Points or cashback: which loyalty program is right for you?
The difference between a points program and cashback, when each works best, and how to choose based on your ticket size and margins.
In this article5
How points work
Customers earn points per dollar or per visit and redeem them for rewards you define. Because you choose the reward, you control its real cost and can feature products with good margins.
How cashback works
A percentage of each purchase returns as credit to spend at your business. It's instantly clear (“5% back”), and the credit only has value if the customer returns.
Which to choose
Cafés, bakeries and quick service: points or stamps. Stores with varied baskets and higher tickets: cashback. If in doubt, start with points; it's easier to keep margins under control.
Practical checklist
- Check your average ticket
- Decide which reward or percentage you can afford
- Explain it in one line
- Review redemptions monthly
Frequently asked questions
Can I offer both?
Yes, but start with one so customers understand it; add the other later if it fits.
What cashback percentage is typical?
Small percentages, often between 2% and 10%, depending on your margin.
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