Glossary
What is points programme?
A points programme awards points in proportion to how much a customer spends (typically one point per unit of currency) and unlocks a reward once a threshold is reached.
Points suit businesses where ticket size varies widely, such as restaurants, beauty salons and retail. Because the reward scales with spend, a large order is rewarded more than a small one, which both feels fair and quietly encourages upselling. The trade-off against stamps is legibility: customers understand 'eight of ten stamps' instantly, while '164 points' requires them to remember the exchange rate.
How should points be valued?
Use one point per unit of currency and set the reward at a round number, because the only property of a points scheme that matters operationally is whether a customer can estimate their progress without doing arithmetic.
One point per euro with a €10 reward at 200 points is a legible five per cent return. The same economics at seven points per euro with a reward at 1,340 is incomprehensible, and a customer who cannot estimate their progress never experiences the pull of an approaching reward.
What is the main weakness of points?
Comprehension. Points add a conversion step between what the customer does and what they get, and every additional step loses some of them. State the reward in currency on the card rather than in points alone.
Never reduce the rate for customers who have already accumulated. If a devaluation is unavoidable, apply it to new earnings only and announce it before it takes effect: a programme that quietly changes the exchange rate teaches customers that progress is not real.
When are points better than stamps?
When a single transaction can be worth ten times another. Restaurants, bars and general retail usually fall here; cafés and bakeries usually do not.
See also
- Stamp card: A stamp card is a loyalty mechanic that rewards a fixed number of visits, one stamp per visit (buy ten coffees, get the eleventh free), and is the digital successor to the paper punch card.
- Visit-based loyalty: Visit-based loyalty rewards a customer for the number of times they come in, regardless of how much they spend on each occasion. Loonine implements this as a stamp card with one stamp per visit.
- Purchase frequency: Purchase frequency is how often a customer buys within a period, and its inverse, the typical gap between one customer's visits, is what sets every other number in a loyalty programme.
Further reading
Do you need POS integration to run a loyalty programme?
Whether a loyalty programme needs to connect to your till, what integration buys you, and when running alongside the POS is the better choice.
Do loyalty programmes work?
An honest look at the evidence: where loyalty programmes measurably change behaviour, where they only subsidise customers you already had, and how to tell which is happening.