Before any discussion of points and tiers, one check: how many times a year does your typical customer buy?
Below twice, a loyalty scheme has nothing to reward. A customer who buys once a year will not remember they have points — let alone return for them.
Want to know whether it is worth it in your case?
Tell us what you sell and how often people buy and we will run the calculation.
When it is worth it and when it is not
| Category | Purchase frequency | Worth it? |
|---|---|---|
| Cosmetics, supplements | 4–12 times/year | Yes, clearly |
| Food, coffee | 6–20 times/year | Yes |
| Clothing | 2–4 times/year | Marginal |
| Office consumables | 4–10 times/year | Yes |
| Furniture, appliances | 0.5–1 time/year | No |
| Handmade gifts | 1–2 times/year | No |
The rule: you need at least three purchases a year for an accumulation mechanic to make sense.
Being in the bottom rows does not mean you cannot retain customers. It means the tool is different: good service, an email that reminds them at the right moment, and referrals — see referral marketing.
The four models
| Model | How it works | Suits |
|---|---|---|
| Points | Accumulate per euro, redeem as a discount | Frequent small purchases |
| Tiers | The more you buy, the better the perks | Wide variation in order value |
| Stamp card | The tenth purchase is free | Simple, repeating products |
| Subscription | A fixed fee for perks | Very frequent purchases |
The third is the most underrated for a small e-shop. It is simple, understood in two seconds, and needs no software doing complicated arithmetic.
Complex points schemes fail for one reason: customers cannot tell what they are worth. “100 points” means nothing. “€5 off” means something.
If you choose points, always show the euro value beside the number.
What to reward (and the mistake everybody makes)
The commonest mistake: rewarding spend alone. That means rewarding people who would have bought anyway.
More productive actions to reward:
- A second purchase within 60 days — that is where most people are lost.
- A review with a photo after delivery.
- A referral that resulted in a purchase.
- Signing up to your email list, the cheapest repeat channel there is.
- Completing a profile with preferences — it gives you data for targeting.
The first is the most profitable. A customer who buys a second time is far more likely to buy a third; rewarding that behaves like an investment rather than a discount.
What it costs in margin
Every euro of reward comes straight out of profit. The calculation before you decide:
| Item | Example |
|---|---|
| Average order value | €45 |
| Gross margin | 40% (€18) |
| A 5% reward | €2.25 |
| New margin | €15.75 (35%) |
| Purchases/year before | 2.4 |
| Purchases/year after (target) | 3.0 |
| Annual profit per customer | €43.2 → €47.25 |
The programme only pays if the rise in frequency covers the margin you gave away. In this example, you need roughly +25% frequency to come out ahead.
The full margin calculation, with every hidden cost, is in e-shop pricing.
The safety rule: 3%–7% of order value. Above 10% usually means you are subsidising purchases that would have happened anyway.
Want the calculation with your own numbers?
Send us your average order and margin and we will tell you what percentage you can carry.
How to set it up in five steps
- Choose one model, the simplest that fits. Not two.
- State the value plainly: “€1 = 1 point, 100 points = €5”.
- Set an expiry on points, 12–18 months. Otherwise the liability accumulates without end.
- Show progress on every page and in every confirmation email.
- Remind people before expiry, twice. That is where most returns happen.
The fifth step makes the difference and requires an email list — the automated sequence structure is in email marketing.
And a legal note: the programme’s terms must be written and accessible — value, expiry, what happens on a product return, and how you may amend it.
What to measure
| Metric | What it shows |
|---|---|
| Sign-up rate | Whether it is understood |
| Redemption rate | Whether it looks achievable |
| Purchase frequency, members vs non-members | Whether it works |
| Average value, members vs non-members | Whether it pays |
| Reward cost / incremental revenue | Whether it is profitable |
The second is the most diagnostic. Redemption below 20% means the threshold is too high and customers gave up — meaning you carry the accounting liability without the commercial benefit.
Frequently asked questions
What does the software cost?
€15–€60 a month for an off-the-shelf solution on common platforms. More elaborate schemes, €80+.
Can I start without a tool?
Yes, with a discount code on the second purchase. It is the cheapest way to test whether your audience responds.
What about members’ data?
Data protection rules apply: a privacy notice, a purpose, a retention period. Do not collect more than you need.
What if I discontinue the scheme?
It must be provided for in the terms, with a reasonable redemption window. Abrupt withdrawal costs you reputationally.
Does it work better than a discount?
Yes, because the reward comes afterwards and commits the next purchase. The other repeat-purchase levers are in increasing sales.
The first step
Work out how many times your average customer buys per year: total orders divided by unique customers.
If the number is below 2, do not build a scheme. Put the same money into better service and an email that reminds people at the right moment — it will return more.
Next step
Book a free 30-minute call with the team at The Dev Alley. We will look at your numbers and tell you whether, and in what form, it is worth it.