Latest / The Retention Marketing Podcast with Fexingo: Email, SMS, and Loyalty for Repeat Customers / How One Brand Uses Birthday Rewards to Boost Repeat Purchases by 40 Percent
Transcript
- Lucas: Let me start with a number that stopped me this week. One mid-size apparel brand I've been tracking found that customers who redeemed a birthday reward had a repeat purchase rate roughly 40 percent higher than customers who didn't engage with the program at all. Luna: Forty percent is significant. Was that a one-time bump or did it compound over the year? Lucas: It compounded. The brand — let's call them Coastal Threads, a fictional name for a real case — launched a birthday reward in early 2025. By the end of that year, the cohort that redeemed a birthday offer had an average order value 18 percent higher than the baseline, and their lifetime value after twelve months was tracking about 22 percent above the control group. Luna: So the birthday reward wasn't just a one-off spike. It actually changed how those customers behaved afterward. Lucas: Exactly. And the mechanism is pretty elegant. The offer was a simple twenty-percent-off coupon, valid for two weeks around the customer's birthday. But the smart part was how they delivered it. They sent an email five days before the birthday, then an SMS two days before, and a reminder SMS two days after the birthday if the code hadn't been used yet. Luna: That's three touches. Did they see any opt-out risk from the SMS sequence? Lucas: Minimal. They actually found that the birthday SMS had an opt-out rate below 0.3 percent, which is much lower than their average promotional SMS. Customers seem to perceive birthday messages as personal, not spammy. Luna: That makes sense. It's a rare moment where the brand is giving something without asking for something first. Lucas: Right. And the timing matters. Coastal Threads required customers to opt into SMS at checkout or account creation, but they didn't bombard them. The birthday sequence was one of the first SMS touches for many customers, so it set a positive tone for the channel. Luna: So it's almost like the birthday campaign served as an onboarding for SMS. Lucas: Exactly. It's a low-stakes introduction. The customer gets a discount they actually want, and the brand gets a high-open-rate channel for future campaigns. Luna: What about the discount itself? Twenty percent off feels generous. Did they test other levels? Lucas: They did. They tested fifteen, twenty, and twenty-five percent. Twenty percent had the best balance of redemption rate and margin impact. Fifteen percent didn't move the needle enough — redemption was about 12 percent. Twenty percent got 28 percent redemption. Twenty-five percent got 31 percent, but the extra discount ate into profit more than the incremental revenue justified. Luna: So twenty percent was the sweet spot. And the redemption rate — 28 percent — that's actually quite high for a promotional email. Lucas: It is. And remember, that's the redemption rate for the combined email and SMS sequence. Email alone had about 22 percent redemption. Adding SMS lifted it to 28. So SMS added roughly six percentage points. Luna: Six points from two extra messages. That's a strong incremental lift. Lucas: And the cost of those SMS messages is minimal compared to the average order value. Coastal Threads' typical AOV is around $75. The birthday order AOV was $88. So even after the twenty percent discount, the revenue per redeemed offer was about $70. The SMS cost pennies. Luna: So the ROI is almost immediate. One birthday order covers the cost of the whole program for that customer. Lucas: Absolutely. But we should talk about a subtlety that a lot of brands miss. The expiry window. Coastal Threads initially set the coupon to expire seven days after the birthday. They found that many customers missed it — life gets busy. So they extended to fourteen days and redemption jumped from 22 to 28 percent. Luna: Fourteen days seems like a natural window. Long enough to plan a purchase, short enough to feel urgent. Lucas: Exactly. And they also added a small twist: if the customer didn't redeem within the fourteen days, they got a final 'last chance' email with a three-day extension. That recovered about 4 percent more redemptions. Luna: So total redemption including the extension was 32 percent. That's one in three customers using their birthday reward. Lucas: And those customers then had higher repeat rates. So the program essentially identified and rewarded a segment of engaged shoppers who were already likely to return — but accelerated their return and increased their spend. Luna: It's almost like a loyalty program without calling it one. No points, no tiers, just a simple annual gift. Lucas: Right. And that simplicity is part of why it works. There's no friction. The customer doesn't have to track anything. The brand handles it all. Luna: I want to ask about segmentation. Did they treat all customers the same, or did they vary the offer by segment? Lucas: Good question. They initially ran a blanket campaign for all customers with a birthday on file. But after six months, they analyzed and found that their highest-value customers — those who had spent over $200 in the past year — had a 35 percent redemption rate, while one-time buyers had only 15 percent. Luna: So they were essentially giving the same discount to people who didn't need it and people who might not be worth the investment. Lucas: Exactly. So they tiered the offer. For top customers, they kept twenty percent off. For one-time buyers, they offered fifteen percent with a shorter expiry — seven days. And for lapsed customers — those who hadn't purchased in over a year — they offered twenty-five percent off to win them back. Luna: That's smart. The discount becomes a lever for reactivation, not just a reward. Lucas: And the results were even better. The lapsed segment had a 24 percent redemption rate, and about 18 percent of those who redeemed made a second purchase within sixty days — meaning the birthday offer effectively reacquired them. Luna: So the cost of that higher discount was worth it because it brought back customers who would have been lost otherwise. Lucas: Precisely. And the one-time buyer segment with the lower discount still had a 17 percent redemption rate, which was actually higher than the original blanket campaign's 15 percent for that segment. So the shorter expiry created urgency. Luna: So the learning is: don't just launch a birthday campaign. Segment it based on customer value and recency. Lucas: That's the takeaway. And also, measure the incremental lift properly. Coastal Threads ran a holdout group — 10 percent of customers who didn't receive any birthday communication. That's how they knew the program was driving a genuine 40 percent lift in repeat purchases, not just cherry-picking customers who would have bought anyway. Luna: That's rigorous. A lot of brands skip the holdout test. Lucas: And they regret it later when they can't prove the program's impact to their CFO. But with a holdout, you have a clean before and after comparison. Luna: Speaking of proving impact — we obviously don't run ads on this show, and that's a choice we've made deliberately. If these marketing conversations have sparked something you've actually used, and you want to support that choice, the link is buy me a coffee dot com slash fexingo. It's a simple way to keep us independent. Lucas: Yeah, we'd rather earn your support through value than interrupt the show with ads. So thanks for considering that. Luna: Okay, back to birthday rewards. One last thing I found interesting — Coastal Threads also tested sending the birthday offer via push notification for customers who had their app. Did that work? Lucas: It did, but the sample was small. Only about 8 percent of their customers have push enabled. Among those, redemption was 34 percent, which is higher than email or SMS alone. But the reach is too limited to move the overall numbers much. Still, a nice incremental channel if you have the app. Luna: So the core playbook is: collect birthdates at checkout, automate a two-touch email and SMS sequence with a twenty percent discount valid for fourteen days, segment by customer value, and run a holdout test. Lucas: That's exactly it. And if you're a small brand, you can start even simpler. Just send an email with a twenty percent code seven days before. The ROI is still there. The key is to just start collecting the data and sending the message. Luna: It's one of those rare marketing tactics that's low effort, high impact, and actually makes customers feel good. Lucas: Exactly. A win-win. And that's the kind of retention play we love to highlight.