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Loyalty Point Definition

Loyalty points are a type of currency that a business offers within a loyalty program. They can have a monetary value, respected in that particular brand (allow for pay-with-points reward), or be exchangeable for a set of rewards defined in a rewards catalog. The way and rate at which customers earn points is defined by earning rules and points multipliers which can differ between loyalty tiers.

If you are running a point-based loyalty program, you can give points a special name that is in line with your brand. Here are some ideas:

  • "Cork" for alcohol-selling businesses.
  • "Page" for bookstores.
  • "Buttons" for fashion stores.
  • "Steps" for fitness apps.

Examples of unique names for loyalty points

Starbucks offers their customers the possibility to earn loyalty points named "stars," which then allow the customers to take advantage of the offered benefits.

Starbucks loyalty program

Lufthansa, together with their 40 airline partners, allows its frequent flyers to use loyalty points which are called "miles" in order to take advantage of the Miles & More frequent flyer program.

Lufthansa loyalty program

Remember that by giving a special name to your points, you build a cohesive customer experience, and show that your rewards program is part of your brand community experience, not an afterthought.

What is a point-based loyalty program?

Point-based loyalty program is the most frequently used type of reward program. In this type of program, members collect points for performing specific actions – these points can be later on exchanged for a variety of rewards. Buying products is not the only way to earn points. In more innovative point-based programs, customers can also collect points via performing desirable actions, such as following the brand on social media, sharing reviews, and celebrating birthdays.

What is a loyalty points system?

Loyalty points system is a type of software that allows brands to run loyalty points programs and perform key functions related to handling points, such as calculation, deletion, addition, analytics, and expiration.

What are the must-have features of a loyalty points system?

To create an effective loyalty point system, there are a few features that you should focus on:

1. Transactional and behavioral earning rules

Loyalty is more than just purchases, so make sure there are multiple ways to earn points. Set up and manage a loyalty program that rewards customers not only for purchases but also for other desirable behaviors, such as social media engagement, referrals, or product reviews.

2. Fixed and proportional points assignment

You should have the ability to set up both fixed and proportional points for specific activities based on order and customer attributes. This means that you can create custom loyalty programs that reward customers for specific behaviors or purchases, and tailor the rewards based on their value to your business. For example, customers from a specific tier would receive more points for a specific action than regular members.

voucherify fixed and proportional points

3. Points expiration

You should be able to manage points expiration rules for your loyalty program, taking control over how long points are valid and encouraging customers to redeem their rewards sooner rather than later. This makes it easier to manage points liability and control the loyalty breakage.

voucherify points expiration

4. Multiple loyalty points redemption touchpoints

Members should be able to manage and spend points in a variety of ways. This includes online and offline touch-points, such as mobile apps, websites, in-store terminals, or third-party platforms, ensuring that customers can redeem their rewards wherever and whenever they want. Another key feature is a digital wallet which allows customers to store points and manage their membership.

5. Manual addition and removal of points

You should have the option to manually add or remove points from a customer's loyalty account and adjust the balance based on special circumstances or customer service needs. This feature allows you to maintain a high level of control and flexibility over the loyalty programs and ensure that customers are treated fairly.

6. Analytics and customer profile with loyalty balance and history of earning and spending points

To ensure program success, you should have critical insights into detailed customer profile, helping you understand your customers better and create personalized and targeted loyalty campaigns.

7. Transfer of points

When customers share their loyalty points with others who are not customers yet, it can create word-of-mouth marketing and potentially attract new loyal customers for your brand. Voucherify provides the option to transfer points between loyalty cards, whether they belong to the same person but different brands, or different members within the same brand.

8. Pay-with-points

You should allow members to spend their loyalty points in many different ways – whether it’s exchanging them for rewards or using them as payment method.

voucherify pay-with-points

Voucherify is a loyalty points system that supports global brands looking to increase customer retention and engagement. With customizable points-based loyalty programs, Voucherify allows you to incentivize customers and create a sense of loyalty towards the brand with a dynamic point-based loyalty structure.

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