Are you thinking of launching a reward points system for your WooCommerce store? You’re on the right track! A well-designed loyalty rewards program is one of the most effective ways to keep customers coming back. However, its success depends on how well it’s structured.
To truly drive long-term loyalty, you’ll need to design a reward system that resonates with your audience and offers real value. No worries though, we’re here to make it easy for you!
In this article, we walk you through the most important aspects to consider when structuring a reward points system. Ready to learn? Then let’s get started!
How Does A Reward Points System Work?
Reward points systems are one of the most popular types of loyalty programs. In this system, shoppers earn points for specific actions such as completing an order, leaving a product review, or referring others to your store. Points accumulated can then be redeemed for future rewards. Depending on how your program is structured, this can be in the form of a discount, free product, gift card, or other exclusive perks.
What makes a points-based system powerful? Definitely its flexibility! As a store owner, you can customize this loyalty program to support your most important business goals. For instance, if you’re looking to grow your customer base, you can choose to reward actions like signing up or incentivize referrals from existing customers. If you’re looking to build brand trust, consider rewarding product reviews.
Tailoring your redemption criteria to match your objectives can help you foster loyalty while encouraging actions that drive growth for your business.
If you’re looking to launch a loyalty program in WooCommerce, check out our complete guide. We walk you through each step! 👉
Designing An Effective Reward Points System
In this section, we’ll walk you through the most important aspects to consider when designing your reward points system. Regardless if you’re launching a new loyalty program or refining an existing one, reviewing these key elements can help set you up for success. Let’s dive in!
1. Setting up point values
Determining the value of points—for both earning and redemption—is one of the most crucial steps to designing an effective reward points system. As a store owner, you get to decide:
- How many points is a purchase (or other actions) worth
- How much those points are worth during redemption
Keep it simple and straightforward. A common strategy is rewarding 1 point for every $1 spent. This helps customers see the immediate reward for each purchase, which encourages them to engage in your loyalty program.
Next, you’ll have to define how much these points are worth. This depends on what you’re offering as a perk (more on this later). A sample structure might be 50 points = $1 discount, which provides a clear conversion for customers.
🎯IMPORTANT: Don’t forget to consider your profit margins when deciding on your points redemption values. For instance, if your average profit margin per product is 20%, make sure that the value of points redeemed doesn’t exceed this percentage.
Plugins like WooCommerce Loyalty Program simplify this process for WooCommerce store owners. With this plugin, you can easily set price-to-points ratio and adjust them based on how your program is performing.
2. Choosing actions that earn rewards
We’ve touched on this earlier–you can use your reward points system to incentivize actions that support your business goals. While it’s tempting to reward every possible action, avoid overwhelming shoppers with too many options! This could affect the perceived value of your loyalty program. Instead, focus on a few key actions that are impactful and easy to understand.
🎯 IMPORTANT: Before choosing which actions to reward, take a second to review your business goals as of the moment. This will help you identify which shopper actions align best with those objectives.
Here are some of the most common actions you can consider rewarding:
- Purchases: Rewarding shoppers for completing orders is an effective tactic to encourage repeat purchases and higher average order values.
- Account sign-ups: You might want to offer bonus loyalty points for new customer sign-ups. Aside from rewarding new shoppers, this strategy makes it easier to track their engagement with your business in the long run.
- Product reviews: Perfect if you’re looking to gather social proof and improve your brand’s credibility.
- Engagement: Grant points to customers who follow your brand on social media, comment on posts, or tag your business in their content. This is especially helpful if you want to increase your online visibility.
- Milestones: Likewise, you can reward points when customers reach a special milestone with your brand, such as reaching a certain spending or order threshold. Plugins like Advanced Coupons allow you to craft offers based on a shopper’s total spend, which is handy for rewarding loyal customers.
With our WooCommerce Loyalty Program plugin, you can choose which specific actions you want to reward in your store.
3. Selecting the right rewards to entice customers
This is undoubtedly the most exciting aspect, especially for shoppers! Choosing the right perks is what will encourage customers to participate in your loyalty program. The key is identifying which rewards they value. You can use surveys or feedback forms to identify which perks your customers are interested in.
There are several types of rewards you can offer. The most common and straightforward option is offering a discount. In this arrangement, shoppers can redeem points as store credits that give them a fixed amount off their next purchase. Discounts are effective because they provide immediate value.
If you’re looking for inspiration, we’ve laid down the most effective types of loyalty incentives you can offer to customers. Check them out in our guide! 👉
4. Setting rules, thresholds, and expiration dates
To make your loyalty program sustainable, you need to set clear terms and communicate them to your customers. Establishing thresholds and expiration dates can also make your program more engaging in the long run. Let’s look into these aspects in more detail:
Program terms and conditions
This defines how points are earned and redeemed, and who can participate in your loyalty program. Most brands have a dedicated landing page to showcase this information to customers. Check out this example from PetSmart:
Redemption thresholds
Thresholds determine the minimum number of points a customer must earn before they can claim rewards. This can help make your loyalty program more engaging. With plugins like WooCommerce Loyalty Program, you can specify both a minimum and maximum points allowed for reward redemption.
Points expiration dates
Setting reasonable expiration dates adds a sense of urgency, motivating customers to claim their rewards within a specific timeframe. A common industry practice is implementing an annual expiration policy, where points expire 12 months after they’re earned. Reminding customers of unclaimed reward points can also be a great way to re-engage inactive shoppers.
5. Tracking, monitoring, and optimizing performance
Thankfully, today’s loyalty program solutions provide built-in analytics tools to help you assess the performance of your rewards system. Our loyalty program plugin, for instance, provides a comprehensive dashboard that summarizes points earning and redemption history:
Regularly monitoring your loyalty program analytics is key to determining what’s working and what needs tweaking.
A critical metric to watch is your point redemption rate. This measures how often customers redeem their points. Having a healthy redemption rate indicates that customers engage and find value in the rewards you offer.
According to industry insights, the average redemption rate of loyalty programs in 2023 was 49.8%. Having a significantly lower redemption rate may indicate that rewards aren’t enticing enough, or set thresholds are too high to meet.
Other relevant metrics to track include average order values (AOV), customer engagement, and customer lifetime value (CLV). Consistently tracking these metrics will help you assess the effectiveness of your rewards system.
Frequently Asked Questions
How are reward points calculated?
Store owners often grant a certain number of points for every dollar spent. For instance, you can offer 1 point for every $1 dollar spent by a shopper. However, some loyalty programs also reward points for specific customer actions, such as leaving reviews or referring a friend. Plugins like WooCommerce Loyalty program allow store owners to customize these points calculations to reward actions that support current business goals.
How do reward points work?
In a points-based loyalty program, shoppers earn points for specific actions, such as completing an order or signing up as a customer. These points can then be redeemed as rewards like discounts, free products, or even gift cards, depending on the program’s structure.
How to set up a points reward system?
You can easily set up a points reward system using a tool like WooCommerce Loyalty Program. This plugin allows you to launch a loyalty program in minutes and grant points for actions like making a purchase and leaving product reviews. When setting up your points reward system, make sure to define clear terms, thresholds, and expiration dates. Spread the word by leveraging social media and creating a dedicated landing page on your website.
Conclusion
Launching a successful reward points system entails careful planning and consideration of key elements. Each aspect plays a role in driving engagement and creating lasting customer loyalty. In this article, we walked you through each critical step:
- Setting up point values
- Choosing actions that earn rewards
- Selecting the right rewards to entice customers
- Setting rules, thresholds and expiration
- Tracking, monitoring, and optimizing your program
If you’re ready to launch a rewards program in your WooCommerce store, consider leveraging the WooCommerce Loyalty Program plugin. This powerful plugin allows you to launch a loyalty program in minutes. With this tool, you can choose which actions earn points, set reasonable thresholds and points expiration, and track loyalty program insights with ease.
We hope this article helped you out. Do you have any questions about setting up an effective loyalty program? Let us know in the comments. ☺️
