5 Tips to Create a Rewards Program that Drives Revenue
To this day, one of the biggest thrills our team gets is seeing merchants use our platform to design compelling, creative rewards programs that get real results.
But over the course of hundreds of emails, chats, and phone calls with our merchants, we’ve learned that one of the most challenging aspects when it comes to getting set up on our platform is learning how to create a rewards program that truly generates results. There’s a lot to learn when merchants first begin using our service!
Keeping that in mind, we wanted to share some “best practices” which we’ve observed over the course of our interactions. While we also have our video tutorials, this post is designed to cover the “how does it work?” question in a bit less detail, and focus on the equally-important “how can I maximize the potential of my program?” question instead.
To date, we’ve found that the recommendations we make to new merchants typically fall into five different categories:
- Create a Points System That Makes Sense — For You And Your Customers
- Design a Dedicated Page for the Program
- Customize It!
- Use Campaigns as Promotional Tools
- Tell Your Customers About the Program
Without further ado, let’s go into a bit more detail on each of the pieces above!
#1: Create a Points System that Makes Sense — For You And Your Customers
The key to an effective points system can be summarized in one word: balance! To create a rewards program that your customers will enjoy participating in, it’s important to offer enough points to make the program enticing, but not so many that you damage your all-important product margins.
As a general rule, the higher your margins, the more points you can afford to award to each enrolled customer to entice them to keep coming back to your store. Here’s a quick table with some guidelines on target discounts based on typical margins:
So how do you set up a program that achieves these discounts? It’s as simple as tweaking the settings in the Coupons section of your Swell account.
For example, let’s say that each time a customer spends $1, she earns 10 points. By controlling how many points she needs to earn before redeeming them for a certain reward, you can also control the overall discount level of your rewards program.
Using the 10 points per dollar example, let’s say that you then set up a $5 coupon (if you use Swell, you would do this in the Coupons section of your account) that costs 500 points to redeem. Because a customer could earn 500 points only after spending $50, you’d achieve an effective 10% discount ($5 back on $50 in total spend) for your program participants.
Just to recap the above example, that’s:
- Spend $50, earn 500 points (10 points earned per dollar)
- Redeem 500 points for a $5 coupon, for a total discount of 10% ($5 coupon / $50 in total spend)
If you wanted a 20% discount instead, you’d just adjust the points required to earn the coupon to 250 — a customer would then be able to earn $5 back after spending $25. And if you wanted a 5% discount, the number of points required would be 1,000. Remember, the more points required in order to earn a reward, the lower the effective discount you’re providing to your program members.
Of course, we always recommend using nice, round numbers that are easy for your customers to understand as well. You could achieve a 10% discount by offering 7 points for every $1 spent, and then creating a $5 coupon that costs 350 points to redeem, but we don’t recommend it! Keeping it simple and easy to understand is also critically important.
The last piece to keep in mind when it comes to preserving margins is that by starting a rewards program, you’re not automatically agreeing to offer a certain discount to every customer on every purchase. Instead, only some customers will participate in the program, and of those, only some subset will earn enough points to redeem them for a reward — it’s those customers that should get something in exchange for their loyalty!
#2: Design a Dedicated Page for the Program
Swell’s “rewards popup” is a great way to help customers manage all of their rewards information in one place; however, there’s only so much information about a rewards program that one can fit in a popup!
In addition to the rewards popup, we’ve seen a number of merchants design beautiful pages on their sites which help customers see a rewards program as a valuable extension of the merchant’s brand. Not only does the dedicated page make the program more visible on the site, but it allows the store to explain how the program fits in with the rest of the business.
Here’s an example from Baccurelli, an extremely unique jewelry designer:
When creating a page dedicated to your rewards program, Swell can help you place a link directly in the page which triggers the “rewards popup”– just reach out to us for more details!
#3: Customize It!
The more you customize your program, the more customers will come to see it as an exciting extension of your store — and another reason to keep coming back.
Customization of your Swell program is important in two dimensions: choosing colors, fonts, and other formatting options to make the program match the rest of the site, and offering a number of redemption options that go beyond simple discounts.
When it comes to formatting, Swell has a number of features to ensure that you can create a rewards program which closely adheres to the rest of your site. In the Rewards Popup, Referral Program, and Newsletter Signup sections of your Swell account, you can use our editor tools to change wording, select various fonts, and use the exact right color. We would encourage you to explore each section fully — if the rewards popup is styled differently from the rest of the site, it will feel out of place to customers.
Outside of styling, perhaps one of the most underutilized features of Swell’s platform is the ability to offer customers rewards that go beyond coupons back to your store! Offering free products and other “custom” a great way to emphasize the uniqueness of your store and reward your most loyal customers. You could even offer one-of-a-kind items available only to those redeeming their points!
To set up custom redemption options, just go to the Coupons section of your Swell account and click on the “Create a New Coupon” button. After that, write an enticing description of the item, select how many points you’d like it to cost, and add it alongside your other coupons.
Just make sure to create the associated coupons in your e-commerce platform account (e.g. Shopify) to ensure that customers are able to automatically earn the discount at checkout. This can usually be done by creating a coupon redeemable for a specific product (or collection of products) — feel free to get in touch with us for more guidance!
Lastly, make sure to cycle redemption options as well to keep it fresh! When adding new products (or removing existing ones), you can always email program members to create a “sense of urgency” for them to use or earn points.
#4: Use Campaigns as Promotional Tools
When it comes to offering special incentives and discounts for holidays and other special occasions, consider using Swell to offer limited-time point-earning opportunities to boost involvement with your rewards program.
Let’s say that you’d like to boost sales over a 2-week holiday period — while you could offer a coupon to all of your customers, you could also use Swell to incentivize additional purchases. For example, if you’re running a “points for purchases” campaign (X points per $1 spent at your store), you might consider adding a “Goal Spend” campaign (i.e. earn a certain number of points after spending a target amount).
Then, the important part is to promote it! The email to your customers, which we would recommend you send through your email marketing provider (e.g. Mailchimp), might look something like this for the above limited-time Goal Spend campaign:
Hurry! For a limited time, we’re offering an additional 3,000 Swell Fashion Rewards Points if you spend $100 over the course of the next two weeks! As long as you have an account, you’re automatically enrolled in the promotion — you’ll earn the points as soon as you reach the $100 goal. Don’t miss out on this awesome opportunity to boost your rewards balance!
Use the example above as inspiration to find opportunities to fold your rewards program into your regular marketing activities!
#5: Tell Both New and Existing Customers About the Program
While Swell offers a way to announce the launch of your program to your existing customers, that’s only the beginning when it comes to the creative ways that we’ve seen our merchants promote their rewards programs to their customers!
Remember, announcing the program when it starts is great, but you might also want to consider a few of the following opportunities to send out emails mentioning your program:
- When a new member creates an account — Once the program is launched, it helps to tell new members about it as they sign up! To do so, we recommend including a line about the program in any automatically-generated emails that send when a customer creates an account with your store. You can let the new customer know that they’re automatically enrolled in a free program designed to reward them for shopping at your store!
- When you add new redemption options — As we discussed earlier in the post, new redemption options are a great reason to remind customers about your program. Use an email marketing program such as Mailchimp to announce the redemption option to each program member!
- For limited-time point-earning opportunities — Just like you would announce a big sale via email to your customers, do the same once you’ve created a special offer via your rewards program as well.
- To advertise particular programs to certain “segments” of your customer base — Segmentation is a fancy word to describe a relatively simple process: use some criteria to choose some portion of your email base to communicate with! We’ve covered the power of segmentation in more detail in another post, but it’s certainly a “best practice” which we’ve seen yield powerful results for merchants. Some good ideas we’ve seen include emailing your most loyal customers to encourage them to refer their friends and emailing customers who haven’t purchased in quite some time to offer them an incentive to come back to your store — we’d love to hear about others as well!
At the end of the day, Swell can help you create a rewards program that’s balanced, customized, and effectively incentivizes additional purchases, but we need your help to make sure that your customers stay informed and excited about it! When put together, your loyalty program will be an essential component of your store’s success.
Lastly, make sure that you bookmark this post — we’ll continue to update it as we see more great examples out there. And if you have more best practices that you’d like to share, we’d love to hear about them (and feature your store in this post)!