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Points

Points are the currency of your loyalty program. How you design your points economy determines member engagement and program profitability.

Understanding Points Economy​

Two Types of Points​

MetricDescriptionUsed For
BalanceCurrent redeemable pointsRedemptions, showing "available points"
LifetimeTotal ever earnedTier qualification, customer value

Key insight: When a customer redeems 500 points, their balance decreases but lifetime stays the same. This means tier status is never lost due to redemptions.

The Points Lifecycle​

Earned → Balance increases, Lifetime increases
    ↓
Redeemed → Balance decreases, Lifetime unchanged
    ↓
Expired → Balance decreases, Lifetime unchanged

Designing Your Points Structure​

Earning Rules​

Decide how customers earn points:

ApproachExampleBest For
Fixed per dollar1 point per $1Simple, easy to understand
Percentage5% back in pointsAligns with margins
Tiered earningGold earns 2xRewards best customers
Category bonus2x on electronicsDrives specific behavior

Redemption Value​

Determine what points are worth:

ModelExamplePerceived Value
100 points = $1Clean, easy mathSimple for customers
1 point = $0.01Direct correlationVery clear
Variable valueBetter rates for bigger rewardsEncourages saving

The Magic Ratio​

Earning should feel fast. Redeeming should feel valuable.

Bad DesignGood Design
Earn 1 point per $10Earn 10 points per $1
1,000 points for $10 reward1,000 points for $10 reward
Feels slowSame value, feels faster

Psychology tip: Larger numbers feel more rewarding. "You earned 50 points!" beats "You earned 0.5 points!"

Tier Multipliers​

Higher-tier customers should earn faster. This rewards loyalty and creates aspiration.

How Multipliers Work​

Base earning: 1 point per $1

Bronze (1x):    $100 purchase = 100 points
Silver (1.5x):  $100 purchase = 150 points  
Gold (2x):      $100 purchase = 200 points
Platinum (3x):  $100 purchase = 300 points

Multiplier Strategy​

TierMultiplierReasoning
Base1xEveryone starts here
Silver1.25-1.5xNoticeable improvement
Gold1.5-2xSignificant advantage
Platinum2-3xVIP treatment

Don't go too high. 10x multipliers can wreck your economics.

Points Expiration​

Should Points Expire?​

ApproachProsCons
Never expireCustomer-friendly, no liability growthHigher point liability
After X monthsReduces liability, creates urgencyCan frustrate customers
Rolling expirationBalance of bothMore complex to communicate

Expiration Best Practices​

If you expire points:

  1. Long runway — 12-24 months minimum
  2. Clear communication — Multiple warnings before expiration
  3. Activity reset — Any transaction resets the clock
  4. Grace period — Consider one-time extensions

Expiration Notifications​

Send warnings at:

  • 90 days before expiration
  • 30 days before expiration
  • 7 days before expiration
  • Day of expiration

Transaction Types​

Every point change is categorized:

TypeDescriptionBalance EffectLifetime Effect
earnPoints awarded+increase+increase
redeemPoints spent on rewards-decreaseunchanged
expirePoints expired-decreaseunchanged
adjustManual correction±either±either

Transaction References​

Always include a reference ID to:

  • Prevent duplicate transactions
  • Link to your order/event
  • Enable reconciliation
reference: "order_12345"

If you send the same reference twice, we return the existing transaction instead of creating a duplicate.

Bonus Points Strategies​

When to Award Bonus Points​

OccasionBonus AmountPurpose
Welcome/signup50-100Immediate value
Birthday100-500Personal touch
Anniversary200-1000Reward loyalty
Referral500+Acquisition
Win-back50-200Reactivation
ApologyVariesService recovery

Promotional Multipliers​

Run time-limited promotions:

  • "Double points weekend"
  • "3x points on new arrivals"
  • "Bonus 100 points on orders over $50"

Points Psychology​

Loss Aversion​

People hate losing points more than they enjoy earning them. Use this:

  • "Your 500 points are waiting!" (ownership)
  • "Don't lose your points - they expire in 30 days" (urgency)
  • Show points balance prominently

Progress Motivation​

People are motivated by visible progress:

  • "You're 80% of the way to your next reward!"
  • "Just 200 more points until Gold status"
  • Progress bars everywhere

Round Numbers​

People prefer round numbers:

  • Price rewards at 500, 1000, 2500 points
  • Award in multiples of 10 or 25
  • Make thresholds memorable

Liability Management​

Points represent future obligations. Manage them:

Track Your Metrics​

MetricWhat It Tells You
Outstanding pointsTotal unredeemed points
Point velocityRate of earning vs. redeeming
Breakage rate% of points that expire unused
Redemption rate% of points redeemed

Healthy Program Indicators​

  • 40-60% redemption rate — Customers engage but don't drain value
  • 15-25% breakage — Some points naturally expire
  • Positive velocity — Earning outpaces redemption

Common Mistakes​

❌ Don't Do This​

MistakeProblemBetter Approach
Points worth too littleNo motivation to engageMake rewards achievable
Points worth too muchUnsustainable costsModel economics carefully
Too many earning rulesConfusionKeep it simple
Surprise expirationCustomer angerCommunicate clearly
No duplicate preventionDouble-awardingUse reference IDs

Dashboard vs API​

TaskDashboardAPI
View points history✅ Customer detail page✅ GET endpoints
Award/deduct points✅ Manual form✅ Automated transactions
Bulk adjustments❌ One at a time✅ Batch operations
Real-time on purchase❌ Not practical✅ Webhook-triggered

Next Steps​