February 29, 2024

Growing your business isn’t just a matter of acquiring new customers. Existing customers can be a lucrative source of repeat business and additional revenue—by some estimates, they’re likely to spend 67% more than new customers. 

Tap into this potential by implementing a customer loyalty program—a rewards program for repeat customers—which you can easily manage through your point-of-sale (POS) system. Here’s more on what POS loyalty programs are, their benefits, and the most popular types.

What is a POS loyalty program?

A POS loyalty program is a customer loyalty program that’s integrated with your point-of-sale system and lets staff enroll shoppers so they can earn and redeem rewards. Loyalty programs can take many forms, including points-based systems, tiered programs, cash back, and exclusive offers or experiences. All are designed to incentivize and reward customers for their repeat business. 

This way, when a customer makes a purchase, your POS system automatically updates their profile with points or rewards earned. Modern systems like Shopify POS unify all of a customer’s loyalty points in their customer profile, saving time and effort that would otherwise be spent manually tracking or reconciling points customers get when they shop online or at your store.

💡TIP: With Shopify POS, you can use fully integrated loyalty apps like Smile.io or Marsello to boost customer retention and let shoppers collect and redeem points every time they shop with your brand online or in store.

3 benefits of a POS loyalty program

Retaining existing customers is often more cost effective than acquiring new ones. You can strengthen customer relationships and gain valuable insights into their behavior and preferences. Here are three key benefits of a POS loyalty program.

  1. Data and insights
  2. Performance tracking
  3. Higher order values

1. Data and insights

The main benefit of using a POS system to run a customer loyalty program is data. A rewards program starts, runs, and ends with data, which can be stored in customer profiles—this includes purchase history, customer lifetime value, purchase frequency, favorite products, and more.

Loyalty programs also give you an opportunity to collect a customer’s contact information and add them to your email newsletter. This ensures shoppers know about upcoming product launches or promotions, and increases the likelihood they buy from you again.

2. Performance tracking

In addition to providing data about customer purchase behavior, a POS loyalty system helps you track your program’s performance. For example, the total number of enrolled customers can teach you how well you’re driving signups, while the percentage of sales that come from enrolled customers demonstrate how effective your loyalty program is at driving repeat sales. All of this helps connect your loyalty program back to what matters: customer lifetime value.

3. Higher order values

Customer loyalty programs not only help drive more repeat purchases, but also gently incentivize shoppers to spend more than they may have initially planned.

If a shopper is just a few points away from earning a reward, they may choose to add more items to their order. If they have an exclusive discount on a higher price point item, that may compel them to purchase. In either case, the loyalty program is helping you increase order values and generate more revenue.

4 popular types of POS loyalty programs

The sky’s the limit when it comes to the kinds of customer loyalty programs you can offer. Use your imagination to devise innovative ways to incentivize customers. Here are four popular loyalty programs you can incorporate into your POS solution to boost repeat visits. 

  1. Points-based POS loyalty programs
  2. Tiered POS loyalty programs
  3. Cash-back POS loyalty programs
  4. Subscription-based POS loyalty programs

1. Points-based POS loyalty program

Points-based POS loyalty programs are the most common. With this type of program, customers earn loyalty points that can be redeemed for perks and loyalty rewards. These benefits don’t always need to be physical goods. Instead, they could be early access to new collections or sales, extended shopping hours, or a longer grace period for returns or exchanges. 

You can also get creative with how your customers earn points. For instance, you could offer two times the points as a birthday reward to encourage customers to buy your products on their special day or for a limited time.

2. Tiered POS loyalty program

A tiered POS loyalty program creates different levels for members based on a metric—usually the frequency or value of their purchases.

The levels determine which perks customers are able to access—think of common tiering structures like Silver, Gold, Diamond, or Platinum. The higher the tier, the better the rewards.

3. Cash-back POS loyalty program

With a cash-back POS loyalty program, customers earn cash for making purchases. The money earned is usually a percentage of the total purchase amount. 

Although you can give real cash back, issuing store credit for future purchases is more common. Cash-back can create a snowball effect—the more the customer shops, the more cash they earn, and the more incentive they have to return.

To drive sales of items with larger profit margins, you can vary the reward percentage based on whether they pay full price or use a discount.

4. Subscription-based POS loyalty program

In subscription-based POS loyalty programs, members pay a recurring fee to get exclusive benefits, discounts, or perks. It’s a model that can create a constant revenue stream for your small business.

Ensure that members get value from their subscription through exclusives like early access to new product collections, or free, discounted, or faster delivery, if you sell products online.

Key POS loyalty program features

POS systems have different types of loyalty functionality included. Here are some key features to look for when choosing loyalty software that integrates with your POS system: 

Unified sales data

To successfully manage a customer rewards program, you need an easy and effective way to collect, store, and analyze your customers’ sales data. Look for a POS system that brings customer sales data together into a single place. This ensures you don’t have to reconcile figures between multiple tools or build spreadsheets to get the information you need.

Customization

Does your business need an out-of-the-box solution, or do you prefer to get into the nuts and bolts to create something with bespoke capabilities? Choose a loyalty app on the Shopify app store that meets your needs, whether you want a ready-to-use loyalty program or something that can be customized. 

Email marketing integrations

To drive more signups for your loyalty program, you’ll need to get the word out. Make sure your loyalty program integrates with your favorite email marketing tools so you can get more customers to sign up.

Ecommerce integration

If you sell online and in-store, you’ll want to make sure your POS system has POS integrations that connect it with your ecommerce platform. This ensures loyalty program members can collect and redeem points when they shop online or at your store, rather than having separate accounts and balances for both.

Reward loyalty everywhere customers shop

Only Shopify’s integrated loyalty apps let customers collect and redeem loyalty rewards when shopping with you both online and in-store—no complicated workarounds or integrations required.


POS loyalty programs FAQ

What types of rewards are typically offered in a POS loyalty program?

Loyalty rewards can be anything, from discounts, free products, and add-ons, to relationship-building perks like sneak peeks into new collections, early access to sales, or an extended return or exchange period.

Can a POS loyalty program be customized to fit my business needs?

You can customize a POS loyalty program to fit your needs. For instance, Shopify POS lets you customize your loyalty program by choosing how points are earned and redeemed, setting up different tiers of rewards, and creating custom messaging to promote the program to customers.

How can I track and analyze the effectiveness of my POS loyalty program?

To track and analyze the effectiveness of your rewards program, you can use reporting and analytics features—like customer retention rate, average order value, and frequency of purchases—while also soliciting customer feedback.

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