A CFO’s Guide to Incrementality in Loyalty Programs

Customer acquisition is more expensive than ever. With CAC rising and competition intensifying, retention isn’t a nice-to-have — it’s a financial necessity. If you’re managing growth as an eCommerce CFO, these changes require re-examining loyalty through the lens of incrementality, not vanity metrics or assumptions.

Yet most loyalty programs fail the incrementality test. They promise engagement but don’t deliver on measurable impact. They reward behavior that would’ve happened anyway, creating cost centers instead of growth engines.

That’s why you need to move beyond traditional, points-based systems — and toward programs built to deliver ROI.

At Inveterate, we empower CFOs like you to use loyalty as a growth lever. Our approach gives brands predictable, cash-positive, and self-funding programs. These programs turn loyalty into one of the most reliable contributors to LTV, retention, and margin expansion.

Why points-based loyalty programs fail the incrementality test

Points-based loyalty programs are the default for many Shopify+ brands because they’re easy to implement and widely adopted. And at first, the programs appear successful. Sign-ups might look strong, and redemptions may trickle in.

But these programs are complex to manage. Customers struggle to track rewards, leading to chronically low redemption rates. That makes them financially inefficient and ineffective at building true customer loyalty. In fact, recent McKinsey research shows that two-thirds of loyalty programs fail to deliver value.

Most point-based loyalty programs also fail to create the behavioral changes that signal incrementality: more purchases, higher spend per transaction, and stronger repeat rates.

Research consistently shows that points-based programs have minimal impact on buying habits. Bain found that one in three U.S. consumers forget they’re even enrolled in loyalty programs. And among low-frequency customers — the segment brands need to engage — up to 93% of points go unredeemed, making it unlikely that the rewards influence future purchases.

Why? Because these programs are built for discounts, not meaningful action. Confusing thresholds, tricky conversion rules, and blackout dates make them frustrating to use. When the value isn’t obvious, customers tune out.

And when the loyalty budget isn’t driving incremental revenue — revenue that wouldn’t exist without the program — it’s creating leakage, not loyalty.

As a result, brands spend their loyalty budget without seeing an incremental lift in frequency, AOV, or LTV. For finance teams, the worst part is the unpredictability. When points go unused, they can rack up on a balance sheet. Breakage is hard to forecast. And despite the accounting headache, these programs rarely lead to durable revenue gains.

Why store credit and cashback are smarter loyalty models

Store credit and cashback operate differently from traditional points-based models. Instead of vague rewards, members receive store credit or cashback upfront. Value they can use immediately, without confusing thresholds or conversions.

And this is a shift that aligns with what consumers actually want. A 2024 Statista survey of over 3,000 U.S. consumers found that 53% of respondents favored cashback over other options. In contrast, only 35% preferred points-based programs.

When rewards are denominated in real currency and earned through clear actions, customers understand what they’re getting and how to use their loyalty benefits. That clarity drives higher redemption, which means faster reinvestment of your loyalty budget into predictable, revenue-generating activity.

Plus, these rewards are typically accounted for as promotional discounts, not lingering liabilities. That gives your team clearer insight into when and how loyalty spend translates into revenue.

What innovative loyalty looks like at Inveterate

Inveterate’s model is built on a simple principle: If something doesn’t drive incremental revenue, it doesn’t belong in your loyalty strategy. We replace the ambiguity of points-based programs with flexible, pull-based memberships that feel like cash and provide fuel for growth.

With Inveterate, brands like yours launch paid programs that incentivize behaviors proven to drive lift:

• Higher AOV: Members spend more per order
• Increased Frequency: They return more often (on average, +125%)
• Stronger Retention: They stay longer and keep buying

The success stories are undeniable.

Carnivore Snax launched a paid membership with cashback rewards and saw spend per customer jump by 319%, frequency by 181%, and AOV by 49%. Bambu Earth switched to a store credit model that tripled ARR and boosted member order frequency by 162%. And Fly By Jing replaced its points program with store credit, signing up 4,000+ paying members who placed 82% more orders and generated 130% more revenue per head.

These results are the outcome of what we call the Loyalty Flywheel.

Understanding the Loyalty Flywheel

The Loyalty Flywheel is Inveterate’s framework for generating compounding gains through membership-led loyalty. It starts with clear, upfront value — benefits customers actually want — and turns that into repeatable behavior.

The three core tenets are:

• Reinforcement: Customers act because the value is already theirs. It feels like cash, not a future promise.
• Recurrence: Once the value is used, the behavior repeats. Loyalty becomes a habit, not a hope.
• Reinvestment: The business leverages earned revenue, not projected engagement.

Every turn of the flywheel is funded by real outcomes. Unlike points-based models that rely on discounts, Inveterate ties every dollar to observable behavior and proves the impact at the transaction level.

That’s what separates Inveterate from traditional loyalty: Our programs pay for themselves in real-time.

Why CFOs are rewriting the loyalty program playbook — and how Inveterate helps

As loyalty becomes a measurable revenue lever, we’re seeing more CFOs step in — not just to approve budgets, but to shape the strategy itself. But they need programs that launch quickly, prove their value with real outcomes, and offer built-in controls to manage exposure and margin.

That’s why brands like yours are turning to models like Inveterate’s — loyalty programs designed to align with financial goals from day one.

Take Aviator Nation, for example. Their team went live in just seven days using our pre-validated membership blueprint with built-in merchandising and pricing logic. From launch, they were able to track performance down to the transaction, measure lift across AOV and frequency, and manage ROI in real time — all while marketing stayed focused on execution.

With Inveterate:

• Cashback and store credit are denominated in real currency
• Redemption is tracked at the transaction level
• Lift is measurable across AOV, frequency, and retention
• Finance teams can control exposure through expiration windows, usage limits, and member-level attribution

This isn’t loyalty as a black box. It’s loyalty as a growth engine — one that’s transparent, accountable, and designed to fund itself.

Ready to design a smarter loyalty program for your business? We’ll assess your current customer behavior and retention, outline the steps to drive immediate incremental revenue, and map a clear path to scale as your goals evolve. Book a demo today!