Home – New Forums Marketing mastery Reward Points Program – how to “price” it?

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  • #988746
    dangaff
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    Does anywhere here have a “rewards points” (or loyalty) program setup?

    I’ve been doing some reading and I think I’ll go with 1 point for every $1 spent.

    The trouble I’m finding though is pricing it on the “points to purchase” side of things.

    I was first considering 1 or 2%, this essentially means if someone wanted to buy a product – they would need to buy the same product 50 times to get one for free. Of course though, if they bought something higher value than this would be less dramatic.

    I thought perhaps that 1 or 2% is too small, then I thought 10% could be too high (perhaps it actually seems more realistic now).

    I sell products ranging from a couple of dollars up to ~$750 each. I suppose the average would be around the $50-80 mark.

    I understand it probably comes down to my own margins but any insight is always good from you all. Thoughts and suggestions are welcome.

    #1168725
    redleaftea
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    You need to work out what you are trying to achieve with a rewards system – is it customer retention, increased revenue per sale or something much more specific?

    A flexible earning strategy can make a change in a customers buying behavior depending on how you award points:

    Some methods encourage larger individual orders:
    – the more you spend the more you earn (Spend <$50 get 1p/$, Spend $50-$200 get 2p/$, etc)
    – different points per product (product A gets 12 points, product B gets 20 points, etc)

    While a status method encourages long term loyalty:
    – reach a points threshold for special pricing (earn 1000 points in 12 months get 5% off future purchases, earn 5000 points in 12 months get 10% off future purchases, etc)

    Building on any method with one-off or regular special offers can change behaviour further or create urgency to order:
    – Double points apply in June
    – Double points apply on product A this weekend
    – Spend $50+ in March for bonus 1p/$

    You also don’t necessarily have to offer your products as the end goal of earning points – depending on what you sell offering something more ‘fun’ might be more attractive (especially true when you sell to business)
    Earn 300 points and redeem for product A might not be as enticing as earn 30,000 points and get flight to nice location with weekend in nice hotel and dinner in nice restaurant

    Just some things to consider

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