Earning is the engine. Redemption is the brake. Most brands obsess over redemption options and starve the engine. Here is how to do it right.
Loyalty programs have two halves: how customers EARN points, and how they REDEEM them. Most brands obsess over the redemption side — variety of rewards, tier perks, special drops. They get the earning math wrong, and the program never gets traction.
Earning is the engine. If a customer can't see meaningful points accrue from a normal purchase, they won't engage. Period. Aim for ~5% of order value in points (e.g., 5 points per dollar, redemption at 100 points = $1).
Margin-aware tuning. Skincare with 70% margin can afford 5-7%. Fashion with 50% margin needs 3-4%. Always start from your unit economics, not from "what does Smile recommend."
Redemption is the brake. Limit redemption to one tier of reward at first. Add complexity later. Members get confused by too many options on day one.
The bonus rule: bonus point events (2x, 3x weekends) drive way more revenue than launching a new reward tier. Pull the earning lever, not the redemption lever.
