Loyalty programs are the most popular type of program today. They have successfully fostered customer retention and driven sales. What it is trying to overcome is that unless a person buys regularly from you, it takes time for them to accumulate enough loyalty points to make it worthwhile to use them. This allows people to purchase points that can be used now. It boosts sales as it functions much like a gift card.
What Does It Mean to Sell Loyalty Points?
Selling loyalty points allows customers to purchase points instead of earning them through spending. The points can be redeemed now. For example, a customer might use points as a discount to buy more points. Many large brands, such as airlines, Hilton, and Starbucks, successfully employ this strategy. With proper planning, it could work for you, too.
Key Mechanics of Point Purchases
Similar to gift cards, which many of you now sell, customers pay upfront for points that they can redeem later. Think of it as a top-up.
This approach would be convenient in industries where people visit infrequently.
Advantages of Selling Loyalty Points
Enhanced Revenue Streams
Selling loyalty points provides immediate cash flow.
Improved Customer Experience
Customers gain control over their loyalty journey. With its accelerated progress, it can be used immediately.
Competitive Differentiation
Offering point purchases sets you apart from competitors still using traditional programs.
Valuable Behavioural Insights
As the points go to the actual buyer, a gift card goes to the buyer, making it harder to track what your customers want. This is a big plus as you can utilise the reports in the VIP section, so allowing better customer tracking.
Implementing such a system
Define Your Pricing Model
In this image above
$300 gives the customer $330
$500 gives $565
$1,000 gives them $1,150
I think it's too much, and I would suggest something like
$25 gives them $25
$50 gives them $52
$100 gives them $104
$250 gives them $255
The reason $25 gives them nothing better is that you do not want to encourage people to buy these points just to get a discount. Additionally, as is typical in such schemes, large purchases often result in a slightly worse deal than the $100.
Integrate with Your POS System
With our modern POS system, you can simplify point sales by:
- Automate point issuance upon purchase
- Syncing inventory with redemption options
- Tracking customer purchase/redemption patterns
There is no reason why you cannot experiment with offers like “Double Point Days,” which many retailers use.
Communicate Clearly
- Use in-store signage to explain how it works. No point in having it if no one knows bout it.
- I could see how someone like a barber could use it to send out targeted offers like “Need 50 more points for a free haircut? Buy them now and save $15!”
- Train the staff to explain the program’s value during checkout.
Written by:
Bernard Zimmermann is the founding director at POS Solutions, a leading point-of-sale system company with 45 years of industry experience. He consults to various organisations, from small businesses to large retailers and government institutions. Bernard is passionate about helping companies optimise their operations through innovative POS technology and enabling seamless customer experiences through effective software solutions.
