charles wrote: More important the points a person gets, will lead them to buy more products without me having to loss money on discounts.
Thanks
How is losing money giving customers free products after getting so many points different from losing money on a discount? In both cases you are losing money, though i dont look at it this way, since you are "increasing sales", "increasing profit" and "increasing customer return".
Every point system rewards a customer with a "free item" after they gain enough points. This IS losing money. Though what you are really doing is giving a customer a product (which has a cost of goods sold) ie. the price you paid for that item for free in exchange for points.
this means that after a customer has spent X dollars, he gains Y points and redeems those points for Z cost of goods sold as a free product. This is no different than using a reward program that gives a customer a discount for spending money in your store. You just need to adjust the discount amount to roughly equal the amount of your free product in relation to his total spending.
As an example of a point system..customer spends $500 and gets reward points worth $50, and then spends those reward points for a $50 item in your store..You basically gave that customer a 10% discount..
As another example using a reward system..Customer spends $500 in your store, over the course of 10 orders. You set your reward system to give a 10% discount (which is of course too high, numbers are examples) and he saves $50 on his purchases as a discount amount...
In both cases you have given the customer $50 for spending $500 in your store...There is no difference in these two programs except for semantics. Adjusting both systems is required to keep you profitable.
I use the rewards system in my store (I actually wrote that system). It has the ability to work on dollars spent or orders placed. In my shop I give discounts in the amount of 1.5% (1-5 orders), 2% (6-10 orders placed), 2.5% (11-20 orders placed), 3%, 4% and 5%, but this is configurable in the system..IT even lets the customer see his current reward level, how many orders placed or dollars spent he needs to reach the next level and therefore works as a great incentive to get the customer returning to buy more. My system allows you to set the discount %, the orders placed or dollars spent for each "discount level" they gain etc. So the customer is required to spend X dollars for each discount level gained.
There is no difference in what the two systems do, namely give the customer a cash incentive to shop more in your store. Your point system gives the customer a cash value in the end, once enough points are earned, and my system gives the customer a smaller reward over time. Both systems have the same endpoint though, namely a giving your customer a given monetary value after spending enough money.
Maybe Giang will add a point system eventually, but for now the system I developed works for giving customers an incentive to shop more the same as a reward point system does.
