The case for understanding your customer

Every marketing dollar, promotional offer, and loyalty program is an investment toward one outcome: a customer base that will buy, return, and repeat—and fill bigger carts over time.

Creating valuable customers is critical to success. Yet most companies evaluate investments through short-term campaign metrics. A 20% sales lift tells you a campaign worked, but it does not say whether it attracted new customers, whether those customers returned, or whether the campaign recouped its activation costs. To truly understand what causes growth, leaders must examine customer behavior across channels and over time.

Although every business wants to create more valuable customers, the required actions for doing so vary greatly by industry:

• Consumer packaged goods (CPG) brands face restrained consumption, weak loyalty, zero-sum competition, and a heavy dependence on retailers’ brand awareness. Penetration is key, and growth comes primarily from constantly attracting new buyers and bringing back lapsed ones.
  
  
• Retailers face a different calculus and have to focus on deepening relationships over the long term. They need customers to visit more frequently and to purchase more on each trip.

Ultimately, winning brands deeply understand their customers. They can identify specific behaviors that create value, not just the output of individual campaigns.

Attract. Retain. Grow: A framework for creating valuable customers

Customer value is created across a journey that Bain & Company calls the Customer Value Creation framework: Attract, serve, retain, and grow.

To test each step’s influence, Bain partnered with Fetch Rewards to analyze omnichannel data at the stock keeping unit (SKU) level for 73 CPG and 19 grocery and general merchandise retail brands. Bain’s research covered 21 months and focused on three steps of the framework: Attract, retain, and grow.

• Attract (Who did you win?): New customers enter through paid channels, referrals, and organic discovery. The key measure of attraction is penetration: how many new buyers a company attracts and at what cost. Customers who take an offer opportunistically may result in a financial loss, and subsidizing those who would have purchased anyway is an inefficient use of marketing dollars.
  
  
• Retain (Did they come back?): Customers who buy once and disappear have no long-term value. Post-purchase retention and engagement prevent churn, so the goal is to keep customers active and reinforce repeat purchasing habits. The critical measure here is whether customers return with positive net value. Ideally, brands will convert customers into loyalists with minimal ongoing incentive costs.
  
  
• Grow (Did they purchase more over time?): The most valuable customers demonstrate higher engagement, including increased frequency, cross-category purchasing, and higher spend. Growth is the compounding mechanism of customer value. Once the attraction cost is recovered, the long-term economics of the relationship truly materialize.

Although all three steps are important for brands, the areas that should be emphasized often differ by industry. For example, CPG brands may disproportionately concentrate on attracting customers, while retailers typically focus on retaining and growing. Through the lens of the framework, the data also reveals how CPG and retail companies create value through distinctly different mechanisms.

The CPG view: Attracting and keeping customers

CPG brands already know that rewards affect sales. The challenge lies in structuring them in ways that attract and reattract buyers without subsidizing customers who would have purchased anyway.

Bain’s research uncovered three findings related to how CPG brands can build more valuable customers:

1. Rewards bring new customers

Bain’s analysis of CPG brands found that rewards are a powerful driver of customer acquisition. While 43% of customers were new to a brand each quarter, rewards increased first-time customer acquisition by 22% compared with a control group. The impact was greatest in broadly consumed categories, including beverages and snacks, and smaller in specialty categories such as baby products. These findings are encouraging, given that CPG brands must continually fill their customer pipelines.

Additionally, the return on investment (ROI) is clear: On average, each CPG brand yielded a net return on initial reward spending of 7.2 times for each new customer within the first three months.

However, there was meaningful variation across categories and life cycles (see Figure 1). The largest dispersion occurred among insurgent brands (which had ROIs ranging from 2.7 times to 11.8 times), reinforcing the need for brands to carefully design and target rewards according to customer segment.

While attracting new customers is essential, long-term growth depends on converting those first-time buyers into repeat purchasers.

Figure 1

2. Brands must convert onetime buyers into repeat customers

New consumers who earned a first-purchase reward were 18% more likely to repurchase within the next two quarters vs. organic purchasers, while driving a 28.4% spend uplift.

However, repurchase rates varied by category. Repurchase was highest in high-velocity categories—such as snacks (51%) and dairy (47%)—and lowest in categories such as home improvement (which still delivered a positive spending lift of 32%).

These findings show that rewards do more than drive trial purchases, they help turn new buyers into repeat customers. By increasing both repurchase rates and spending, incentives can strengthen customer value across a wide range of categories.

3. Retain customers to reduce churn

High churn rates pressure brands to constantly reengage customers, but rewards can help. Over 12 months, rewards increased a brand’s customer base by 7.1% through retention and reactivation, equivalent to retaining enough customers to match nearly one month of typical new customer acquisition. Overall, this drove a 20.7% sales uplift versus the control.

For CPG brands, the goal is not to eliminate incentive spending but rather to use it strategically. The most effective programs attract new customers, invest in ongoing incentives to counteract churn, and build long-term purchasing habits. Although the “leaky bucket” of customers remains, well-designed rewards can make investment work harder.  

The retail view: Deepening the customer relationship

For retailers, creating valuable customers follows a different arc, with the emphasis shifting toward deepening the relationship. Retailers also face powerful gravitational forces: Customers may split purchases with competitors, channels blur when nontraditional competitors enter the scene, and brands often lack visibility beyond their own storefronts.

Three findings from the retail analysis are instructive for grocery and general merchandise brands:

1. New customer acquisition is small but meaningful

Approximately 16% of retail customers were new each quarter. This is a significantly lower percentage than the attraction rate seen in CPG (43%), reflecting the retail industry’s lower churn rates and more stable customer base.

Among these new customers, 23% used a retailer-specific reward on their first purchase. While new customer acquisition plays a smaller role in retail vs. CPG, it remains an important source of incremental value. The results suggest that rewards can attract new customers, even in more established categories.

2. Use rewards to boost retention

For retailers, rewards played a powerful role in improving retention. Over one year, rewards increased the active customer base by 3.9% for general merchandisers and 9.8% for grocers (see Figure 2). This lift was equivalent to gaining nearly one month of new customers for general merchandisers and 2.1 months for grocers.

Among returning customers who used an offer, an average of 42% made their next purchase with an incentive. Given the habitual nature of many retail purchases, this suggests that rewards can reinforce existing shopping behaviors and encourage repeat visits.

Figure 2

3. Growth comes from trip frequency

Across all retailers, rewards generated an average of 8.4% sales uplift over 12 months. The driver was shopping frequency, where the treatment group’s shopping frequency was approximately 11% higher than the control. This lift was remarkably consistent across retailers and the observation window.  

Average spending per trip, by contrast, was stable ($43 for grocers and $52 for general merchandisers). In retail, growth is often tied more to occasions than basket size.

As a result, incentive programs create value primarily by encouraging customer engagement over time. When more customers make more trips, their value compounds, driving sustained sales growth.

Win the customer, not the quarter

Incentives are crucial to creating valuable, long-term customers. For CPG brands, attraction spending is a pipeline investment that spurs growth and penetration. For retailers, value is created by developing habitual shoppers with higher trip frequency. Across both segments, measurement is key. Building customer value also requires three specific actions:

1. Invest in the right data tools to see customers clearly. Enhance your measurements of customer value by building a 360-degree view of the customer and creating a robust methodology for overlaying incentive costs. Without the right metrics, brands cannot distinguish between a campaign that created long-term customers and one that merely moved short-term volume. Your data foundation must provide visibility into your customer and, most importantly, takeaways you can act on.

2. Distinguish attraction from retention—and allocate resources accordingly. Context influences the role incentives will play. Companies need to invest in efficient activations and programs that thoughtfully encourage customer behavior. In addition, attraction and retention must be measured separately. Doing so changes how budgets are allocated and success is defined.

3. Understand what triggers customers to act and when. Customer value is built through attraction, retention, and growth. The most effective interventions trigger a purchasing occasion—such as a first trial or an incremental trip—at the exact moment a customer is likely to act. Design incentives around the behaviors you want to create, not the products you want to promote. In addition, continuously monitor whether you are encouraging customers to build long-term shopping habits or merely promoting dependencies.

The data is clear: Brands can create valuable customers with incentives. Those that succeed deeply understand their customers and invest in the right tactics at the right moment, at the right cost. They play to win the customer, not the quarter.

• Methodology

  Fetch Rewards provides consumers with redeemable points in exchange for SKU-level receipts. It captures data from more than 17 million users in the US.

  For this research, Bain received anonymized transaction-level data from 92 Fetch Rewards partners (73 CPG brands and 19 grocery and general merchandise retailers). The data sample spanned from the fourth quarter of 2023 through the fourth quarter of 2025 to establish a baseline for customer history. The analysis period was 21 months, from the second quarter of 2024 through the fourth quarter of 2025.

  Bain also leveraged Fetch Rewards’ existing randomized treatment and control methodology, which keeps a small percentage of shoppers unexposed to any brand-specific reward. To calculate the net dollar impact, Bain allocated Fetch Rewards points to each transaction and deducted the value. Point values were estimated based on total marketing costs from brands to Fetch Rewards.

  For this study, a “new customer” was defined as one who had no previous purchase history with a specific brand within the Fetch Rewards platform. A six-month look-back buffer was applied to mitigate bias from left-censored data.