A points reward system is a great way to boost sales, show appreciation to regular customers, and get them to spend more. The problem is, with all these possibilities, how do you even start?

This post will guide you through 5 easy steps to create a small company points-based incentive system.

Why Does The Points Reward System Remain A Marketing Powerhouse?

Points reward systems have a long history as an e-commerce marketing tool. Here are four major benefits of points programs  that may help your Shopify store:

Encouraging Repeat Business And Customer Retention

According to the book Marketing Metrics, loyal customers are far more likely to buy than new ones. The conversion rate for current customers rises from 60% to 70%, while the new customer acquisition rate drops from 5% to 20%. 

No doubt, loyalty boosts income. Your current customers are 50% more likely to try new products and spend 31% more each transaction.

Thus, a good points reward system leverages this customer advantage. Rewarding loyal customers reduces turnover and prevents them from transferring to competitors.

Fueling Customer Engagement And Brand Advocacy

Customer loyalty increases word-of-mouth advertising by 71% when people identify with your brand. A well-designed points program can be a powerful tool for doing this. Customer satisfaction and engagement lead to brand advocacy.

By rewarding more than purchases, you encourage customers to interact with your business in various ways. This might refer to their friends, customer feedback, events, or social media followers.

Harnessing Valuable Customer Data And Insights

Customers prefer personalized experiences, with 65% prepared to provide their information for value-added customization.

You can keep an eye on what customers do inside the program, which gives you a lot of information about their buying habits and tastes. Customer insights lets you tailor your marketing to their requirements and wants. 

So, marketing that resonates with your target audience improves efficiency and profitability.

The Modern Points Program: Moving Beyond Simple Transactions

Modern points reward system is more than one-dimensional transactions. They’re dynamic ecosystems that provide incentives to increase customer engagement strategies and brand loyalty.

Take a look at Starbuck’s Reward. People who join this support group can get free food and drinks, which makes things easier. It has “double star days” to thank customers and different levels of perks. It also works with mobile apps.

Luckily, building a successful rewards program does not need you to be a giant business like Starbucks. Here are the five most important things you need to do to start a points program at your brand.

5 Key Steps To Creating An Effective Loyalty Program For Your Business

Having a purposeful, engaging, and customer-value-delivering campaign is essential if you want to stand out. Here, we’ll walk you through the five essential stages of establishing a successful points reward system in 2024. 

Step 1: Define Your Program Goals and Target Audience

It all starts with a well-defined goal for the points reward system. Everything from the program’s structure to its features and budget will be shaped by your mission. We should think about these two shared goals:

1.1. Build Branding With New Customer Acquisition

Depending on referral success, consider welcome rewards, referral discounts, or tiered points. Also, offer points for joining your email list, following you on social media to see behind-the-scenes material, or giving positive reviews about your customer service.

Budget: Customer acquisition cost (CAC) expects to spend more money upfront to engage these new consumers with appealing offers that stimulate their first buy.

1.2. Boost Sale With Customer Retention And Increased Customer Lifetime Value (CLTV).

You can provide a points program that rewards customers for spending a particular amount within a specified period.

Budget: The budget for this campaign may be more flexible since it rewards current customers.

For instance, if customers could get double points for every $50 they spend, it may encourage them to purchase more and more rapidly.

Read more: How can you boost Shopify’s customer lifetime value?

1.3. Research Your Target Audience:

After you’ve identified your company’s goals, research your target audience:

• Analyze your customer demographics:

Knowing your audience’s age, gender, geography, income, and purchasing patterns helps you design relatable incentives. 

For example, millennials may choose early access to new goods above free delivery, but pensioners may favor discounts on commonly bought items.

• Consider customers’ motivations:

Dig deeper than merely demographics. What drives your consumers to buy from you? Do they choose convenience and quick delivery, or are they ecologically sensitive and favor sustainable practices?

By analyzing your target population and structuring your program appropriately, you may use customer reviews to boost brand loyalty, customer lifetime value (CLTV), and sales.

The next stage is to design an enticing reward system.

Step 2: Crafting A Compelling Reward Structure

Now that you know who you’re trying to reach and what you want to do with your program, you can build the incentive structure that will keep people engaged. Decide what actions earn points and what exciting rewards customers may redeem them for.

1. Selecting Actions To Reward

You can consider offering points for

• Every purchase.
• Rewards for social media followers, post shares, and reviews.
• Completing surveys or participating in events.
• Rewarding these efforts attracts new consumers and drives brand promotion.

One program that does this very well is the Love Your Body Club. Loyal customers may take advantage of a 20% discount on their next purchase for every friend who places their first transaction.

2. Establishing Clear Point Values And Tiered Rewards

Being open and honest is vital. Establish a clear conversion rate between points earned and rewards delivered. Consider aspects such as the effort required to finish an activity and the value of the reward.

Also, set up a tiered system in which earning points grants access to lucrative prizes.

Take Sephora Beauty Insider as inspiration for creating explicit point values and tiered prizes in their loyalty programs. The program has three stages (Insider, VIB, and Rouge), each with increasing perks.

3. Offering A Diverse Selection Of Incentives

Don’t be scared to be inventive with the possibilities of your reasons. Here are a few ideas:

• Free delivery.
• Exclusive items or experiences.
• Priority access to sales.
• Donations to charitable organizations.

The next stage in ensuring that your application works properly is to confirm that you are utilizing the correct technical platform and that you are following tool instructions.   

Step 3: Choosing The Right Technology Platform For Seamless Management

After creating an appealing incentive system, choosing the right technology platform for your points program is important. Your program will rely on this platform for point tracking, redemption, and consumer communication.

Here’s what to look for while choosing the best tool for smooth management:

• Integration Ease: There are simple POS and CRM interfaces. Integration with Shopify marketing tools like app review platforms, email marketing software, page builders, and translation apps may improve program reach and performance.
• Feature Focus: Carefully check each platform’s specific features to ensure they align with your program goals. Common features include points-based rewards, birthday rewards, a comprehensive referral program, and VIP tiers.
• Customization Capabilities: Look for an app that lets you personalize many things, including branding, earning restrictions, and redemption rules.

For Shopify stores, we recommend the BON Loyalty – The top-recommended Shopify Loyalty App. It includes all the above capabilities and extra perks, such as limitless member awards. 

This Shopify user-friendly interface loyalty app lets you monitor program success and make data-driven choices.

TRY BON LOYALTY FOR FREE NOW

Additionally, you can learn more about Shopify’s top 5 loyalty program apps.

In the following stage, we’ll look at ways to promote your program and increase consumer involvement.

Step 4: Communication Is Key: Launching And Promoting Your Program**

Effective communication is critical for program launch and ongoing promotion, ensuring that customers grasp the benefits and participate. Using our advice, you should design clear and appealing program announcements. 

• Email Marketing:

Look at Flag And Anthem’s email in the image below as an example.

They highlight the program’s key advantages and how they improve the customer experience (CX). Include clear images, a call to action (CTA) encouraging users to join up, and a link to a dedicated program landing page for more information.

1. Social Media Buzz:

Be like Lifestyles PH (see the striking picture below). Use captivating pictures to draw attention and mark the start of the event. Write a short, exciting summary of the program’s benefits for people who follow it.

Also, free social media products linked to program registration should be added to get Why Points Programs Remain a Marketing Powerhousemore people involved. This gets people involved and gets people who already follow the program excited to join.

• Website Integration:

Figure out what works by looking at the ZANEROBE Crew Rewards program. A large banner announcing the program’s launch stands out on their homepage and directs visitors to the landing page for the specific program, where they can see a prominent call to action (CTA). 

Integrating Points Program Information into Customer Touchpoints:

• In-Store Signage: Display program information at the checkout counter and other high-traffic areas in brick-and-mortar stores. 
• Integration with POS systems: Consider integrating your software with POS systems. Cashiers can enroll consumers and notify them of their checkout points.

Next, we’ll cover ways to boost client engagement and sustain your rewards program.

Step 5: Track, Analyze, and Optimize for Continuous Improvement

Like any marketing strategy, your program’s success depends on tracking the correct data. Here are some important key performance indicators (KPIs) to track:

• User Participation Rate.
• Redemption Rates: Track how frequently customers redeem points. A low redemption rate may imply a reward scheme your audience doesn’t like.
• Average Buy Value: Examine if your program encourages consumers to spend more to get points. A rise in average buy value implies the program is increasing consumer value.

For example, if your participation rate is low. This might suggest a need for more program awareness. It’s time to change your communication approach to reach more customers with program information.

Additionally, surveys show that users need help getting points. This could mean that your point structure needs to change. Provide more points for submitting reviews or engaging on social media to help.

Tracking and analyzing your points program performance for optimal results ensures its success and long-term value for you and your customer.

3 Key Strategies to Enhance Your Loyalty Program

Now that you have your points-based reward system in place, things are going really well. Still, how can it be made better and ensure long-term success? There are three main things you can do to keep your show interesting and your fans happy:  

Segmenting Your Audience For Personalized Rewards

Customers say personalized rewards make them 80% more likely to buy from a business.

Take a second look at Starbucks Rewards as an example. It’s not a tiered structure; instead, they live on customizing things to fit the needs of each customer. People can get deals on their favorite food items by changing the app’s settings. 

Gamification Elements: Adding Fun And Competition

If you want to add more game-like elements to the reward program, here are some ideas:

• Bonus points.
• Point Streaks.
• Leaderboards: Display top point earners.
• Mystery Points.
• Unlockable content.
• Charity Donations: Let customers donate points to a good cause. This fosters social responsibility and program loyalty.

See how Arirang Hibachi Steakhouse uses a points multiplier to make gamification more entertaining. Points for members are doubled every Wednesday. Effective gamification is characterized by methods like this one, which engage and excite program participants.

Strategic Partnerships And Points Exchange Programs

Work with businesses that fit the lives of your buyers. For instance, a clothes store might work with a gym or a shoe store to offer deals that go well with each other’s goods or services. 

You can join large loyalty networks, combined with Coalition Loyalty or Loyalty Connect, to quickly expand your reward collection.

Conclusion

In today’s market, customer loyalty programs are more important than ever. A good points-based reward system could increase sales. Follow the steps in this blog to make a program that works for both you and your customer.

Are you ready to upgrade your loyalty program? If you have Shopify stores, BON Loyalty may help.

To learn how to create a loyalty program that attracts and retains customers, expands your brand’s reach, and helps it thrive in the modern market, check out our blog.