A loyalty program enables customers to accumulate points based on their spending, which can then be redeemed for discounts or rewards on future purchases.

This strategic marketing approach is designed to incentivize repeat business and foster customer loyalty within a company’s target market, ultimately encouraging regular engagement, frequent purchases, and brand loyalty while also deterring customers from switching to competitors.

To access the Loyalty Program list, go to:

Home > Retail > Retail Operations > Loyalty Program

1. Prerequisites

Before creating and using a Loyalty Program, it is advised to create the following first:

1. Customer
2. Sales Invoice

2. How to Create a Loyalty Program

Here’s how to set up a Loyalty Program:

1. Navigate to the Loyalty Program list and click on “New.”
2. Provide a Name for the Loyalty Program.
3. Choose whether it’s a Single Tiered or Multi-Tiered program (e.g., gold, silver).
4. Specify the start and end dates for the program.
5. Select the applicable Customer Group and Territory; the default setting is for all.
6. To automatically enroll all customers, check the box for “Auto Opt In (For all customers).” Otherwise, assign the program from the Customer master.
7. In the table, fill in the following details:

• Tier name: Assign tiers based on customer eligibility.
• Collection Factor: Determine how much money spent earns 1 Loyalty Point in BizCentric.
• Minimum Amount: Specify the minimum spending required to qualify for a tier.

1. Conversion Factor: Set the conversion rate, e.g., 10 USD = 1 point.
2. Save your changes.

2.1 Redemption section

• Conversion Factor: This factor determines the value of each Loyalty Point when redeemed. For instance, if 1 Loyalty Point equals 1 USD, a customer with 100 Loyalty Points can use them to purchase items worth up to 100 USD.
• Expense Account: Specify an Expense Account from which you’ll provide the benefits. This helps in tracking the benefits separately.
• Expiry Duration (in days): Loyalty points collected will expire after the specified number of days set in this field.

2.2 Loyalty Points in Customer

Set a Loyalty Program section in the Customer master to assign a Loyalty Program to a Customer.

Loyalty points earned can be viewed in the Customer’s dashboard.

2.3 Loyalty Point Entry

Go to: Accounts > Retail Operations > Loyalty Point Entry. This acts as a log to give an overview of which Customer earned how many points against which Sales Invoice. It holds the data Invoice and Customer.

3. How does a Loyalty Program work?

3.1 Earning Points

• Firstly, create a Loyalty Program following the instructions provided in the initial section.
• Assign this Loyalty Program to a specific Customer.
• Generate a new Sales Invoice for the Customer associated with the Loyalty Program.
• For instance, if the invoice totals 3,000 INR and meets the Loyalty Program’s minimum spending requirement of 2,000 INR, the customer qualifies for the silver Tier collection factor.
• This means the Customer will receive 1 point for every 300 INR spent, resulting in a total of 15 points earned for this transaction.
• Upon submission of the invoice, a Loyalty Point Entry will be generated for this invoice, as depicted in the Loyalty Program Entry section above.
• In the Loyalty Program, once the minimum spending threshold of 6,000 INR is reached, the Gold Tier becomes applicable. Therefore, when another invoice is submitted with the same value, bringing the total sales from this Customer to 6,000 INR, the Customer will be automatically upgraded to the gold tier.

Note: The minimum spent in Loyalty Program does not mean a minimum value for a single invoice. Rather it means the sum of number of invoices for the Customer under a particular Loyalty Program scheme.

3.2 Redeeming Points 

• Let’s continue from the above example where we created 1 invoice and earned 15 points from it. When creating another invoice for the same Customer, go to the Loyalty Points section and enable the checkbox to ‘Redeem Loyalty Points’.
• The fields for ‘Loyalty Point’, ‘Redemption Account’ and ‘Redemption Cost Center’ will become visible under this section. The account and Cost Center will be fetched from the Loyalty Program assigned to the Customer.
• Since the Customer has earned 15 points, we can use all of it until expiry. If we try to use more than what we have an error will be thrown.
• In above example, we have used 6375 points to be redeemed. Doing so will enable another field that will display the amount calculated using (loyalty point * Conversion Factor). So, USD 6375 will be deducted from the amount since our ‘Conversion Factor’ was ‘1’.
• When submitted, 2 Loyalty Point Entries will be created. One for redeemed, which will be a negative value and one for the current invoice.

Note: For an invoice on which points have been earned, if a return invoice is created, it will delete the original Loyalty Point Entry and create a new one after subtracting the returned amount from the original amount. Also, when canceling an invoice, its subsequent Loyalty Point Entry will be deleted.

4. Related Topics

1. Sales Invoice
2. Customer
3. Customer Group