Loyalty Program

A loyalty program pays a customer for coming back, and the usual shape is points. You spend one pound and earn one point, so a hundred points takes five pounds off a later purchase. Some shops use tiers instead, or as well as points, where spending more over a year moves you up a level with better rewards. Both work, but only if you have done one piece of arithmetic first.

The part most owners skip is that arithmetic, because every point you hand out is money you have promised to give away later. If a hundred points is worth five pounds and every pound earns a point, you are running a five percent discount on everything, forever. That number belongs in your margin before you launch, and it is worth writing down. Ask your accountant where unspent points sit in the books as well, because in many places they count as a debt until someone spends them or they expire.

Tiers work because people hate losing a level they have already reached, though they annoy the customer who misses the next one by a little. So keep the levels few, and keep the rules short enough to say out loud in a single sentence. If the person at the counter cannot explain it while wrapping a purchase, it will not be explained at all.

The hard part is one balance in two places, since a customer who earned points on the website expects to spend them in the shop. The person at the till needs to see the same number in the same second, which is why Storek keeps a single balance behind both. Linkysoft usually puts the card in the phone as well, because a mobile app saves the customer from carrying anything. It also lets you send a reminder before the points expire, so nobody loses a balance without warning.

Two mistakes come up so often they are worth naming. The first is a reward set so far away that nobody believes in it, so aim for a small first win within about three visits. The second is quietly changing the rules on people who have been saving for months, which costs more goodwill than the scheme ever bought. That is why, when Linkysoft writes the terms for a program, the line about old points goes in on day one, not on the day you need it.