A loyalty programme is one of the cheapest ways to increase repeat purchase rate — but most merchants set the earn rate and redemption threshold arbitrarily, which is why so many loyalty programmes go unused. Here's how to set the numbers so customers actually engage with them.
Start with the psychology, not the math
Customers need to see a "visible" first reward within their first two or three purchases, or they mentally write off the programme as not worth tracking. This means your earn rate should be generous enough — and your minimum redemption low enough — that a genuinely engaged customer earns their first reward quickly, even if it's small.
Setting your earn rate
A common, easy-to-communicate starting point is 1 point per ₹1 spent, with 100 points = ₹10 (a 10% back rate). If your margins are thin, you can lower this to 1 point per ₹1 = ₹5 (5% back) — what matters more than the exact rate is that it's round, easy to explain in one sentence, and visible to the customer at checkout, not buried in a terms page.
Setting your redemption threshold
Set the minimum redeemable amount low enough that an average customer's first or second order gets them there — if your AOV is ₹1,000 and you're running 1%-per-rupee, don't make customers wait until 1,000 points (₹10,000 in spend) for their first reward. A threshold reachable within 1–2 typical orders keeps the programme visible and worth checking.
Make points visible everywhere, not just on a hidden account page
- Show running point balance on the cart page
- Show points earned per product directly on the product page ("Earn 45 points")
- Send a "you have points to redeem" reminder email a week before points would otherwise go unused
- Confirm points earned in the order confirmation email, not just silently in the backend
Consider a referral bonus on top
Loyalty and referrals compound each other: rewarding existing customers with bonus points for referring a friend (StoreKit supports this under Customers → Loyalty) turns your best customers into an acquisition channel at a fraction of the cost of ads.
Review the numbers quarterly
Track redemption rate, not just enrolment — a programme with high sign-ups but low redemption isn't working, it's just a line item on your P&L that customers ignore. If redemption is low after a full quarter, lower the threshold before you lower the earn rate; threshold is almost always the bigger lever.