Designing a successful loyalty program means balancing simplicity, customer motivation, and long-term profitability. This guide outlines proven strategies, structuring recommendations, and metrics to track so you can launch or refine a high-impact loyalty program with Skio.
Credit rewards structure
Cashback vs. points
We recommend a cashback-style program (e.g., 1% of spend = credits) over traditional points for simplicity. Customers understand dollar value more intuitively.
Subscription vs. one-time purchases
Reward subscription purchases more heavily than one-time orders to incentivize recurring revenue.
Credit-earning actions to consider
Offer credits for actions that drive retention and engagement:
Account creation
Feedback surveys
Birthdays and anniversaries
Product reviews
Newsletter or SMS sign-ups
Custom actions (via Shopify Flow)
Prepaid gift subscriptions (coming soon)
Credit expiration
Consider credit penalties for canceled orders.
Avoid penalizing customers for pausing subscriptions.
Set expiration reminders to reduce unused credit churn.
Tier strategies (customer levels)
Example tier structure:
Member: Default entry level, no extra benefits
Bronze: 2% cashback
Silver: 3% cashback — top 20% of customers
Gold: 5% cashback — top 5% of customers
Additional tier perks
Offer high-tier customers added value:
Free shipping or gifts
Early access or exclusive product drops
Private events or gated content
Expiration strategy
Decide whether tiers:
Expire after a set period to drive urgency and repeat purchases, or
Remain permanent once earned
Merchant considerations
Profit margins: Ensure your credit values and tier benefits align with what’s financially sustainable.
Program naming: Create a branded, memorable name for your program (avoid generic terms like “Rewards”).
Discount stacking: Decide if loyalty credits can be used with sales (e.g., Black Friday).
On-site visibility: Add a dedicated Loyalty page and update your FAQ to explain how your program works.
Key metrics to track
Monitor these metrics regularly to optimize performance:
AOV (Average Order Value): Track separately for subscribers vs. one-time buyers.
LTV (Lifetime Value): Analyze at 3, 6, and 12-month intervals.
Subscriber vs. non-subscriber performance: Measure loyalty impact by segment.
Redemption rates: Ensure rewards are used, but not overused.
Cost vs. ROI: Evaluate whether the program increases revenue more than it costs in rewards.
Best practices for tier structuring & reward valuation
Tier logic options
By order count
Bronze: 1–3 orders
Silver: 4–9 orders
Gold: 10+ orders
By lifetime spend
Bronze: $0–$100
Silver: $101–$500
Gold: $501+
By subscription tenure
Bronze: 1–3 months
Silver: 4–9 months
Gold: 10+ months
Valuing loyalty credits
Standard conversion: 100 credits = $1 (1% cashback)
Customer reward percentage (CRP): Keep CRP between 1%–5% to maintain profitability
Cost of loyalty rewards (CLR):
Example: If 1,000 points ($50 value) drive $1,000 in revenue, CLR = 5%
Tier threshold strategy
Use the 80/20 rule: Design your top tier(s) for the top 20% of customers who drive 80% of revenue.
Make thresholds motivating but achievable to keep customers climbing.
Customization options
Skio Loyalty supports full UI customization. For each reward, you can:
Rename the reward
Write a custom description
Choose your own icon
You can also style loyalty components using custom CSS and apply translations for multi-language storefronts.