Published
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Sep 6, 2023

How To Calculate The Value of My Loyalty Points (5 Steps)

Influence.io's 5-step guide reveals how merchants can precisely calculate the value of their loyalty points for optimized rewards and profitability.

Reward Strategy

Knowing the real value of your loyalty points is essential. It's not just about offering great rewards to your customers; it's also about giving them something valuable without overspending.

At Influence.io, we're all about helping you get the most from your loyalty program. In this article, we'll dive into the value of loyalty points and how to make them work for you. Let's explore (in 5 key steps) how to figure out what your loyalty points are really worth and how to give them to your customers effectively.

Experts often say“Points are money.” This reminds us that loyalty programs are not just simple platforms for exchanging points. They are like banks but with points as the main form of currency. - Comarch

Step 1: Finding the Cold, Hard Cash Value

Think of your loyalty points like little dollar bills. How much are they actually worth? It's pretty straightforward! 

If you allow customers to swap 2,000 points for a $20 discount, just do this math: divide the reward ($20) by the points (2,000). And there you have it – each point is worth 1 cent. 


Just keep this in mind when you're giving points to your customers for various activities. Essentially, you're giving them a kind of free product or cash back when they engage, so it's crucial to encourage both earning and spending points. 

For example, if a customer racks up a bunch of points, it means you owe them some sort of freebie or discount. That's why we suggest setting a deadline for when the points expire.

Step 2: What People Think vs. Reality

Here's the twist. What you think your points are worth may not match what your customers think. Imagine you sell a product for $30, but offer it to customers for 3,500 loyalty points. 

Customers might see each point as worth 1.5 cents, thinking they're getting a great deal. However, it actually costs you $10 to make that product, making each point worth around 0.285 cents.

Now, the clever part is this: You can use your customers' higher perceived point value to motivate them while still managing your costs effectively. Offering the product for 3,500 points seems like a fantastic deal to customers, and it keeps your expenses in check.

This strategy lets you strike a balance between customer satisfaction and profitability, making your loyalty programs a win-win for both sides

Step 3: Tailoring Rewards for Actions

Influence.io's loyalty platform gives you the power to hand out points for various customer actions, which can be a game-changer for community growth. To figure out the value of each action, take a peek at your customer data. For example, if you're spurring referrals, check out how much a new customer usually spends. 

To break even, consider giving points equal to your historical cost per acquisition for each successful referral. You can even nudge the rewards slightly below that cost to keep referrals beneficial for both you and your customers. Apply this method to other actions based on their impact on community growth and customer acquisition costs.

Set point values for loyalty program actions like sign-up perks, social media followers, leaving reviews, and birthday bonuses. Keep sign-up perks and social media followers under half of the points for the first reward. 

Drive long-term profitability by combining reviews and loyalty. For example, be generous with your point distribution to customers leaving product reviews, using REVIEWS.io, to increase your review collection. Or gift your customers on their birthdays, but make sure that you encourage customers to input birthdays 30 days ahead.

Step 4: From Dollars to Points

Now, let's convert dollars into points. If you want to reward customers with $10 for bringing in a friend and your points are worth 2 cents each, assign 500 points for successful referrals. 

Use the same approach for other activities within your program, customizing the point value based on their dollar worth. By offering rewards, businesses not only motivate customers to refer new clients but also strengthen loyalty among their current customer base. 

This double benefit of gaining and keeping customers is a smart strategy that leads to long-term growth and a more loyal customer community. Referrals work like a chain reaction, spreading the word about the business's value and creating a positive cycle of growth and happy customers. And, in turn, help merchants boost their bottom line and build a cost-effective acquisition strategy.

Step 5: Starting Strong

To kick off your loyalty program successfully, Influence.io suggests giving customers a 2% cashback on their purchases and setting the value of each point at 2 cents. It's a simple approach that's easy for everyone to understand and sets up a rewarding incentive system.

Recognizing the value of your loyalty points can make a significant difference in creating a fantastic rewards program. With Influence.io, you can use data-driven insights to calculate point values, ensuring everyone receives fair rewards. 

Remember, you can always adjust your point values to align with your brand's goals. Keep it straightforward, and watch your loyalty program thrive with Influence.io. Get started with our free trial today.