How a headphone site operator built loyalty startup Lantern to solve his own problems

Andrew Lissimore has been running the audio apparel site Headphones.com for nearly a decade now. While audiophiles have a high affinity toward their gear and want to try out new gadgets, Lissimore wasn’t satisfied with continuously spending money on platforms like Meta and Google to acquire new customers; he wanted to find a way to better retain the customers he already had.

The founder started to look for solutions within the Shopify ecosystem that would help the business with loyalty programs. But most of what he found offered only spend and tier-based solutions. So he decided to build his own system.

What started as a project to solve loyalty for Headphones.com is now a startup called Lantern, which other companies can use to easily integrate loyalty solutions into their own businesses.

Initially, the company wired together different apps to have a variety of loyalty points based on stamps, spend, points, and referrals, but it was hard to manage. Plus, bringing together different apps introduced challenges with user experience flows and brand identity.

“We thought it would be great to have a Shopify native system for loyalty that is easy to customize and integrate,” Lissimore said. “I managed to convince Shopify designers Kyle Peatt and Dominic McPhee, who built their Polaris design system, to work on this.”

Later, both joined Lantern as co-founders. Peatt currently works as the chief design and product officer, and McPhee works as the chief technology officer. In total, the company currently has eight full-time employees.

Lantern co-founders Dominic McPhee and Kyle Peatt. Image Credits:Lantern

Lantern can handle customer account creation and management, loyalty, and referrals for any vendor working on Shopify. Websites can reward returning or new customers and award them points for activities like participating in forums, as well. The company explained that the sellers can easily integrate their solution and don’t need to add any extra code to do so.

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Lissimore said that operating Headphones.com provided the perfect testing ground for Lantern to understand the pain points of being a seller and getting better retention.

“I think 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,” he told TechCrunch.

Image Credits:Lantern

After Headphones.com adopted Lantern, its purchase rate for repeat visitors increased from 30% to 50%. The period for buying a second pair of headphones has also reduced from 198 days to 98 days.

The company now has clients like skincare site Counter, which rakes in over $200 million a year, and footwear brand Vessi. It has also built tools to measure retention effectively to show Lantern’s value to its clients.

To further grow its business, Lantern raised $3.1 million in seed funding led by Salesforce Ventures, with participation from Sidekick Partners, Day One Ventures, and individual investors like Vessi’s Tony Yu. The company directly competes with existing startups such as LoyaltyLion and Yotpo.

Rob Keith, a partner at Salesforce Ventures, said that Lantern stood out to the firm because the startup is approaching retention through means that go beyond point-based loyalty with a flexible 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,” he said.

Keith added that Lantern’s features, like wallet functionality, directly appearing in checkout without any pop-ups or redirects, help both consumers and brands.

In its product roadmap, the company plans to leverage AI and provide customers with insights and recommendations around retention.