Create your own Points Program in 10 Simple Steps

Editorial note: This article was originally written by Dastan Chikeev and later updated for relevance by Polina Kulikova.

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Are your customers sticking around — or slipping through the cracks? With rising ad costs and intense competition, keeping existing customers has never been more critical. That’s where a well-crafted reward point system comes in.

A strategic loyalty program can boost repeat purchases, increase average order value, and turn one-time buyers into lifelong brand advocates. In this step-by-step guide, we’ll show you exactly how to create your own reward point system — from setting goals to choosing rewards and optimizing performance — so you can build a sustainable growth engine for your Shopify store.

Here is what we will cover:

• Step 1: Set Clear Goals for Your Loyalty Program
• Step 2: Understand Your Ideal Customer
• Step 3: Define How Customers Earn Points
• Step 4: Assign Point Values That Balance Profit & Incentives
• Step 5: Design Reward Tiers for VIP Engagement
• Step 6: Keep Rules Simple and Clear
• Step 7: Make It Easy to Use
• Step 8: Promote Your Loyalty Program
• Step 9: Monitor and Optimize Your Loyalty Program
• Step 10: Engage Loyal Customers with Personalization

Let’s dive in and turn loyalty into revenue!

Why a Reward Points System Matters

A well-designed reward points system isn’t just a marketing add-on — it’s a proven way to grow your business sustainably. In today’s competitive eCommerce landscape, retaining existing customers is more cost-effective than constantly acquiring new ones. A loyalty program helps you do just that.

Here’s why it matters:

• Increases Customer Retention: Shoppers are more likely to return when they know they’ll earn points with every purchase. According to studies, increasing retention by just 5% can boost profits by 25% to 95%.
  
  
• Boosts Average Order Value (AOV): Points encourage customers to spend more to reach the next reward threshold, especially when paired with tiered systems or limited-time offers.
  
  
• Improves Customer Lifetime Value (CLTV): Rewarding repeat behavior builds habits. The more often customers shop with you, the more they engage — and the more they spend over time.
  
  
• Encourages Engagement Beyond Purchases: Reward systems aren’t limited to transactions. You can offer points for actions like social sharing, writing reviews, or referring friends — helping you build a community around your brand.
  
  
• Creates Competitive Differentiation: In saturated markets, a compelling loyalty program can set your brand apart, offering more value than just discounts or fast shipping.
  
  

When implemented well, a points-based loyalty program becomes more than just a perk — it becomes a reason for customers to keep coming back.

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Step 1: Set Clear Goals for Your Loyalty Program

Before you start designing your reward point system, you need to answer one essential question: What do you want your loyalty program to achieve? Without a clear objective, customer engagement can become scattered — and your program may deliver little value in return.

Reward point programs are powerful tools that can be tailored to support a wide range of business goals. Whether you're trying to drive more sales, improve customer retention, or strengthen your brand experience, having a defined outcome will guide every decision you make.

A successful rewards system should nudge customers toward high-value actions — a concept known as goal-oriented engagement. This means designing your point-earning structure in a way that encourages specific behaviors that support your broader strategy.

Here are some examples of loyalty program goals:

• Increase user-generated content – Reward customers for writing product reviews or sharing photos
  
  
• Boost social media engagement – Offer points for following your brand or sharing posts
  
  
• Drive loyalty program sign-ups – Use welcome bonuses or limited-time incentives
  
  
• Promote upsells and cross-sells – Offer bonus points for purchasing bundles or product add-ons
  
  
• Raise average order value (AOV) – Create thresholds where higher spend unlocks more points or exclusive perks
  
  

By defining your loyalty goals early on, you can build a points program with purpose — one that feels valuable to customers while delivering measurable business results.

Step 2: Understand Your Ideal Customer

To build a successful reward point system, you need to go beyond the basics of incentives and discounts. Understanding your customers — what motivates them, what they value, and how they engage with your brand — can have a major impact on the effectiveness of your loyalty program.

Start by identifying which types of rewards your customers care about most. Some shoppers are motivated by discounts or free products, while others may value exclusive access, early product drops, or social impact initiatives.

Real-World Example: Mango

Fashion brand Mango offers points when customers donate old garments, which are then passed on to NGOs. This approach aligns with their sustainability values and appeals to customers who care about ethical fashion.

When your loyalty program fits into your customers’ world, it becomes more than a transaction — it becomes a reason to stay loyal.

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Step 3: Define How Customers Earn Points

A key advantage of running a reward point system is having full control over the actions you incentivize. Deciding how customers earn points allows you to guide their behavior toward your business goals — whether it’s boosting sales, increasing engagement, or driving brand visibility.

Think about the behaviors you want to encourage and align them with your strategy. Here are some common earning opportunities:

• Purchases: Points awarded based on how much a customer spends—typically as “X points per $1 spent.”
  
  
• Frequency: Reward repeat visits or orders to increase customer retention. Often used in tiered or VIP programs.
  
  
• Referrals: Offer points for referring friends. Double rewards for both parties are common, especially with loyal members.
  
  
• Social Engagement: Grant points for following, sharing, or tagging your brand on platforms like Instagram or TikTok.
  
  
• Surveys or Reviews: Encourage feedback and user-generated content. Reviews, in particular, drive real value in eCommerce.
  
  
• Special Events: Reward participation in brand-led events. For example, Nike gives loyalty members access to exclusive workout sessions.
  
  

Each point-earning method plays a role in shaping customer behavior. By being intentional with your structure, you’ll keep your program focused — and valuable to both you and your audience.

Step 4: Assign Point Values That Balance Profit & Incentives

Once you’ve defined how customers will earn points, the next step is to determine how much each point is worth. This is where strategy meets math — and getting the balance right is essential for a profitable loyalty program.

Think of reward points as a form of discount allowance — you're giving up a small part of your margin in exchange for future customer purchases. Your job is to figure out how much margin you can afford to sacrifice while still motivating repeat behavior.

Here’s how to approach it:

• Start with your margins: Identify how much you can comfortably give back without cutting into profits.
  
  
• Set a target value per point: Define how many points a customer needs to redeem a reward. Make sure it encourages more spending without being too generous.
  
  
• Think forward: Points are typically awarded after a purchase and redeemed on future ones. They’re not just a thank-you—they’re a nudge toward the next transaction.
  
  
• Track key loyalty metrics: Monitor these four indicators to evaluate your program’s effectiveness:
  
  
  
  • Customer Lifetime Value (CLTV)
    
    
  • Repeat Purchase Rate
    
    
  • Average Order Value (AOV)
    
    
  • Customer Retention Rate
    
    

When point values are well-calculated, they can help you drive revenue, build loyalty, and keep customers coming back — without hurting your bottom line.

Step 5: Design Reward Tiers for VIP Engagement

If you want to keep customers engaged over the long term, introducing reward tiers (often called VIP tiers) is a powerful strategy. Tiers allow you to offer increasing value based on customer loyalty — motivating shoppers to spend more to unlock better benefits.

Why Tiers Work

Tiers create a sense of progression. As customers move up, they feel more appreciated and recognized. This makes your brand more memorable and harder to replace in a crowded market.

Here’s how tiers can elevate your loyalty program:

• Boost Retention
  Higher tiers offer better rewards, encouraging customers to stick around and keep shopping.
  
  
• Increase AOV
  Reward multipliers at higher tiers motivate shoppers to spend more to reach or maintain their status.
  
  
• Add Exclusivity
  Framing upper tiers as VIP access builds emotional value — making customers feel special and part of something premium.
  
  
• Encourage Brand Affinity
  When customers associate their status with your brand, they’re more likely to return and recommend it to others.
  
  

With smart planning, your tiered program can do more than just offer points — it can turn casual shoppers into loyal brand ambassadors. Focus on making each level feel more rewarding and exclusive, and you’ll create a loyalty ladder worth climbing.

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Step 6: Keep Rules Simple and Clear

Every loyalty program needs clear communication. Since reward point systems can vary, it’s important to keep things intuitive and easy to understand.

The best programs include straightforward instructions, FAQs, and accessible support so customers know exactly how to earn and redeem points. When everything is clear, the experience feels seamless—and customers are more likely to engage.

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Step 7: Make It Easy to Use

A great loyalty program should be interactive, simple, and enjoyable. The easier it is for customers to use, the more likely they are to engage.

Today, many loyalty programs can be set up with apps — making it easy to offer a fully branded experience without starting from scratch. A smooth, user-friendly setup not only improves customer satisfaction but also boosts your brand image.

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Step 8: Promote Your Loyalty Program

You’ve put effort into building your loyalty program — now it’s time to let people know it exists. Promoting it properly helps drive sign-ups, engagement, and reinforces your brand values.

Here are a few things to focus on:

• Brand Values: Use your loyalty program to reflect what your brand stands for. Let customers feel connected to your mission.
  
  
• Customization: Personalize your loyalty program with custom branding and messaging. Make it feel like an extension of your store — not just a generic system.
  
  
• Highlight Key Features: Focus on standout benefits. Whether it’s big rewards, VIP tiers, or referral bonuses — make it clear why shoppers should join.
  
  
• Marketing Channels: Promote your program across your best-performing channels — email, social, website, or even SMS. Create content that’s engaging and benefit-driven.
  
  

The goal is to showcase value and build excitement. The more visible and aligned your program is with your brand, the more effective it will be.

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Step 9: Monitor and Optimize Your Loyalty Program

Actively monitoring your program’s performance is an essential part of the process. No one gets it perfect on the first try. Once the main setup is complete, your focus should shift to ongoing optimization and maintenance.

Your loyalty program will generate a wealth of data — use it. Track customer behavior, reward redemption patterns, and key loyalty metrics like retention and repeat purchase rate. These insights can help you fine-tune your program and even influence your broader business strategy.

Remember, your most loyal customers are often your most valuable source of feedback. Pay attention to how they interact with your program — and use that information to improve it over time.

Step 10: Engage Loyal Customers with Personalization

Out of all your customer segments, loyal members are your most engaged audience. They’ve shown strong interest and trust in your brand — now it’s your job to keep that connection alive.

To do this, maintain active communication and create tailored marketing campaigns that speak directly to their preferences. These customers are your most valuable — treat them accordingly.

At the very least, you want to stay relevant. But ideally, you’ll maximize their value through personalized experiences. This can start with something as simple as automated emails and evolve into full customer segmentation strategies.

The keys to long-term success:

• Personalize your messaging
  
  
• Segment your audience accurately
  
  
• Analyze behavior to anticipate needs
  
  
• Use insights to inform your broader brand strategy
  
  

The more you learn about your loyal customers, the better you can serve them—and turn engagement into long-term growth.

Below is an example is an email builder designed for loyalty points:

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Conclusion

Building a reward point system doesn’t have to be complicated—especially when you break it down into clear, actionable steps. From setting goals to engaging loyal customers, every part of your program should work toward increasing retention, driving repeat purchases, and reinforcing your brand.

Now that you understand the fundamentals, it’s time to take the next step and put your plan into action.

Ready to launch a loyalty program that drives real results? Book a Growave demo today and see how easy it is to build a fully branded, high-converting reward point system for your Shopify store.