Loyalty programme
What is a loyalty programme?
A loyalty programme is a standing rule that gives a returning customer something back — points, a discount, early access — for buying from the same shop again. Points carry a value, so the programme is also a liability: what is collected gets spent one day. It works when one sentence explains the rule, points are awarded automatically, and the balance is visible in the customer’s account.
Example
A shop awards one point per euro spent, and 100 points give a €5 discount. That is 5 per cent back. A customer with four €60 orders collects 240 points and spends €12.
The shop’s side of the sum looks different. At a 40 per cent margin, €240 of turnover carries €96 of margin, and a €12 discount is 12.5 per cent of it. So a programme is priced against margin, not turnover: 5 per cent sounds small and is not.
The point of it is the repeat order. If the programme lifts a customer from four orders a year to six, the same margin goes from €96 to €144 and the discount pays for itself. It is checked with lifetime value by customer group rather than by impression. The amounts are illustrative.
Why it matters for a business
Keeping a customer costs less than finding one: they already know the shop, the delivery and how a return works. The programme gives them a reason to come back, and gives you data on who does and how often.
There are two weights on the other side. Collected points are a future obligation and belong in the accounts as one, not in the marketing budget. And a programme gathers personal data — an account, an order history, consent for email — which needs separate marketing consent and a working way to delete the account.
The simple rule wins. “One euro, one point” is remembered; tiers, multipliers and expiry dates are not, and they generate questions for support. The awarding, the balance and the spending live in the shop — online store development.
What to ask
- Which amount earns points — with delivery included or without it?
- What happens to points when goods are returned: are they taken back?
- Do points expire, and how is the customer told in advance?
- Can the discount be combined with a promo code and with a sale price?
- Where is the member data held, and how is it exported if you change platform?