When creating a reward you will need to decide how many points each reward is worth. Having a point cost that is too high may lead to customers feeling as though they are unable to earn enough points to claim rewards. Likewise, having a point cost that is too low can make it too easy for your customers to claim and redeem rewards in your store.
In this article:
- % of dollar spend rule
- Choosing what rewards to offer
The '% of dollar spend' rule
📝 Note: This rule can be applied to your $ Off, % Off, Free Shipping & Free Product rewards.
When deciding how many points to allocate to your rewards we suggest following a '% of dollar spend rule'. This rule works by making your reward discount amount a certain % of the spend required to earn this number of points. Our default recommendation is to set this at 10%, an example of this is below:
- Assume you are applying a 10% of dollar spend rule and you offer members 1 point per $1 spend
- A customer who has spent $100 would earn 100 points
- 10% of $100 = $10 (this is your 10% of dollar spend)
- Reward = $10 off for 100 points
- Following this, a reward of $25 would cost 250 points, and $50 would cost 500 points
📝 Note: This is simply a guideline. Make sure to choose a point cost that is appropriate to your store, based on your product margins.
Choosing what rewards to offer
Along with knowing how many points your rewards should cost, you also need to decide what rewards to offer your customers. Think about how much your customers will be spending with you, and what reward would be appealing to your average customer. This will lead to a higher participation in your loyalty program.
If your average customers order spend is around $50 and you offer your customers 1 point per $1, then having a reward that cost 1000 points for a $100 off reward may be unrealistic, as it would take your customers a long time to save up enough points for this. This will lead to a low participation rate in your loyalty program and the majority of your customers would not reach this threshold. A more realistic reward for this example would be to offer $10 off for 100 points, or $20 off for 200 points.
💡Tip: If you are looking for some inspiration while setting up your rewards, you can check out some of our loyalty success stories here.