitability

For example, with another client in the beauty and skincare space, we identified opportunities to create product-specific challenges within the loyalty program to educate customers and drive upsells to complementary products.

By understanding your products’ individual metrics, you can better incentivize purchases and more easily drive customers toward your most profitable items.

6. Email & SMS Marketing Evaluation

Assess your current marketing strategies by analyzing:

• Subscriber list growth and engagement
• Automation flows effectiveness
• Campaign performance
• Segmentation strategies

During a recent audit for a large DTC wellness client, we noticed opportunities to improve post-purchase communications and referral program integration with their email and SMS marketing efforts.

Making sure that your communications are in lock step with your loyalty program is one of the single most important factors in driving incremental sales via your loyalty program.

Turning Insights into Action: Designing Your Skincare Loyalty Program

Now that you have a comprehensive understanding of your brand's current state, it's time to design a loyalty program that drives results. Here's how to structure your program based on our findings:

1. Set Clear Objectives

Define what you want to achieve with your loyalty program. For example, our data driven, medically oriented skincare brand’s objectives could include:

• Increase customer retention and LTV
• Drive engagement with the brand's authoritative, educational content
• Encourage customers to try multiple products in the line
• Boost user-generated content and referrals

2. Consider a Tiered Structure

Design a tiered program that rewards your best customers and encourages others to increase their engagement. A structure might look something like this:

• Primer Tier: New customers
• Foundation Tier: Repeat customers
• Bronzer Tier: Regular buyers and subscribers
• Highlighter Tier: VIP customers and brand advocates

Each tier should offer increasing benefits and exclusive perks, encouraging users to continue growing their affinity for (and purchases from) your brand.

3. Develop Engaging Challenges

Gone are the days of points-for-dollars as the only loyalty model. Discounts and points for purchases are just one potential element in a loyalty program.

Instead, we create a diverse, gamified system of challenges that align with your brand values and drive desired behaviors. For one skincare client we suggested:

• "The Self-Care Challenge": Encourage daily skincare routines
• "Subscription Consistency Challenge": Reward long-term subscribers
• "Product Education Challenge": Incentivize customers to learn about different products in the line

Each of these actions was driving users to engage in a behavior that would boost one of the brand’s KPI’s. Thanks to a thorough audit, we were able to understand the brand’s goals beyond just purchases and find ways for the loyalty program to lift metrics across the board.

Doing the legwork really pays off.

4. Offer Unique Benefits

Leverage your brand's unique assets to create compelling benefits. These could include:

• Behind-the-scenes formulation webinars
• Early access to new product launches
• Customized skincare consultations

Understanding your ICP and your brand’s unique positioning allows you to dive deeper into what compelling offerings you can make customers.

5. Implement Smart Offers

Use data from your audit to create personalized offers that drive incremental sales:

• Leverage quiz results to recommend products
• Create bundle offers based on successful product pairings
• Offer targeted discounts to reactivate churned customers

6. Integrate with Your Tech Stack

Ensure your loyalty program works seamlessly with your existing tools:

• Integrate with Shopify for smooth point accrual and redemption
• Connect with Klaviyo for personalized email and SMS campaigns
• Sync with your customer service platform for a unified experience
• Connect with any subscription product you and your customers currently rely on

Designing Your Program: The Blueprints For Brand Growth

Your brand is a house.

During your audit you took a tour. You flipped every switch, tested every faucet, found what’s working, what’s not working and what you’d like to improve.

Now it’s time to design your loyalty program, aka the blueprints that will take your home from ‘nice place’ to ‘dream home’.

But without that initial audit, you’d have no clue where to begin (or what to pursue).

So, once you have a clear grasp on your current state of affairs and KPIs, it’s time to get designing. The different components we look at in the design phase are:

Customer Lifecycle Model

Who are your customers and how do they find your brand?  We look at the channels that are already driving revenue and where there’s room for improvement. By creating and analyzing  a high level funnel, we can identify pain points and bottlenecks as well as places to direct our loyalty efforts.

Specific KPIs

We drill down into nitty gritty of your KPIs and how those tie to specific pieces of the loyalty program. If your goals are to increase LTV, what do our rewards need to look like in order to achieve that net growth. For some clients, it’s reducing churn and for still others we’re looking to cross-pollinate between different brands and boost social media followers on newer properties.

What we’re saying is, this is the math part. Breakout your spreadsheets and pour your black coffees.

Benefits Design

By deeply understanding your ICP and KPIs, we can craft a series of benefits and corresponding tiers that will activate and excite your customers. From UI to copywriting, we draft a complete system that will drive results while feeling like a natural extension of your brand.

Challenge Design

We move through a creative process of developing not just rewards but challenges that will attract and engage your customers. Quizzes, social media prompts, calls for reviews, and newsletter signups are just the tip of the iceberg. With your ICP and KPIs in mind (do you sense a trend?) we can create challenges that will resonate and bring real value to your customers beyond points and discounts.

These are the building blocks of  a successful loyalty program. Once we have them in place and our house is built, we move in!

And that’s when the real work begins.

Measuring Success and Optimizing Your Program

That’s right, there’s no such thing as set-it-and-forget it in the loyalty program game. It’s part of what makes Flaunt’s managed service approach so powerful. To continue getting the most you can out of your loyalty program, you need to continually measure its performance and make data-driven optimizations.

Focus on these key metrics:

1. Program Enrollment Rate: Track the percentage of customers who join your loyalty program.
2. Point Redemption Rate: Monitor how often customers are using their points.
3. Repeat Purchase Rate: Measure the increase in repeat purchases among program members.
4. Average Order Value: Compare AOV for program members vs. non-members.
5. Customer Lifetime Value and Profits: Track the growth in LTV and LTP for loyalty program participants and your business.
6. Referral Rate: Measure the number of new customers acquired through member referrals.
7. Incremental Gross Profits: Measuring the total immediate immediate impact of your loyalty program will be necessary to track the overall net gain

Use the financial forecasting model we provided to regularly update your projections and adjust your program as needed.

Case Study: Flaunt's Partnership with Barefaced

To illustrate the potential of a well-designed loyalty program, let's look at a real-world success story: Flaunt's partnership with Barefaced, a market-leading skincare brand.

The "No Sun Club": A New Era of Loyalty Programs

Barefaced, in collaboration with Flaunt, launched the "No Sun Club," a custom loyalty program that goes beyond traditional points and rewards. This program exemplifies many of the best practices we've discussed in this guide.

Key features of the "No Sun Club" include:

1. Focus on Active Participation: The program encourages members to engage actively with the brand, not just make purchases.
2. Brand Advocacy through User-Generated Content: By elevating user-generated content, Barefaced turns customers into brand ambassadors.
3. Community Building: The program creates a vibrant community where members can connect, learn, and share their skincare journeys.
4. Tiered Structure: Members progress through four tiers, unlocking exclusive rewards and experiences as they advance.
5. Gamification: Challenges allow members to earn points and exclusive rewards, keeping them engaged with the brand.
6. Badges + Collectibles: Reward your superfans and express your brand values. Simple digital swag helps build affinity (and is pretty fun for everyone to design and collect).
7. Seamless Integration: Unlike many loyalty programs that require separate platforms, the "No Sun Club" is fully integrated into Barefaced's existing Shopify storefront.

Results and Impact

Using Flaunt’s audit process, program design and managed service approach, Barefaced was able to drive +17% incremental sales.

Jordan Harper, Founder and CEO of Barefaced, noted that the program has allowed them to "take our community brand experience to the next level," furthering their vision of being more than just a skincare brand.

The program has enabled Barefaced to:

• Cultivate a stronger sense of community
• Personalize the virtual brand experience
• Create deeper, emotional relationships with customers
• Drive more profitable revenue

The rigor and thorough approach of our process has been a massive success for Barefaced and many other clients–the work up top pays dividends in the form of incremental sales and invaluable insights about the overall health and CX of your brand.

Key Takeaways for Skincare Brands

There’s a whole lot of information here and even more waiting to be discovered in your audit process. But if we were to deliver you a neat, loyalty program tl;dr (and who doesn’t love a summary), it would be to:

1. Get Your Audit Going: Know thyself, thy numbers, benchmarks and goals. Doing the work before diving into a program will make the process far simpler and profitable in the long run. By establishing your differentiators and KPIs you can design a program unique to you and truly valuable to your customers.
2. Think Beyond Points: Your loyalty program can be a platform for community building and brand storytelling, a way to transform happy customers into real world ambassadors. Think outside the (points) box.
3. Focus on Engagement: Design your program to encourage active participation, not just purchases. Reviews, social media comments, follows, and referrals are all great ways to engage customers and build brand affinity.
4. Seamless Integration: Ensure your loyalty program integrates smoothly with your existing e-commerce platform for a frictionless customer experience.
5. Personalization: Use the data gathered through your program to offer personalized experiences and recommendations.

The “No Sun Club” as it exists today is just the first version of an ever-evolving loyalty program. At the time of writing, Barefaced + Flaunt are developing a program that puts each individual customer on a personal rewards journey designed to help them reach their skincare goals.

This kind of next level loyalty system is only made possible by diligent data collection and analysis. Barefaced is poised to take skincare customer loyalty to new heights.

Conclusion: Your Roadmap to Skincare E-commerce Success

Implementing a well-designed loyalty program based on a comprehensive audit can transform your skincare brand's performance on Shopify. Focus on personalization, engagement, and data-driven decision-making and you can create a loyalty strategy that not only retains customers but turns them into passionate brand advocates.

But all of this takes work as we’ve laid out in the past. In order to increase sales and LTV, you need to continuously gather feedback, analyze performance data, and iterate on your program. Of course you can choose a one-size-fit all platform that kind of, sort of addresses your needs and then leaves you holding the optimization bag.

Or, you can opt for best-in-class managed service.

For our final recommendation, well, you can guess what we suggest.

We’re ready and waiting with office hours available here to review our audit strategy and get a loyalty program up and running for you.

In the meantime, reach out to us for access to our free Financial Forecasting Model to get started on your journey establishing the right KPIs and increasing conversion, retention, and LTV.

We hope your forecast shows smooth sailing and nothing but successful loyalty programs ahead.