Loyalty Programs - Importance of Points

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Loyalty Programs - Importance of Points

Loyalty programs are common everywhere particularly in rewarding customer loyalty. Points on loyalty programs are important to consumers, businesses, and even designers of business rewarding systems. Additionally, customers have different preferences on different kinds of reward programs.

Increased engagement

  • Providing options on how members earn points keeps them engaged and motivate them to explore more of a brand.
  • Points in loyalty programs encourage particular consumer behaviors.
  • At least 50% of Australian consumers are willing to spend more on retailers that offer loyalty programs over those who do not offer the same.
  • Global Loyalty Sentiment Survey indicate that 57% of Australian consumers are more likely to revisit a retailer who has a loyalty program and 48% will increase their spending if they anticipate a reward. Globally, 72% will buy from retailers with loyalty program as opposed to one without.

Provide feedback

  • Redeemable points and reputation points as well as experience points offer feedback which acts as an immediate and continuous reward.
  • Consumers use awarded points from retailers as a feedback on their reward levels. For instance, in Starbucks, 5 stars means a client qualifies for a Green level member while 30 starts means the customers has attained Gold level and the rewards vary across the levels.

Hold Redemption value

  • Points on a loyalty program point to the value of reward a points' holder stands to benefit. The money value that the loyalty points hold is the redemption value a customer receives upon redeeming his or her points. A given amount of points is needed to earn a given value of reward.
  • A point value is equal to the value of reward divided by the number of points to redeem.

Designing a rewards program

  • The determination of the value of loyalty points is fundamental in developing a reward program.
  • Points in a loyalty program are a methodology of a point-based loyalty system. Earning loyalty points which translate to some kind of reward is loyalty program methodology.
  • Customers, in loyalty point programs, accumulate points that they redeem for different prescribed rewards. Collecting points is the essence of a loyalty program and can be earned for purchasing stuff, answering surveys, or sharing on social media.


  • According to Global Loyalty Sentiment Survey, most global consumers prefer monetary incentives; 51% of global consumers prefer product discounts, 45% rebates or cashback offers, and 33% prefer free products. The highly ranked non-monetary reward program is frequent flyer points.
  • Millennial put more value on discounted shipping while older consumers consider product discounts in a reward system more valuable.


Sephora’s Beauty Insider

  • Sephora’s Beauty Insider is a cosmetic brand and one of the companies that run a points-based loyalty program.
  • In Sephora, customers swipe a Beauty Insider Card whenever they buy an item and the card keeps track of the sum of finances spent. A purchaser earns one Beauty Insider point from every dollar spent and customers can redeem earned points for beauty supply items. Sephora measures points in dollars and gives cosmetic items as rewards as per the requests of clients.
  • Sephora further gives IB and IB Rouge programs that provide clienteles more rewards if their monetary expenditure in Sephora hits a particular threshold. This ensures increased reward as money expenditure increases and hence a motivation to continue spending.


  • Qantas is an Australian based brand that allows businesses to accrue points whenever their employees fly with Qantas while passengers gaining individual regular flyer points.
  • An Australian public or private entity, excluding travel agents, registers with Qantas to become a Qantas Business Rewards Member. Air traveling earns Qantas points based on the airline earn table. The Qantas Frequent Flyer membership numbers as well as a member’s ABN are indicated at the booking time to earn Qantas points for the business and the traveler.
  • Qantas Business Reward members get savings on certain fares through discounts based on Qantas terms and conditions regarding Qantas points.

American Express

  • American Express has a Plenti program that allows Plenti members to earn points in for buying from stores from various retailers who are partners with American Express and redeem points at these stores by connecting their available store loyalty card to their Plenti account.
  • Clients can redeem Plenti points from activities like renting a car from Retailer to pay for their AT&T phone bills.