How a loyalty points system works and what each design choice costs you
A loyalty points system is a small set of rules: how many points a dollar earns, what a point is worth, when a reward unlocks, and whether points expire or multiply. Get those rules right and a points based loyalty program is cheap to run and easy for customers to understand. This page walks through each decision, the arithmetic behind it in plain words, and how Sopoints handles the mechanics at the counter.
Earn rate: how many points per dollar
The earn rate is the first rule customers learn and the one they repeat to friends, so keep it simple. One point per dollar is the easiest to explain. A point per two dollars is more conservative and still easy to say. Fractional rules such as three points per two dollars sound generous, but nobody can do that maths while waiting in the queue.
On Sopoints you set the earn rate once for your business. Staff enter the sale amount on the POS screen and the points are calculated for them, so a simple rule for customers does not have to mean extra work for staff. You can change the rate later; points already in customer balances are unaffected.
Point value: what a point is worth
Many programs leave point value vague so they can quietly change it. Sopoints fixes it: one point is worth one cent in the merchant’s currency, CAD at Canadian merchants and USD at US merchants. A hundred points is a dollar off, a thousand points is ten dollars. Customers can see what they hold and staff never have to look up a conversion.
A fixed value also keeps the shared network honest. Because Loyalty Wallet Points are spendable across participating merchants, everyone has to agree on what a point buys, and one cent per point is that agreement. Sopoints serves Canada and the United States and bills merchants in CAD or USD; US businesses see the US page.
Reward thresholds: when the first reward unlocks
The first reward is the moment a customer decides your program is real. Set it too far away and they stop paying attention before they get there; set it too close and you give away margin on visits you would have had anyway. A useful test is to count how many typical visits it takes to reach the first reward and ask whether that many visits is a habit worth paying for.
Sopoints lets you define several rewards at different point costs, so you can offer a small early reward and a larger one further out. Customers redeem at the counter and the points come off their balance on the spot. On plans that include advanced rewards you can also set redemption limits and expiry on individual rewards.
Expiry, tiers and multipliers
Expiry gives points a deadline. It keeps your outstanding liability from growing without limit and gives you an honest reason to message a customer who has gone quiet: your points expire soon, come and use them. Set the window long enough that a normal customer is never caught out; a short window feels like a trick and costs you trust.
Tiers reward your most frequent customers with a higher earn rate, for example a multiplier for anyone above a certain number of points or visits. Multipliers raise the cost of every enrolled dollar for that group, so pair them with a tier your best customers will actually reach and be clear about what they get. Sopoints applies the tier multiplier automatically when points are awarded and shows customers their tier in the app.
Bonus campaigns: happy hours and double-points days
A bonus campaign temporarily changes the earn rate: double points on a slow Tuesday afternoon, a happy hour after the lunch rush, a launch week bonus for a new product. Because the extra cost is confined to a window you chose, campaigns are the cheapest way to move demand to the hours you want to fill.
Sopoints campaigns are scheduled in advance, can repeat on chosen days and hours, and apply automatically on the POS screen so staff do not have to remember anything. Customers with the app can be notified when a bonus starts at a merchant they use, which is what turns a quiet afternoon into a reason to come in.
The liability math, in words
Every point you issue is a promise to give something later, so the cost of a points reward system is the value of points outstanding, not the software bill. With a point worth one cent, one point per dollar means each enrolled dollar carries one cent of promise: one percent of enrolled sales. A point per two dollars is half a percent. A double-points day is two percent on the sales made that day.
A tier multiplier of two makes it two percent for the customers in that tier. Expiry lowers the final number because some points are never spent, but never rely on that to make an over-generous rule affordable. Add up your earn rate, your multipliers and your campaign hours, apply them to the sales you expect to enroll, and you have your reward budget in plain terms.
On the shared network, the cost of a point sits with the business that issued it. When a customer spends points they earned elsewhere at your counter, you are not funding that reward; you gain a visit. Your own liability is only ever the points you award.
Redemption at the counter and audit integrity
Redemption should be as fast as earning. On the Sopoints POS screen staff identify the customer by phone number, QR scan or NFC tap, pick the reward, and the points come off the balance immediately. The customer sees the new balance in the app or on their wallet card. Staff roles control who can award and who can redeem.
Every point issued, redeemed, expired or adjusted is recorded and can be audited. That matters for you when a customer questions a balance, for your accountant when outstanding points are a liability on the books, and for the network when points move between merchants. Refunds reverse the points a purchase earned, so balances stay true to what was actually bought.
Points system design decisions and what they cost
Point value is fixed at one cent, so each row follows from arithmetic rather than from a statistic.
| Design decision | Typical choice | What it does to cost and behaviour |
|---|---|---|
| Earn rate | One point per dollar | One percent of enrolled sales set aside as future rewards; easy to explain and remember |
| First reward threshold | Reachable in a few normal visits | Sets how quickly the habit forms; too far and customers stop noticing, too close and you subsidise visits you already had |
| Expiry | Long enough that regulars are never caught out | Caps outstanding liability and gives a reason to message quiet customers; short windows feel like a trick |
| Tiers and multipliers | Higher earn rate for your most frequent customers | Raises cost only for that group; keep the tier reachable and the benefit clear |
| Bonus days and happy hours | Double points in a slow window | Doubles the cost for those hours only; moves demand to when you want it |
| Coalition redemption | Accept points earned at other merchants | Costs you nothing on points you did not issue; brings in customers who have never visited |
Loyalty points system questions
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