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How to Build a Reward Point System for Customers (+Tips)

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How to Build a Reward Point System for Customers (+Tips)

Not all loyalty programs are created equal; reward point systems for customers outperform the competition every time.

The truth is in the numbers too: A study from Yotpo states that 83% of customers are more inclined to repeat purchases with a brand if they’re part of its loyalty program.

But how do you create an effective reward point system for customers that increases your sales and revenue? Worry not!

In this blog, we’ll explore the nuts and bolts of it that rewards your customers for their purchases and engagement, ensuring they keep coming back for more. Also, we’ll show you how to create an effective one using a user-friendly WooCommerce points and reward plugin-WPLoyalty. Let’s begin.

Why Do You Need a Reward Point System for Your Business?

You should need a reward point system for your business to enhance customer loyalty and increase sales. It’s a straightforward exchange—your customers feel appreciated when they earn points, and that appreciation translates into increased customer engagement and repeat visits. 

Here are few more key points on why it is essential:

Increase Average Order Value

Customers rewarded through the point reward system tend to buy more. They see the points as extra currency to spend, which often leads them to add more to their cart. 

This means higher profits from sales that might not have happened otherwise. It’s a clever way to encourage customers to spend a little extra every time they shop.

Increase Customer Lifetime Value

A reward point system encourages customer retention and repeat purchases by rewarding customers each time they buy, nudging their lifetime value upward. It’s a strategy to make customers stick longer and spend more. 

Every point acts as an incentive for another visit, another browse, and another buy. This system turns average buyers into valuable assets for your business.

Enhance Customer Data Collection

Implementing a reward point system for customers allows you to collect valuable data on customer preferences and buying habits. This information is useful for creating marketing efforts and improving product offerings. 

As customers interact with your points system, you gain insights that can drive targeted campaigns, resulting in more effective sales strategies.

Encourage Referrals

Happy customers make referrals helping in customer acquisition and points make them even happier. 

Each successful referral counts you new customers leading to a growing customer base. This word-of-mouth promotion is invaluable and costs you nothing.

Encourage Desired Behaviors

With a points and rewards system, you can influence customer behavior in ways that align with your business goals. 

Want more online engagement? Offer points for product reviews or social media interaction. Aiming to boost off-season sales? Double the points during slow periods.

Key Elements of a Successful Reward Points System

The core of a successful point reward system rests on its ability to be accessible, transparent, and genuinely rewarding. Also, it should be effortless with no hurdles. Thus, to get it right here are some key elements listed:

Simple Point Accumulation

A successful point reward system keeps it simple: more purchases mean more points. 

Take Starbucks rewards, for instance. Their rewards system allows customers to earn stars (Points) for every purchase, which can then be redeemed for free drinks or food.

Clear Value of Points

For customers to stay interested, the value of points needs to be clear and tangible. They need to know what their points are worth. 

Sephora’s Beauty Insider program is a great example of the points and rewards system. They make it clear: certain points equal certain discounts or products. This transparency helps customers make the decision to collect and use their points.

Exciting Redemption Options

Rewards should be enticing enough to drive customers to earn more points. Some of them are discounts, special products, or unique experiences.

For example, Olive & June, known for their manicure sets and nail polishes, offers a reward point system for customers where earned points can be exchanged for discounts on future purchases or for exclusive items.

Regular Updates and Communication

Frequent communication keeps customers informed and engaged. Tell them about their points and what’s new with regular updates via emails, notifications and other social media platforms. It’s like giving them little reminders about the rewards they can get. 

Personalized Rewards

Make the rewards feel special, like a birthday gift that’s just what you wanted. Use customer data to offer points for items they already like. Personal touches like this make a big impact.

Designing Your Reward Point System for Customers

Designing your reward point system can be done by following some simple steps which are as follows:

  1. Select a Point Calculation Method
  2. Design a User-Friendly Platform
  3. Establish Reward Levels and Benefits
  4. Create a Clear Redemption Process
  5. Implement a Promotion Strategy
  6. Monitor, Analyze, and Adjust

Select a Point Calculation Method

  • Decide on a clear, simple formula for how points will be earned. Will it be based on the dollar amount spent, the number of purchases, or specific actions like social media engagement?
  • Ensure the method aligns with your business goals and is easy for customers to understand.

Integrate a User-Friendly Platform

  • Develop or integrate a system where customers can easily view their points balance, track their progress, and redeem rewards.
  • Consider including a best point and rewards plugin or a dedicated section on your website for maximum accessibility.

Establish Reward Levels and Benefits

  • Clearly communicate what each tier offers and what is required to reach each level.
  • Define various reward tiers or levels, each offering distinct benefits or rewards that increase in value.

Create a Clear Redemption Process

  • Outline a straightforward process for how points can be redeemed. Consider including options for online and in-store redemptions.
  • Provide step-by-step instructions or a FAQ section to assist customers in the redemption process.

Implement a Promotion Strategy

  • Plan an initial launch promotion to generate excitement and encourage sign-ups.
  • Use email marketing, social media, and in-store signage to educate your customers about the new system and its benefits.

Monitor, Analyze, and Adjust

  • Set up a system for tracking participation, redemption rates, and customer feedback.
  • Regularly review these metrics to identify areas for improvement and adjust your program as necessary to keep it engaging and effective.

How to Create a Reward Point System for Customers?

You can create a reward point system for customers easily by using a points and rewards plugin like WPLoyalty.

With WPLoyalty you can create effective loyalty campaigns for various customer actions. Here is the rundown of the list:

You can set up a point reward system for all these campaigns and apart from rewarding points you can also offer various reward types such as fixed discounts, percentage discounts, free shipping, and free products.

Now, to give you a clearer understanding, let us create three examples of reward point systems with the “Point for purchase” campaign, “Product review” campaign, and “Birthday” campaign in WPLoyalty.

Note: It takes only a few steps to install and activate WPLoyalty. 

  • The initial step is to download the WPLoyalty.
  • Once you downloaded WPLoyalty, go to WordPress dashboard -> Plugins -> Add New -> Upload Plugin. Upload the downloaded zip file. Then click Install Now -> Activate.
  • Refer to the installation document for more clarification.

Scenario 1: Reward point system for purchases

Let us create an example for the above scenario.

Example – Rewarding one point for every dollar spent and redeem 500 points for a $5 discount.

To create reward point system for customer purchases:

  • Install and activate “WPLoyalty” plugin, 
  • Go to your WordPress dashboard -> WPLoyalty -> Campaigns -> Click on the ‘Create a New Campaign -> Choose the “Points for Purchase” campaign type.
  • Fill in the necessary details like campaign name, description, points to be earn for every amount spent, etc.,

Check out the screenshot below for an example configuration:

Creating Reward point system for purchases

Now, we have created a campaign and customers can start earning points.

  • Let’s create a “Point conversion” reward for customers to redeem their points. For that,
  • Go to your WordPress dashboard -> WPLoyalty -> Rewards -> Create a new reward-> choose the Points Conversion reward type.
  • Fill in the necessary details like reward title, reward description, point value, discount value etc.,

Check out the screenshot below for an example configuration:

Creating “Point conversion” reward for customers to redeem their points

We have now created the “Points for purchase” campaign that allows customers to earn points and spend them for a discount.

Scenario 2: Points for Product reviews

Example – Rewarding 20 points for reviewing a product.
To create reward point system for product reviews:

  • Go to your WordPress dashboard -> WPLoyalty -> Campaigns -> Create a new campaign -> Choose the “Write a Review” campaign type.
  • Fill in the necessary fields shown in the screenshot below, click save and close.
Creating reward point system for product reviews

Now, the point reward system for product reviews is created and customers will earn 20 points for reviewing a product.

Scenario 3: Points for Customer Birthday

Example – Rewarding 50 points for customer’s birthday

To create reward point system for customer birthday:

  • Go to your WordPress dashboard -> WPLoyalty -> Campaigns -> Create a new campaign -> Choose the “Birthday Campaign” type.

You have the option to reward points to your customers in two ways: on their birthday and when they provide their birth date.

Creating reward point system for customer birthday

Once the campaign is activated, customers will earn 50 points on their birthday/when they provide their birth date.

How do Customers Discover your Point Reward System?

WPLoyalty provides three options for your existing customers to discover your point reward system: 

  1. My account -> Points & Rewards
  2. A separate “Loyalty Reward” page
  3. A chat-like Launcher widget.

Tips for Managing a Successful Point Reward System

  1. Personalize Point Milestones: Rather than offering one-size-fits-all rewards, personalize point milestones based on customer behavior. Track their purchase history and set individualized targets that encourage each customer to take the next step. 
  2. Integrate Gamification: Inject an element of fun by gamifying your loyalty system. Introduce badges, leaderboards, or levels that customers can achieve. 
  3. Leverage Time-Sensitive Bonuses: Create urgency with time-sensitive bonuses to spur immediate action. Offer double points during certain hours or on specific days to drive traffic and sales when you need it most. 
  4. Balance Point Economy: Maintain a balanced ‘point economy’ by ensuring the earning and redemption of points is neither too easy nor too hard. If points are too easy to earn, they may lose their perceived value; if too hard, customers might get frustrated. 
  5. Optimize for Mobile Engagement: Ensure your point reward system is optimized for mobile use, recognizing that many customers interact with brands primarily through their smartphones. 
  6. Implement Tiered Rewards: Introduce a tiered loyalty program where customers can achieve different levels based on their point accumulation. Each tier offers progressively better rewards, encouraging customers to aspire to the next level.

Wrapping Up

In wrapping up, creating a point-based reward system is a long-term strategy for your business growth. By rewarding customers with points, you’re inspiring customers to continue their relationship with your brand. 

This simple act of recognition can lead to increased customer satisfaction, word-of-mouth referrals, and ultimately, a stronger bottom line. 

How do you create a reward point system?

To create a reward point system for customers, identify your key objectives, decide on how points are earned, select appealing rewards, and ensure the system is easy for customers to use and understand.

How do reward points work?

Reward points act as incentives; customers collect them through interactions and transactions, accumulating points to exchange for exclusive offers, services, or products.

What four items are required for an effective reward system?

An effective reward system needs transparent rules, a compelling rewards catalog, a seamless tracking and redemption process, and regular communication to keep customers informed and engaged.

What is the most effective reward system?

The effectiveness of a reward system hinges on its alignment with customer desires, its simplicity in earning and redeeming points, and its ability to offer desirable and attainable rewards.

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Picture of Harini Arunachalam
Harini Arunachalam
Harini is an experienced content writer with a passion for transforming complex SaaS concepts into engaging, informative content. She has honed her skills in crafting compelling blogs and articles that resonate with a diverse audience.
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