How to choose loyalty rewards that fit your Shopify store's margins

Choose the behaviour before choosing the reward

Write down the next action you want to encourage. For a skincare store, it might be a second purchase when the first jar runs out. For a homeware store, it might be a recommendation that brings a new shopper. Those are different goals, so they need different earning rules and different measures of success.

Shopify's rewards programme guide recommends considering business goals, customer preferences and available resources when choosing incentives. Apply that idea narrowly: start with one audience and one understandable reward rather than a long menu of benefits.

In RewardMe, customer loyalty rewards a customer's own eligible activity. Affiliates earn points from eligible referred purchases. Keep these explanations separate even if both groups use the same branded point name. Our affiliate rewards versus customer loyalty guide, linked below, explains the distinction.

Compare the cost of the actual reward

A fixed discount is easy to explain: redeem a stated number of points for a stated amount off. Its face value gives you a clear starting cost, but minimum spend, eligible products and other discounts still affect the economics of the order.

A percentage discount scales with the eligible basket value. Ten percent off a £30 basket is £3; ten percent off £100 is £10. A rate that looks small can become expensive on large baskets or products with little margin. Model the baskets your customers actually buy.

A shipping reward removes a cost shoppers can see, but delivery is not free for the merchant. Use the shipping charge you would otherwise collect and the actual carrier cost for the eligible destination. Check whether you already subsidise that shipment, so you do not count the same cost twice.

RewardMe supports merchant-chosen rewards, including discounts and shipping rewards. Confirm the available conditions in your setup before describing them to customers. A reward idea is not a promise that every exclusion or combination can be configured automatically.

A worked example: a £50 skincare order

Imagine a fictional store with £50 in merchandise revenue after any existing discounts and excluding tax. Product costs are £20, packing and fulfilment are £4, payment fees are £2, and shipping subsidy is £3. That leaves £21 before the new reward, marketing, app charges and fixed overhead.

If the shopper redeems a £5 discount, the same simplified order leaves £16. The £5 reward uses about 24% of the original £21 contribution, even though it is only 10% of the £50 merchandise value. This is why looking only at the discount percentage can be misleading.

If the order also earns an affiliate reward costing £3, the remainder is £13 before the other costs listed above. Recalculate payment fees or other variable costs if they change after discounting. These figures are a planning illustration, not accounting profit or a prediction of what your store will earn.

• Start with merchandise revenue after existing discounts, using one consistent tax basis.
• Subtract product cost, payment fees, fulfilment and the shipping cost your store bears.
• Subtract the redeemed reward and any other reward costs associated with that order, without counting them twice.
• Keep marketing, software and fixed overhead visible when judging the programme as a whole.

Connect the point rate to a reachable reward

Suppose your planning example is one Star per £1 of eligible spending, with 100 Stars redeemable for £5 off a later qualifying purchase. That promises £5 of reward face value per £100 of eligible spend, or 5%, if all those points are redeemed at that rate. It does not mean every order receives an immediate 5% discount.

At a typical eligible spend of £50 per order, a customer would need two such purchases to earn 100 Stars before any bonuses. Decide whether that journey makes sense for your buying cycle. A store selling refills and a store selling occasional furniture purchases should not assume the same threshold feels reachable.

Include points from other eligible actions when estimating cost. If you reward product reviews through RewardMe's Judge.me integration, those points also move customers towards redemption. Estimate the combined effect instead of budgeting purchase points and review points as if they never meet.

Stars, Gold or another branded name can make the experience feel like your store. Pair the name with a plain explanation of what earns it, when it becomes available and what it buys. Naming points does not change their reward cost.

Test rewards alongside your normal promotions

A reward might look affordable in isolation but behave differently during a sale. Build a small checkout test around your welcome discount, automatic promotion and shipping offer. Check what is actually accepted, what is replaced and the final amount charged.

Shopify's discount-combination documentation explains that combinations depend on the discount classes and settings; app-created discounts also need compatible implementation. Do not promise that a RewardMe redemption stacks with every promotion. Test the actual reward on your store and ask support if the outcome is unclear.

Explain the conditions beside the offer, not only after someone earns enough points. Customers should understand minimum spend, eligible items, expiry and any combination limits that apply. Test cancellations and refunds in an appropriate test setup too, and confirm how your configured programme handles the associated points.

Run a small pilot with a written reward budget

Before launch, record the earning rule, redemption value, expected number of qualifying actions and cost if all newly issued points are redeemed. You can also model a lower redemption scenario, but do not rely on customers forgetting their points to make the offer affordable.

Start with a reward you can explain in one sentence and a review date that fits the product's repurchase cycle. Watch issued points, redeemed points, reward costs, repeat orders and customer questions. Track outstanding points for operational planning without treating a rough estimate as a formal accounting valuation.

Compare contribution after rewards with a sensible baseline. Members who already shop frequently may join first, so higher member spending alone does not prove the programme caused extra purchases. Note changes in advertising, product availability and promotions that could also explain the result.

If customers earn but rarely redeem, inspect the threshold and instructions before increasing the reward. If redemptions are popular but orders leave too little contribution, review the economics before expanding. RewardMe is free to test on your store; check the current Shopify App Store plan allowances and charges before scaling.

Your final check before inviting customers

Use this short checklist with the person responsible for your store's pricing and promotions. Keep the first version simple enough that support can explain it without opening a spreadsheet.

• One clear goal and a reward customers can understand.
• Costs checked on typical, small and low-margin eligible baskets.
• Purchase, review and affiliate reward costs considered together where they overlap.
• A point threshold that matches a realistic shopping journey.
• A tested path from earning points to seeing a balance, redeeming and checking out.
• A review date and a decision based on contribution and repeat purchases, not sign-ups alone.

Common questions