Loyalty points
Loyalty points are credit a customer earns per order and spends as a voucher on a later one. A points program gives repeat customers a reason to come back to the store instead of to the ad that brought them the first time.
What it means
The mechanics are simple: a rate per order, a balance per customer, a voucher when the balance crosses a line. What makes a program work is less the rate than the messaging around it: the customer must know her balance, see how close the next voucher is, and hear about it at the moment she is deciding where to buy.
Why it matters for a store
Repeat customers cost nothing to acquire. A store that pays an ad platform to bring back people who already bought is paying twice. Points move that second purchase from paid to owned channels, and the balance gives every message a reason to exist that is not a discount.
An example
A customer has 1,240 points and needs 260 more for her next voucher. The agent tells her in the next order confirmation, shows the balance on her account page, and reminds her once when a product she viewed would get her over the line.
How the agent uses it
The loyalty program with points and vouchers is part of retention, on the same profile as email, push and messages, so the balance appears wherever the agent talks to the customer.
Related terms
See also RFM segmentation, Dynamic coupon, NPS (net promoter score).
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