Bonus point systems – pros and cons

When starting a loyalty program, it is important to think about the type of benefits you should have. Welcome and birthday coupon deal with what we call the onboarding program. This is where you recruit new members. The benefits program, on the other hand, will help make your customers / members even more loyal to your particular store / chain. There are many paths to success here. In this article, we give some examples of how this can be done, with some of the advantages and disadvantages with the various alternatives.

1. Standard bonus ladder: Bronze – Silver – Gold
2. Bonus ladder with various membership benefits
3. Point level coupons
4. Coupons without the use of points
5. Loyalty card

1. Standard Bonus Ladder – Bronze – Silver – Gold

The standard bonus ladder is inspired by the aviation and hotel industry; you get different discount levels / benefits as you climb the ladder. For example: Bronze – 5% discount, Silver – 10% discount, Gold – 15% discount. Qualification period and point life can be asynchronous, but most programs keep them equal in 1, 2 or 3 years duration. A member must within each qualifying period earn the necessary points to achieve the same status. You must decide whether the member will receive the discount with each purchase, once, or if they should receive X number of coupons within each level.

BENEFITS

• A familiar system to most people.
• Generally easy to understand for members.
• You can still provide other additional coupons for all members during given promotion periods.
• Fully integrated with all checkout systems.
• Fully integrated with WooCommerce.

DISADVANTAGES

• May limit the most-buying customers.
• Coupon duration – if you reach the next bonus  level the day before the qualifying period is over, you go down again the next day.
• Customers will not be notified when they have reached a new level (SMS).

2. Bonus ladder with various membership benefits

This variant is quite similar to the bronze, silver and gold levels, but with different names. This model is most often used by online stores to provide a good customer experience.

BENEFITS

• Generally easy to understand for members.
• You can still provide other additional coupons for all members during given promotion periods.
• Gives customers a sense of an exciting bonus program with various benefits when they are loyal.
• Fully integrated with all checkout systems.
• Fully integrated with WooCommerce.

DISADVANTAGES

• May limit the most-buying customers.
• Coupon duration – if you reach the next bonus  level the day before the qualifying period is over, you go down again the next day.
• Customers will not be notified when they have reached a new level (SMS).

3. Point level coupons

This means that for every X Euro spent, you get a voucher or percentage discount on your next purchase. For example, for every Euro 2,00 spent, you will receive a Euro 10 discount. If you earn many points, you will be given the choice of using a Euro 10 discount (200 points), Euro 20 discount (400 points), Euro 30 discount (600 points) or NOK 40 discount (800 points). You can easily choose at checkout which coupon to use.

BENEFITS

• Very easy for customers to understand.
• Generates loyal customers quickly – purchases directly provide future discounts.
• Easy for employees to explain / sell to their customers.
• Continues indefinitely.
• Can also create their own coupons / promotions for periods.
• Fully integrated with all checkout systems.
• Fully integrated with WooCommerce.

DISADVANTAGES

• Can only have one recurring coupon.
• Can only have the same benefit in the loyalty program (excluding own coupons / promotions).
• Customers will not be notified when they have received a new coupon (SMS).

4. Coupons without the use of points

For instance when having a sale, you can create a separate campaign that is sent by SMS to everyone or a segmented group of members.You will get valuable statistics on who uses the coupon (s). Even if you have a sale that applies to all members, it can be an advantage to enter a coupon that is registered on the member at the time of purchase. Then you will build up history on your members, what they shop for, how often, if they only shop for sales, etc.

BENEFITS

• Valuable statistics providing the purchase patterns of your members. It allows you to run an even more relevant campaign next time, and it increases loyalty as you get more and more relevant to your customers.
• You can set up coupons / promotions ahead of time, which will be activated automatically at the set time.
• SMSes can similarly be set up in advance and sent out at the set time.
• Fully integrated with all checkout systems.
• Fully integrated with WooCommerce.

DISADVANTAGES

• Must make a coupon in Diller that pops up in the online store or at checkout. However, this is done very quickly, so we would probably say that the advantages clearly outweigh this small disadvantage.

5. Loyalty card

Most people are used to the old paper loyalty cards. For example, for pet store, coffee shop, or for filling gas bottles. You can get a digital loyalty card right at the checkout, and the member can follow their status via their member page.

BENEFITS

• Digital loyalty cards do not require members to remember paper cards – only a mobile number.
• If you do not have a bonus point model, you may use loyalty cards instead. For example, for every tenth clip (one clip for every Euro 25) you get a Euro 15 discount. This corresponds to a Euro 15 discount for every Euro 250 bought on a recurring coupon.
• You can receive reports per month for the number of clips used per loyalty card.

DISADVANTAGES

• Not fully integrated with all checkout systems.
• Not fully integrated with WooCommerce (can display status, but not used in online store).