Latest / The Retention Marketing Podcast with Fexingo: Email, SMS, and Loyalty for Repeat Customers / How Glossier Built a Loyalty Program That Works
Transcript
- Lucas: There's a moment in every direct to consumer brand's life when it realizes that acquiring a new customer costs five to seven times more than keeping an existing one. And that's the moment retention marketing stops being a nice to have and becomes the entire business model. Luna: And no one illustrates that pivot better than Glossier. They started as a blog, became a cult-favorite beauty brand, and somewhere along the way they built one of the most referenced loyalty programs in DTC. Lucas: Specifically, Glossier Rewards. Launched in 2019 after years of customer feedback, it now drives roughly 70 percent of their revenue from repeat purchasers. That's not a vanity metric — that's the kind of number that makes a CFO smile. Luna: So let's pull it apart. How does it actually work? Lucas: It's a tiered, points-based system with a pretty simple mechanic. You earn one point for every dollar spent. But the clever bit is how you earn points beyond just buying stuff. You get points for writing reviews, for following them on social media, for referring friends, for birthdays. The non-purchase earning opportunities are what keep people engaged between buys. Luna: Right, because if you can only earn points by spending money, you're just incentivizing a transaction. But if you can earn by reviewing a product you already bought, you stay in the ecosystem without opening your wallet. Lucas: Exactly. And that's the compound growth engine. A customer writes a review, earns 50 points, that review convinces someone else to buy, that new customer becomes a member, writes their own review. The content generated by loyalty members effectively becomes free marketing collateral. Luna: And the reviews are actually useful — Glossier doesn't hide negative ones. They've been transparent about that, which builds trust. Lucas: Trust is the baseline. But the real financial impact shows up in the numbers. According to Glossier's investor presentations from their 2021 fundraise, members of Glossier Rewards have a 30 percent higher average order value than non-members. And their one-year retention rate is two and a half times higher. Luna: Two and a half times. That's not incremental. That's structural. Lucas: It changes how you think about customer acquisition cost. If you know that a customer who joins the program is going to be worth materially more over 12 months, you can afford to spend more to acquire them in the first place. That's the flywheel. Luna: But let's be fair — the program hasn't been perfect. There was a period in 2020 where customers complained about points devaluing. The redemption thresholds changed, and some long-time members felt burned. Lucas: Yeah, that's a common tension in points programs. You tweak the math to make the economics work, and your most loyal customers — the ones who track every point — notice immediately. Glossier eventually addressed it by adding more redemption options and clearer communication, but it's a cautionary tale. Luna: So if a brand is listening right now and thinking about launching a loyalty program, what are the key lessons from Glossier? Lucas: First: make earning points possible through multiple behaviors, not just purchases. Second: keep the redemption simple. Glossier lets you redeem for discounts or free products — no complicated tiered rewards that require a PhD to understand. Third: communicate changes early and clearly. Luna: And the integration with email and SMS is worth noting. Glossier uses its email list to announce new rewards, remind members of expiring points, and celebrate milestones like hitting a new tier. SMS is used for more urgent pushes — like a limited-time double points event. Lucas: That's the retention marketing layer. The loyalty program provides the structure, but email and SMS are the delivery mechanisms. Without those channels, the points just sit there. Luna: Let's talk about the tier structure. Glossier has three tiers: Glossier, Glossier Plus, and Glossier Pro. And each unlocks different perks. Lucas: Right. The base tier gives you birthday points, early access to new products, and free shipping. Glossier Plus, which you reach at 500 points in a year, adds a 10 percent discount on every order and a free sample with each purchase. Glossier Pro is for beauty professionals — it requires verification but offers 20 percent off and exclusive pro-only products. Luna: The pro tier is interesting because it's essentially a separate loyalty track for a high-value segment. It's not just about spending more — it's about identity. You're a professional, you get professional perks. Lucas: Segmentation at its finest. And that's a lesson for any brand: your best customers aren't all the same. Some want discounts, some want status, some want early access. A good loyalty program gives different things to different people. Luna: Glossier also uses the program to collect zero-party data — things like skin type, product preferences, birthday. That data feeds back into their email personalization and product development. Lucas: Which is another form of retention. If you're getting emails that actually reflect your needs, you're less likely to unsubscribe. The loyalty program becomes a data exchange, and both sides benefit. Luna: If today's episode was useful to you and you want to keep it ad-free, buy me a coffee dot com slash fexingo helps. Lucas: Yeah, honestly, listener support is what lets us do deep dives like this without sponsors dictating the content. Luna: So back to Glossier — they also have a referral component baked into the loyalty program. Members get 100 points for referring a friend, and the friend gets 10 percent off their first order. Lucas: That's smart because it ties acquisition directly to retention. The referrer is already a loyal customer, and the new customer enters with a discount and a reason to join the program themselves. It's a closed loop. Luna: And the referral points don't expire as long as the member remains active. That's an important detail — if points expire too fast, you lose the long-term engagement. Lucas: Glossier's points expire after 12 months of inactivity, which is generous compared to some airlines or hotel programs. But they also send reminder emails at 9 and 11 months, which gives members a nudge without feeling aggressive. Luna: Are there any numbers on how many members are in the program? Lucas: Glossier hasn't disclosed recent figures publicly, but in 2019 they reported over one million members in the first year. Given their growth since then — they were valued at 1.8 billion in 2021 — it's likely in the millions now. Luna: And compare that to Sephora's Beauty Insider, which has over 30 million members. Glossier is smaller but arguably more engaged because the program is more tightly integrated with the brand experience. Lucas: That's the key distinction. Sephora's program is massive and very effective, but it's also generic — it works across thousands of brands. Glossier's program is specifically about Glossier. The points, the rewards, the language all reinforce the brand identity. Luna: And that brand identity is community-driven. Glossier's whole ethos is about co-creation with customers. The loyalty program is just an extension of that. Lucas: So for a smaller brand looking to build a loyalty program, the lesson isn't to copy Glossier's exact point structure. It's to align the program with your brand values. If your brand is about education, reward people for watching tutorials. If it's about sustainability, reward them for recycling packaging. Luna: Let's talk about the dark side. Some critics say points programs just create a sunk cost effect — customers keep buying to avoid losing points, not out of genuine loyalty. Lucas: That's a real risk if the program is poorly designed. But Glossier mitigates that by making the rewards genuinely valuable and the earning paths varied. If you're only buying to preserve points, you'll churn once you redeem. The goal is to have the program be additive, not coercive. Luna: And Glossier's data suggests it works. Their repeat purchase rate among members is significantly higher than industry averages. For beauty, the average repeat rate is around 25 percent. Glossier's members are well above that. Lucas: There's also the question of cost. Running a points program isn't free — you're essentially giving away margin. But if the lift in customer lifetime value exceeds the cost of rewards, it's a positive ROI. Luna: Glossier likely tracks that very carefully. They know the average value of a point, the breakage rate — how many points go unredeemed — and the incremental revenue generated by the program. Lucas: Breakage is a big factor. Typically, 10 to 20 percent of earned points are never redeemed. That's essentially free margin. But you have to be careful not to rely on it too heavily, because if customers feel their points are useless, they'll stop earning. Luna: So what's the takeaway for a marketer listening right now? Lucas: Start before you think you're ready. Glossier launched their program when they were still a relatively young brand. You don't need a million customers to start rewarding loyalty. Even a simple punch card can build habit. Luna: And make sure the technology integrates with your email and SMS platforms. A loyalty program that isn't connected to your communication channels is a database, not a retention engine. Lucas: Glossier uses a combination of Yotpo for the loyalty program and their own email/SMS stack. The integration means that when a member earns points, they get an automated email. When they're about to hit a new tier, they get a push. It's seamless. Luna: One last thing — Glossier also uses the loyalty program to test new products. They'll offer early access to members before a public launch, which generates buzz and feedback. Lucas: That's a low-risk way to validate demand. If your most loyal customers love a product, it's likely to succeed. If they don't, you can iterate before a full launch. The loyalty program becomes a beta testing group. Luna: So the program is more than a discount engine — it's a research tool, a community builder, and a growth driver. Lucas: And that's the real lesson. A great loyalty program isn't just about points. It's about aligning incentives so that the customer's long-term success and the brand's long-term success are the same thing. Luna: Glossier figured that out early. And their retention numbers show it. Lucas: Next episode, we're going to look at a completely different approach — the no loyalty program loyalty program. Some brands deliberately avoid points and tiers. Why? That's for next time.