Best Practices for Building Your Loyalty Rewards

By structuring your rewards strategically, you can create a fun, compelling experience that incentivizes shoppers to spend more and return often. This guide shows you how to design a tiered reward structure that will maximize customer engagement.

Design a Tiered Reward Structure

The most effective loyalty programs use a tiered structure (3–5 distinct rewards) to gamify the shopping experience. This gives shoppers clear, progressive goals to work toward, driving adoption and engagement.

Use the three core tiers below as your foundation, and remember that every dollar spent earns one point for the member.

Best Practices for Reward Tiers

Design each tier with a specific business outcome in mind, setting the point value and reward type to drive the desired shopper behavior.

Low Tier: The Quick Win

The Low Tier encourages members to engage with the program early and often.

• Reward Type: Free Item Savings or Store-Branded Item.

• Point Cost: Set this at a low threshold (e.g., 50–100 points).

• Value: Select inexpensive, always-in-stock staples (e.g., bananas, a single bakery item) or store-branded items (e.g., a tote bag or coffee mug).

• Rationale: The item's retail value should be approximately 2–3% of the points required to earn it. Store-branded items are excellent low-cost rewards that turn shoppers into walking brand advertisements.

Medium Tier: Drive Basket Size

This is the most critical tier for influencing a shopper's spending behavior.

• Reward Type: Transaction Discount (a flat dollar amount off).

• Goal: Use this reward to drive the shopper's spend above your store's current average basket size.

• Setting the Minimum Spend:

  • Find your current average basket size (ABS).

  • Set the Minimum Spend on Discount in Vori to be 5–10% higher than your ABS.

  • Example: If your ABS is $30, set the minimum spend to $35. This encourages shoppers to add an extra item to qualify for the discount.

• Reward Name: Always state the minimum spend requirement clearly in the reward name (e.g., "$5 Off $35+"). This prevents confusion at the POS (Point of Sale system).

High Tier: The Long-Term Goal

This reward is designed for your most loyal, high-spending shoppers.

• Reward Type: Percentage Off or a Large Dollar Amount Off.

• Point Cost: Set a high point threshold (e.g., 500–750 points or more).

• Rationale: This tier is for long-term gamification. Shoppers must actively save points over multiple trips to earn a significant, high-value reward, which cements their loyalty to your store.

Seasonal and Fun Rewards

Once your core tiers are set, create temporary rewards to keep the program engaging.

• Use Seasonal Items: Add rewards for items like a free pumpkin in October or a packet of seeds in the Spring.

• Custom Campaigns: Tie these fun rewards to an SMS campaign to promote them for a limited time

Store Examples

Vori Neighborhood Market is a popular SF-based grocery store. The store sees an average basket size of $38.

Here’s an example of how they could structure their loyalty rewards to drive behavior:

• 1. 🥑 Low Tier (The Quick Win)

  • The store sells custom totes for $15 and house-made popcorn for $3.29.

  • Recommended Rewards: 50 points – free tote or 100 points – free bag of popcorn.

• 2. 💰 Medium Tier (Drive Basket Size)

  • Since their average basket size is $38, they should set the minimum spend above that (e.g., $18 higher).

  • Recommended Reward: 200 points – $5 Off $45+ deal.

• 3. ✨ High Tier (The Long-Term Goal)

  • This is reserved for the most dedicated shoppers.

  • Recommended Reward: 500 points – 10% Off Your $100+ Purchase.