Category Archives: Business Thoughts

Planning A Points System (part 2)

The last time I looked a the general principles of any good Reward Program. This time I wanted to take a look at specifics of implementing those criteria. In particular I want to look at two types of Rewards you can offer and then at how you can implement them.

Reward Types

There are two main types of Rewards you can give to customers: a discount (or cash) or a free product.

  • Discounts: Discounts can be redeemed for points or can be flat after a certain number of points have been reached. The discount can also be percentage based (10%) or cash based (€5).

Examples of the first are when a person is entitled to a 10% discount from their next purchase when they reach 100 points. The points are then deducted and they start earning to gain the next discount.
The alternative to this is to award people a constant discount once they have reached a point level. For instance a person earning 1,000 points is entitled to a 2% discount on every purchase for the rest of the year. Once they reach 5,000 points they are entitled to a 5% discount on every purchase and so on.
The main difference between these two models is in the expiry of the points. In the first points are deducted after every use while in the latter the points are cumulative and reset every period (usually a year). This in turn dictates the level at which the discounts are earned.

  • Free Products: The other most common method of providing rewards is to provide the customer with a specific product when making a purchase. For instance a restaurant providing a free bottle of wine with dinner for 2. This invariably involves the deduction of those points from the customers account.

Reward Methods

A business typically chooses one of two methods for redeeming points.

  • On Purchase: The most common method involves the customer presenting their card at the time of purchase and the points being deducted at that stage. This is the most efficient method and involves the least amount of administrative work.
  • Voucher: It is possible to issue vouchers to customers at intervals based upon their points balance. This is administratively cumbersome and is only suitable for the discount method of reward. The advantage is in the marketing result – the arrival of the voucher creates a renewed awareness of the business and the vouchers themselves seem more real and valuable to the customer than points.


These are the most common methods used and are a good starting point to designing the Reward program. Once they have the basics up and running a business can slowly refine and customise it (while bearing in mind the rules such as keeping it simple, discussed previously).

Even within these four methods however it is possible to be innovative. For instance two or more business can agree to provide discounts to each others businesses instead of or in addition to their own. Both businesses gain from the marketing benefit and the possibility of new customers. Of course they have to agree in advance the redemption level in order not to be caught giving away too many discounts.


We have put together some examples of Reward Programs based on these types and implemented by clients. The first two charts show a general implementation of the two program types shown above and then there are some examples for specific business categories.

Business Type General Retail (option 1)
Type Example
Award Points per band (excluding delivery) 5 points for every 5 Euro spent
Redeem Defined Discount based upon points gathered in 1 year.

Points accumulate throughout the year and reset on January 1st.

The more a person spends in a year the larger the discount they get for the rest of the year.

100 points gives 1% discount on all purchases for rest of year

500 points gives 2.5% discount on all purchases for rest of year

1500 points gives 5% discount

2500 points gives 8% discount on all purchases for the rest of the year

5000 points gives 10% discount on all purchases for rest of the year

Promotions Extra points on high margin products

Extra points for higher value purchases

Business Type General Retail (option 2)
Type Example
Award Points per band (excluding delivery) 5 points for every 5 Euro spent
Redeem Defined value discount.

Points reset on use.

Percentage higher discount the more points accumulate means people may aim for the next level.

100 points = €5 discount

250 points = €15 discount

500 points = €40 discount

Promotions Extra points on high margin products or clearing stock

Business Type Restaurant
Type Example
Award Points per band 10 points for every 10 Euro spent
Redeem Tiered with sales
  1. Free Coffee after dinner
  2. Free Desert
  3. Free Starter
  4. Free house wine with dinner
  5. Second Dinner is free
Promotions Extra points on quiet nights, high margin products 50% extra points on Wednesdays before 9pm

Business Type Takeaway
Type Example
Award Points per band (excluding delivery) 5 points for every 5 Euro spent
Redeem Tiered with sales
Promotions Extra points on high margin products or large orders Extra point for orders containing starter plus main meal

Business Type Taxi
Type Example
Award Points per completed telephone booking 5 points for every completed booking
Redeem Tiered Discount based on booking made. Discount can be limited. 50 points: 2% discount

180 points: 5%

300 points: 10%

All up to limit of €10

Promotions Extra points on bookings made the day before or regular booking
Business Type Video Shop
Type Example
Award Points per rental 5 points for every rental
Redeem Tiered with sales 50 points: 1 free rental

75 points: 2 free rentals

100 points: 3 free rentals

Promotions Extra points on high margin products 2 points for popcorn
Business Type Hairdresser
Type Example
Award Points per band 5 points for every €20 spent
Redeem Tiered with sales 5% discount for every visit after 1000 points

10% discount for every visit after 5000 points

Promotions Extra points on high margin services or on products.
Business Type Bar
Type Example
Award Points per pint 1 point per drink
Redeem Tiered with sales Every 10th drink free (with a price limit)
Promotions Extra points on high margin products
Note: This model allows quick transactions but limits the application for meals etc.
Business Type Off Licence
Type Example
Award Points per band 5 points for every €10 spent
Redeem Tiered with sales 500 points gets 5% discount

750 points gets 8% discount

Promotions Extra points on high margin products
Business Type Cafe
Type Example
Award Points per band 5 points for every €5 spent
Redeem Tiered with sales 100 points: free muffin with coffee

150 points free coffee and muffin

Promotions Extra points on high margin/promotional products
Note This allows more flexibility than the standard “every 10th coffee free” option and also encourages purchase of additional items but is slightly more time-consuming to enter points.

Protecting Your Data In A Crisis

According to a report in The Sunday Tribune of November 29 half of all businesses which lost computer data in the recent floods will end up going out of business. While the article doesn’t mention the number of businesses affected it does highlight the issue of disaster recovery for digital data. Not all businesses keep regular backups of their data and even fewer keep those backups outside their offices.

Sunday Tribune Article

The loss of Loyalty records might not be as serious as losing your accounts but it can still lead to bad feeling from your customers. The automatic protection of this information is another advantage of A system you host yourself requires that you are responsible for regular backups and storing them in a secure location. however is not only operated on a cloud cluster with built in redundancy but also makes externally-stored backups twice a day and then archives these on a weekly basis. This peace of mind is an integrated part of our service and is included in the low annual cost.

reward programs and quick fixes

With the new year many businesses are considering ways to improve their profitability. Reward Programs of all types are among the most effective ways to do so both in terms of cost and results. Many businesses will look at implementing them for the first time and a large portion will be expecting immediate results. The belief that simply implementing a program will result in success is a common one that leads to many abandoned efforts. Because of this belief a majority of businesses implement a program and sit back expecting results without any further tuning or promotion.
A successful Reward Program may not be an instant fix but neither does it require a lot of work. All it needs is some promotion and monitoring. From our experience with businesses we have identified 5 simple things that a business can do to make their program a success:

1. Define

A Reward Program does not have to be complex but is most effective if you have a clear idea of what you are trying to achieve: is it to increase awareness of your brand, compile a mailing list, get your brand on the street, encourage the sale of more profitable items? Or is it all those and more?

Knowing what you are trying to achieve with your program will help you decide the following:

  • which type of program to install (a simple stamped crd or more complex information gathering system)
  • where and how to assign points ( per transaction or per profitability of the product)
  • whether to use someone else brand or your own

2. Simplify

It is possible to come up with complex points and reward schemes that graduate the reward people get according to every action. This will confuse both you and your customer, and while there is nothing wrong with special offers to promote specific products (such as 50% more points on a specific day or bottle of wine) the general rule, as with most things, is Keep It Simple.

3. Communicate

You cannot expect a customer to see the cards you provide, or to understand what you are offering them without explanation. Communication about the program is essential. The simplest and most effective way is to have your staff ask every customer if they have a card and offer to provide them with one if they don’t – while also explaining how it works. The next most important action is to provide some information on the program along with the card – a simple A3 sheet or brochure gives the customer something to read and allows them to see what is in the program for them without feeling like a fool by asking staff again.

4. Repeat

As the most successful users of Loyalty Programs have discovered, repetition is important. You and your staff must ask every customer if they have a card – and do so for every transaction. This will create awareness – leading to a higher uptake on the cards themselves – and will also ensure that regular customers use the cards rather than leaving them in their wallets. Not everyone is comfortable asking for points, especially on low value transactions, and the fact you offer the points is welcomed by the customer.

5. Review

Situations change and if they do your program needs to change along with them. A review of your program and how it operates should be an important part of your business review, especially in the early days when you need to tweak the points system. But even when you have a system you are happy with you should review it on a regular basis to ensure it is working as you want and achieving what you need. This will include reviewing customer usage, points, and if staff are still asking customers if they have a card.

A review does not have to be a lengthy process and twice a year is more than enough.

These are simple steps but following them can dramatically improve the performance of any Reward Program.