---
title: "Loyalty best practices"
slug: "skio-loyalty-best-practices"
updated: 2026-03-02T20:04:20Z
published: 2026-03-02T20:04:20Z
---

> ## Documentation Index
> Fetch the complete documentation index at: https://help.skio.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Loyalty best practices

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](/hc/en-us/articles/32344415022107).

## 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.