For nearly a decade, Andrew Lissimore has been at the helm of Headphones.com, an online retailer catering to audiophiles eager to explore the latest in audio gear. Despite the high engagement of his customer base, Lissimore faced a persistent challenge: the escalating costs of acquiring new customers through platforms like Meta and Google. Determined to enhance customer retention, he sought solutions within the Shopify ecosystem to implement effective loyalty programs. However, the available options were predominantly spend and tier-based, lacking the flexibility he desired.
This quest led to the inception of Lantern, a startup born out of Lissimore’s need to create a more adaptable and integrated loyalty system. Initially, he attempted to amalgamate various apps to offer diverse loyalty points based on stamps, spending, points, and referrals. This approach proved cumbersome, introducing complexities in user experience and diluting brand identity.
Recognizing the need for a more cohesive solution, Lissimore envisioned a Shopify-native loyalty system that was both customizable and easy to integrate. To bring this vision to life, he enlisted the expertise of Kyle Peatt and Dominic McPhee, designers renowned for their work on Shopify’s Polaris design system. Their collaboration culminated in the formation of Lantern, with Peatt assuming the role of Chief Design and Product Officer, and McPhee serving as Chief Technology Officer. Today, Lantern boasts a dedicated team of eight full-time employees.
Lantern’s platform offers comprehensive solutions for customer account creation, management, loyalty, and referrals for Shopify vendors. Merchants can reward both returning and new customers, assigning points for activities such as forum participation. The integration process is streamlined, requiring no additional coding, thereby preserving the seller’s brand identity and ensuring a seamless user experience.
The practical application of Lantern within Headphones.com provided invaluable insights into the challenges of customer retention. Lissimore noted, We were in the perfect spot to come up with something like Lantern because we [headphones.com] were so desperate to increase the repurchase rate. A lot of businesses like clothing brands or makeup brands have naturally built-in repurchase, but for us, it was existential.
The implementation of Lantern yielded significant results for Headphones.com. The repeat purchase rate surged from 30% to 50%, and the interval between purchases decreased from 198 days to 98 days. These metrics underscore the efficacy of Lantern’s approach to fostering customer loyalty.
Lantern’s success has attracted a diverse clientele, including skincare brand Counter, with annual revenues exceeding $200 million, and footwear company Vessi. To further demonstrate its value, Lantern has developed tools to effectively measure retention, providing clients with tangible evidence of the platform’s impact.
To fuel its growth, Lantern secured $3.1 million in seed funding, led by Salesforce Ventures, with contributions from Sidekick Partners, Day One Ventures, and individual investors like Vessi’s Tony Yu. The startup positions itself as a competitor to existing loyalty solutions such as LoyaltyLion and Yotpo.
Rob Keith, a partner at Salesforce Ventures, highlighted Lantern’s unique approach: Lantern brings together something unique — Andrew built and scaled Headphones.com and lived these retention challenges as a merchant, while Kyle and Dominic come from Shopify, where they built the Polaris design system that thousands of developers use today. That combination means they understand both what merchants actually need and how to build solutions that feel native to the platform rather than bolted on.
Keith also emphasized features like wallet functionality, which integrates directly into the checkout process without pop-ups or redirects, benefiting both consumers and brands.
Looking ahead, Lantern plans to leverage artificial intelligence to provide customers with insights and recommendations aimed at enhancing retention strategies.
