Loyalty Programme Types
The three main loyalty programme models are points-based, tiered status, and paid membership. Points-based programmes are the most familiar: customers earn points for purchases and redeem them for discounts or rewards. Tiered programmes reward higher-spending customers with better benefits. Paid memberships (like Amazon Prime) charge a recurring fee for premium benefits.
Most Shopify merchants start with a points-based programme because it is simple to understand and configure. Tiered programmes are more effective at driving incremental spend but are more complex to operate.
Points vs Tiered Models
Points programmes work best for high-frequency purchases where customers can accumulate and redeem regularly. A coffee brand where customers buy monthly benefits from points more than a furniture brand where customers buy once every few years.
Tiered programmes work best for mid-to-high frequency categories where you want to incentivise customers to increase their spend to reach the next tier. Fashion, beauty, and subscription boxes suit tiered programmes well.
Choosing an App
The leading loyalty apps for Shopify are Smile.io, LoyaltyLion, and Yotpo Loyalty (part of the Yotpo suite). Smile.io is the most widely used with good affordability at the entry level. LoyaltyLion offers more customisation and integrations. Yotpo Loyalty integrates well with Yotpo Reviews if you already use that platform.
Choose based on your needs: Smile.io for simplicity and price, LoyaltyLion for customisation, Yotpo for integration with the wider Yotpo platform.
Setting Earn Rates
Points earn rates should feel rewarding without being economically unsustainable. A common structure is 1 point per £1 spent, with 100 points = £1 reward (effectively 1% cashback). This is low enough to protect margins while still feeling meaningful.
Boost earn rates for specific actions: leaving a review (50 bonus points), referring a friend (200 points), celebrating a birthday (100 points). These drive engagement with your programme beyond just purchases.
Reward Options
Discount rewards (5% off next order) are the most common and simple to configure. Product rewards (free product at 500 points) increase engagement but reduce the flexibility of redemption. Charitable donations (donate your points to charity) work well for brands with strong values.
Include a free shipping reward: this is often the highest-value reward for customers who find shipping costs a barrier to purchase.
Communicating Your Programme
Loyalty programme participation rates suffer when customers do not know they have points or forget to use them. Send a monthly points balance email reminding customers of their balance and what they can redeem it for. Prompt redemption at checkout when a customer has enough points for a reward.
Measuring LTV Impact
Measure the average purchase frequency and lifetime value of loyalty programme members versus non-members. Well-designed programmes typically show members purchasing 2-3x more frequently. Track programme engagement: active members as a percentage of enrolled members, point redemption rates, and churn rate among members versus non-members.
