STEP 1 Earn mechanism
The process of point collection involves a set of rules that determine how customers are awarded points. During this stage, we establish which activities are eligible for rewards and to what degree.
Significance of points in loyalty programs
The mechanism for collecting points within a loyalty program plays a key role, as it is the main incentive for participants, motivating them to make regular purchases or use the services offered by the company. Below there are several key benefits of the mechanism for a loyalty program:
- Purchase motivation - The accumulation of points can be a motivational tool, as customers are willing to use products or services more often in order to earn more points.
- Building engagement - Customers feel more engaged when they see that their loyalty is both appreciated and rewarded.
- Create a positive customer experience - Collecting points and receiving rewards can enhance the customer experience and have a positive impact on brand image.
- Customer retention - As earning points often requires repetitive purchases, the customer is more likely to remain loyal to the brand.
- Data analysis and personalization - The points collection allows the company to collect data on customer behavior, preferences, and purchase history. This data can be used to personalize offers.
- Competitiveness in the marketplace - Customers are more likely to choose companies that offer them additional benefits, such as points and rewards.
- Increase in customer value - Customers who are part of a loyalty program are typically more profitable for the company.
How does the earn mechanism work?
The mechanism for earning points is closely connected to the mechanism for burning points. Customers collect points to convert them into benefits. To understand this process and its place in the business environment, it is essential to view it in its entirety.
The diagram illustrates the process for collecting and burning points. The left-hand side displays the communication channels with customers, which are used to accumulate points. In the middle, there is a list of activities that are eligible for awarding. These include:
- Registration,
- Transaction,
- Survey,
- Ratings,
- Quests,
- Challenges,
- Other events.
The illustration on the right-hand side shows the process of burning points, which can be done through: exchanging for free products or vouchers, product or basket discounts, point transfer and using the points for charity causes. For more information on point burn, please refer to lesson 2 and lesson 3.
Next step
You already know how the process of awarding points works, in the next article you will learn more about the rules for awarding and managing points.
