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

  • This topic is empty.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
  • #988746
    • Total posts: 244

    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.

    • Total posts: 53

    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

Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.