Quick links:

• • • What is a rewards system?
    • 6 tips for designing a points reward system for your business
    • Final words
      
      

The ultimate goal with a reward points system is to motivate customer behavior that grows your business. However, it is also a good way to build brand loyalty and reward your most loyal customers. 

The Pareto Principle (also known as the Law of the Vital Few) states that 80% of all sales come from just 20% of your customers and that 20% are usually loyal, returning customers. 

Creating a rewards program lets you focus on that valuable 20%!

If you have ever wondered 

• What a reward points system is, 
• How to set up a simple rewards program for loyal customers, and 
• How you can increase your revenue with a loyalty program

Then you are in the right place.

Related: How Mecca Built One Of The World's Best Loyalty Programs

What is a reward points system?

According to Shopify, rewarding points is the most common type of customer loyalty program. A reward points system is an incentivization strategy that increases spending through earning in-store points or credits. 

Customers earn points on their account when they purchase. They can then redeem points the next time they shop or use them for other freebies and perks. Some loyalty programs also let customers accumulate points and move from a “regular” member to a “VIP” member in a tiered program. 

Evermore Toys is a great example of a simple points rewards system. Their mission is to create high-quality toys for their customers, and they implemented an elegant customer loyalty program that increased their revenue by 738.87%.

Customers earn 1 point for every $1 they spend; when they reach 100 points they get $10 off their next purchase. Evermore Toys saw a 95% per month increase in loyalty points over a one-year period, showing that you don’t need a complicated loyalty program to get results.

6 tips for designing a points reward system for your business

To implement a reward points system for customers, there are a few key systems you need. Your business and your customers are unique. 44% of consumers aren’t happy with rewards programs because the bonuses feel “irrelevant”. So it’s worth a bit of creative strategy! 

The most successful loyalty programs are specific to your brand community and are extremely customer-focused. 

Related: 7 Steps To Building A Profitable Loyalty & Rewards Program

1. Identify the main goals of your customer loyalty program

Obviously, your loyalty points system benefits your revenue potential. However, you can do so much more with it! So the first step to a successful points system is to identify what you want to achieve with it. 

Here are a few questions you can ask yourself: 

• • • Do you want to build brand loyalty by creating a unique community?
    • Do you want to reward your MOST loyal customers by creating a tiered reward system? 
    • Do you want to delight customers with unexpected surprises? 
    • Do you want to encourage more spending or points accumulation? 
    • Do you want people to share your business on social media or get people to refer their friends? 
    • Are you going to run “points promotions” to encourage higher spending in sales? 

All loyalty programs motivate particular behaviors. When you are starting out it is best to choose just one or two goals so that you can track their progress and then build from there.

2. Determine how customers will earn the rewards

Next, you will need to determine HOW customers actually get rewards. 

You might want to keep it simple like the Evermore Toys example above. They spend a dollar, they earn a point. There’s nothing wrong with avoiding complications.

Loyalty programs also offer points for customer behavior such as

• • • Sharing on social media 
    • Earning freebies on your birthday 
    • Giving product reviews
    • Referring a friend

Take Our Bralette Club as an example. Their loyalty program members can earn points when they make a purchase, for every friend they refer, for Tweeting about the brand, and even just for getting a year older on their birthday.

Other models include tiered rewards systems. This is where members can move from regular member to VIP status once they cross a spend threshold. VIP customers could have benefits such as Double Points (every dollar is 2 points) or other bonuses like automatic free shipping. 

You will also need to consider online versus in-person shopping. Can customers earn and spend points no matter where they shop with you? Using a points reward software like Marsello makes loyalty programs completely seamless across eCommerce and POS.

3. Determine how these rewards will be awarded to the customers

Once customers have earned their points, it’s time to reward them! Do you have a system for how they can claim points? 

Firstly it is important to have a login for members where they can easily see their points program total. Seamless integration with your eCommerce checkout and POS is critical for a successful loyalty program. Don’t make your customers work for it! 

Next, identify the timeline. Can they redeem points as soon as they earn them? Will they receive a coupon or code for their next purchase? Will you send them something for free? 

Lastly, consider what form their rewards will be in. It doesn’t just have to be points they can spend in-store. 

Here are a few ways you could reward your customers in a points program:

• • • Offer secret sales for people with  a certain number of points 
    • Collaborate with other businesses to do giveaways with similar products 
    • Give away freebies when they buy multiple items 
    • Do live in-person events for your most loyal customers 
    • Offer other bonuses like free shipping or first access to new products 
    • Set up an affiliate program where they can make actual money for referring new customers 

Nigerian shoe brand bCODE has an outstanding loyalty program strategy. When they first launched their online rewards, they created a double-point promotion as well as a spend threshold. 

With their email marketing and social media campaign, they encouraged increased sales, loyalty program sign-ups, reward redemptions, and more! They also encouraged bCode customers to sign-up by sending an email campaign that detailed how shoppers could sign up to the newly expanded loyalty program and earn points in the lead-up to the weekend’s promotion.

With a 94% increase in loyalty points spent, you know they are rewarding loyalty right! 

4. Identify the value of your rewards

If customers earn points-per-dollar, you will need to identify the value of your rewards. You can categorize rewards from low to high value based on how loyal customers are. 

Will they get a discount voucher? Do their points add up to free shipping? Can they move up a membership level if they reach a spend threshold? 

If you have a tiered loyalty program, the value of the rewards can go up with each level. 

For example, a first-tier member could earn points that add up to a discount voucher. A second-tier member could earn double points. A third tier, VIP member could have free shipping, triple points, and access to exclusive events. 

Remember, your most loyal customers bring in the most amount of revenue. It is worth going above and beyond to improve their experience with higher value rewards.

Look at outdoor apparel & footwear brand Merrell NZ. As soon as you sign up for their rewards program you can start moving up the tiers. Their silver and gold tier members enjoy generous discounts when they earn a certain number of points. Merrell NZ makes it simple for members to earn points with amazing rewards and a simple loyalty program widget.

5. Associate a name/brand to your loyalty program

No matter how amazing your product is, you are facing a huge amount of competition. Your customers are probably being asked to join a huge number of other loyalty programs. 

To make your customer reward system stand out, we recommend branding it. 

How can you make your loyal customers feel like they are part of a special community? This is where customer experience comes into play for modern business. It’s not enough to simply sell to your customers. Associating a brand name with your loyalty program makes you memorable. 

For example, Marsello user Our Bralette Club has a membership loyalty program called the Peach Party. Peach Party members enjoy generous discounts and free products, and most importantly the branded name makes them feel part of the club!

6. Promote your rewards point program

Finally, you need a system for promoting your points reward program. You can’t reward customers if they don’t know it exists! Don’t be afraid to promote it everywhere online and in stores. 

This isn’t just for new customers or new business. When Evermore Toys rebranded, they used a clever email marketing campaign to encourage existing loyalty members to engage with the newly branded store and earn more rewards.

We have a few tips for promoting your rewards system online:

• • • Let people register for an account at the checkout and remind them to sign in
    • Have a banner on your website telling people about the benefits of becoming a member and earning points 
    • Let customers know on your social media platforms 
    • Use an omnichannel marketing platform that combines your reward system online with your POS 
    • Automate your email marketing strategy to communicate effectively with new and existing members- you need to promote at the right times to ensure high engagement!

Your loyalty program is all about serving your customers even more. Shout its benefits from the rooftops!

Final words

A reward points system is an effective way to increase your revenue. It rewards your most valuable customers and goes beyond a transactional relationship. By branding your loyalty club, designing an easy-to-follow system, and promoting it for every new and returning customer, you will see incredible ROI on your rewards program. 

If you are looking for the easiest way to set up a loyalty program for your eCommerce or in-person store, you’ve already found it. Marsello makes it simple to set up, market and run a successful point system for rewards. Start rewarding your customers with Marsello!

Read more: 7 Steps To Building A Profitable Loyalty & Rewards Program

As it turns out, there are very good reasons for you to treat your customers on their birthday. A study by Vibes found that 77% of mobile consumers state that receiving surprise points, exclusive messages, and birthday/anniversary content "would have a major impact on their brand loyalty."

Birthday campaigns also tend to perform better. Research by Experian revealed that compared with promotional emails, birthday messages:

• • • have a 481% higher transaction rate
    • generate 342% more revenue
    • have a 179% higher unique click rate
    • See an 89% higher open rate.
      

These numbers tell us that birthday email campaigns can be a huge treat – for both customers and brands. So, it’s worth investing the time and effort to make your birthday initiatives shine. Read on for ideas and tips on how to do just that.

What are the benefits of birthday rewards for your business?

The biggest benefit of birthday rewards programs is that they are a win-win strategy. They put the focus on the buyer experience which benefits your best customers while simultaneously increasing revenue and loyalty.  

There are several key reasons why birthday rewards should be part of your overall loyalty program strategy:

• • • Firstly, birthday rewards programs increase customer loyalty. 84% of customers opt to stay with a brand that surprises them and takes a customer-centric approach. Who doesn’t like being spoiled on their birthday! 
    • Secondly, loyalty programs (that include things like birthday surprises) are proven to improve customer retention rates. Even a small increase of 5% in retention can boost profits by a whopping 25-95%.
    • Lastly, you can gather personalized data on your best customers. This allows you to personalize customer experiences and again improve loyalty. 

By adding birthday rewards to an existing loyalty program, you can personalize customer experiences, gather data on what campaigns are resonating with which customers, and re-target loyal customers who redeem rewards. 

Read more: 7 Steps To Building A Profitable Loyalty & Rewards Program

How to prevent birthday rewards abuse

You might be asking “what if people sign up to our birthday points program with a fake birthday?”. 

We have three suggestions to help stop birthday rewards point abuse. 

1. 1. 1. Apply a “cooling-off” period when people sign up to your loyalty program, i.e. don’t let people put in a birthday date that is within the first month (“What a coincidence, my birthday is TOMORROW!”). This will deter people who want “quick points” or instant freebies and then disappear. 
      2. If you are using a points system, make it less than the points they receive for making an actual purchase while still being valuable.
      3. For birthday programs where you give out a freebie, make it a surprise! Don’t explicitly say what free item they will receive before they sign up. That way people will be less likely to sign up for that one specific item and you can still treat your loyal members.

Ultimately, there will always be people who want to take advantage of free points. The benefits you get from creating positive customer experiences for your loyalty club members will almost always outweigh the potential for rewards abuse. 

Examples of Birthday Rewards Campaigns

When you do it right, birthday rewards campaigns can improve customer retention, loyalty, and engagement. Whether it’s sending specialty coupons, giving out freebies, or something a little more creative, these examples hit the nail on the head. 

Send a one-off special discount and build excitement

This one can seem to be a low-hanging fruit of birthday rewards, however, special discounts are known to yield quick results and valuable data when implemented correctly. If you’re new to birthday campaigns, consider starting things off with a special discount that shoppers can use on the month of their birthday.

It’s simple, straightforward, and easy to test. Just make sure to create unique promo codes for each celebrant, so you can track who’s redeeming your offers.

Offer free products on special occasions

Alternatively, you can opt to give shoppers a freebie on their special day. Some examples of brands that offer birthday freebies include Starbucks and Sephora. In fact, birthday freebies are growing increasingly common. Australian burger joint Hello Harry’s openly offers their customers a free birthday burger… with a small caveat that protects the business – the birthday burgers are free up to the value of $12.

Freebies are a great option if you want to encourage your customers to try your products or if you have samples and surplus stock to give away.

Offer creative rewards to encourage engagement

Here’s the not-so-great reality of loyalty or rewards programs: while many consumers sign up for them, not everyone participates in all the programs they join. 

A 2018 survey found that almost "two-thirds of respondents actively engage with less than half the loyalty programs to which they are members.” The survey found that only 18% actively engage with all their rewards programs.

If your loyalty or rewards program is suffering from low engagement rates, consider incorporating birthday rewards to stir things up. When implemented correctly, this tactic can fuel engagement among your members and put your brand back on their radar.

Anna Beck, a Shopify Plus-powered Jewelry store with multiple resellers and stores, has done a great job at subtly incorporating birthday rewards into their loyalty program to incentivize customers but not create so much buzz that they risk sign-ups for just that reason.

Members of the program automatically get 20 points on their birthday, but with 100 points for creating a profile and 25 for completing their profile information, it’s easy to see how customers quickly earn enough points to reap the rewards.

Since they started using Marsello, Anna Beck has experienced a 728.33% increase in revenue, directly attributable to their loyalty program. And even better, they’ve developed a really thorough understanding of their customer database and how to convert them into loyal customers. They had this to say about developing their loyalty program with Marsello:

“​​Through the data, we’ve found that we have incredibly loyal customers. Once they make their second purchase, they are highly likely to be lifelong customers. Marsello allows us to easily reward those loyal customers for sticking around, it was a no-brainer. Anna Beck has only been an online retail brand for a handful of years, and a loyalty program was the natural next step.”

Another great example comes from Smack Bang, a Wellington-based pet products specialist is one brand that's using a powerful loyalty program to its advantage. With a 100% engagement rate and 6x ROI, the addition of loyalty marketing to SmackBang's all-over marketing tech stack really helps them to capture customers' attention time and time again. 

Loyalty members earn points for actions such as creating a profile, referring a friend, reviewing products, making purchases, and engaging on social media. And the benefits include % discounts off as well as first-looks at product releases. 

The Smack Bang team makes sure to keep their loyalty program members up to date with emails regarding product releases, business updates, sales, events, and more! By keeping regular contact with their customers, they set the expectation that the more loyal a customer is, the better deals they’ll get. And we love that SB lives up to this expectation!

Create a sense of mystery and surprise your customers 

Want to keep shoppers on their toes or still trying to figure out which reward type is the best option? Consider offering a range of rewards and surprises that your customers can enjoy on their birthday month.

That’s what the lingerie retailer ThirdLove is doing. Members of their ‘Hooked’ loyalty program get an annual free birthday gift, which remains a surprise until the customer's special day. According to the company's website:

“We’re not ones to spoil a surprise! While we won’t tell exactly what they are, they’ll change regularly and might be a freebie, a discount, or a little something special just for you.”

Surprise freebies are a wonderful way to keep your customers excited, but our tip? Don’t be tempted to fall into the trap of ‘pawning off’ your hard-to-sell stock on these customers. Make sure your birthday freebies are worth the hype and keep shoppers wanting more.

Celebrate your business’s birthday and say thanks to your customers

A nice twist to the concept of birthday rewards is to celebrate your brand’s birthday. This is a good way to mark an important milestone, and it gives you the opportunity to thank customers – both new and old.

Bare Wholefoods, a Sydney-based cafe, did just that when they celebrated their 4th birthday. 

To mark the occasion, Bare Wholefoods sent a pre-birthday email to their customers, which included a $10 discount code along with a sincere message of appreciation. The result? The small but mighty campaign saw a 6.59% conversion rate!

By celebrating their own birthday, Rough & Bare was also able to show appreciation to the customers that keep them going – and this is such a powerful message in the wake of significant changes brought about by COVID-19.

Tips for implementing birthday rewards

We’ve talked about the different types of birthday rewards you can offer; now let’s discuss how you can take your campaigns to the next level. If you’re looking to start or further optimize your birthday rewards initiatives, follow these best practices to ensure that your efforts hit the mark:

Integrate birthday perks with your loyalty or rewards program

While it’s certainly possible to offer birthday rewards to non-loyalty program members, your campaigns will perform far better if they’re incorporated into your loyalty program.

Roping birthday rewards into your loyalty program enables you to build data-rich customer profiles. Having your shoppers’ purchase histories, shopping activities, and birthdays in one place means that you have a clear view of who each customer is. That, in turn, can enable you to improve and personalize their shopping experiences even more.

LEGO Certified Stores South Africa has done this to great success!

By awarding customers points on their birthdays and for purchases, LEGO creates a feeling of scarcity but customers also quickly rack up the points with each purchase. This means that when customers earn a reward, it feels all the sweeter!

Automate your campaigns

Keeping track of everyone’s birthdays and setting up individual messages isn’t just tedious, it’s impossible as your business grows. Campaign automation is not only a remarkable time-saver – automation as a whole (along with personalization) has actually been pinpointed as the future of marketing. 

Thankfully, Marsello has done the hard work for you and already has a number of pre-made automated flows that are easy to review and enable. One of these automated flows includes a Birthday Flow which automatically triggers an email sequence to engage customers on their birthday month. This pre-designed email series is populated with an offer of a small discount and is already tied to your customer database, so there’s no need to manually configure the campaign. 

Just take a look at this example from Nigerian shoe retailer bCODE:

Notice that they’ve given their customers a lovely surprise by automatically adding 5 points to their account to celebrate! We love that this campaign stands out, has a compelling subject line, and gives customers value right away.

In fact, all of Marsello’s automated campaigns are designed to be easily enabled in just a few clicks. Learn more about Marsello’s marketing automation functionality or start a free trial and explore yourself.

Test your offers

While we can certainly recommend birthday rewards and ideas, ultimately, the performance of your birthday promotions will depend on your specific store and customer base. That’s why it’s important that you test and analyze different birthday promotions to see what works best for your business.

As mentioned above, coming up with unique promo codes makes it easier to monitor the performance of your offers, as well as the customers who are redeeming their rewards.

In fact, the NZ arm of international sporting goods specialists Merrell are pros are testing all of their marketing. They had this to say when we spoke to them about their Marsello-powered marketing.

“Marsello offers automations, loyalty, rewards, email campaign segmentation, SMS. All the tools that we knew we wanted to test in stages as our eCommerce and business grows. Step 1 was swapping from [our old provider] to using Marsello’s email marketing campaigns. Step 2, we’re using marketing automation. Step 3, it’s loyalty!”

It was essential to the team to find an all-in-one tool that they could use to build their marketing functionality while also testing each and every change. And that didn’t stop when it came to building their loyalty program and testing their promotional offers!

One way you can use birthday rewards to understand your customer engagement patterns is to test which different promo types (e.g., free shipping vs. 20% off vs. $5 off) your customer responds well too. Then, it’s easy to apply similar logic to any other promotions and offers that you create in the future!

Integrate SMS marketing

While email is still the most popular channel for sending birthday promos and rewards, SMS is rapidly gaining steam – and it won’t slow down anytime soon. Industry experts are predicting SMS marketing to grow by 52% by 2023.

As such, if you’re thinking about using SMS marketing, customer birthdays present the perfect opportunity to touch base. Consumers will likely be checking their phones for birthday greetings, and having a timely text from your brand could serve as a pleasant surprise. 

Just remember, SMS marketing comes with a few rules to keep in mind and not every merchant is eligible. To make sure you’re doing everything right, check out our help center on SMS compliance. 

Final words

Birthdays can be a real treat not just for your customers, but for your brand, as well. So, take the time to create campaigns that make your customers feel appreciated on their special day.

Need help doing just that? Check out Marsello’s customer loyalty features and discover how you can engage each customer on their birthday and beyond.

Make sure to check out our comprehensive loyalty guide to ensure your loyalty marketing is up to date in all areas.