Loyalty Program
A loyalty program enables customers to accumulate points as a function of their expenditure and redeem points on subsequent purchases.
A customer loyalty program is an organized, long-term marketing effort aimed at rewarding and keeping repeat customers. Successful programmers are intended to motivate customers in a business's target market to return often, make repeat buys, and stay loyal to the brand versus others.
To access the Loyalty Program list, go to:
1. Prerequisites
Before creating and using a Loyalty Program, it is advised to create the following first:
2. How to Create a Loyalty Program
Go to the Loyalty Program list and click New.
Give the loyalty program a name.
Select whether the program is single-tiered or multi-tiered (e.g., Gold, Silver, etc.).
Input the start and end dates for the program.
Determine the customer group and territory applicable to the program. By default, the program is for all.
To automatically have all customers enrolled, check "Auto Opt In (For all customers)". Otherwise, the program needs to be manually assigned in the customer master.
In the program details table, provide the following:
1) Tier Name: Name of the tier to which a customer will be assigned as per their eligibility.
2) Collection Factor: Value a customer has to incur in order to receive 1 loyalty point in ERPNext.
3) Minimum Amount: Minimum value required for a customer to achieve a certain tier.
Conversion Factor Specify the manner in which loyalty points are converted (e.g., 1 point = 10 GBP).
Click Save to save the loyalty program.
2.1 Redemption section
Conversion Factor: This indicates the value of every loyalty point when redeemed. For instance, if a customer possesses 100 loyalty points and the conversion factor is 1 loyalty point = 1 GBP, he/she can exchange items up to £100 in value using his/her points on subsequent purchases.
Expense Account: Select an expense account to capture the expense of loyalty rewards. This allows the tracking and reporting of loyalty benefits-related expenses independently.
Expiry Duration (in days): Loyalty points acquired by the customer will be expired after the mentioned number of days from the award date.
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
First, make a loyalty program as described in the previous section.
Assign the loyalty program to the respective Customer.
Make a new sales invoice for the Customer who is a member of the loyalty program.
For instance, taking a case when an invoice has a grand total amount of £3,000 with the loyalty program defined for a minimum spending required to place a customer under the Silver Tier and a factor of collection to earn 1 point for each £300 expended, the client shall receive 15 loyalty points as a reward under this transaction.
When the invoice is posted, it automatically generates a Loyalty Point Entry for it (as per the Loyalty Program Entry above).
Under this loyalty program, when the customer spends a minimum of £6,000, he gets qualified for the Gold Tier. Therefore, when another invoice worth £3,000 is posted—giving the customer's total spend £6,000—he automatically becomes a member of the Gold Tier.
3.2 Redeeming Points
- Let's continue from the previous example where we created one invoice and earned 15 loyalty points. Now, when creating another invoice for the same customer, go to the Loyalty Points section and check the box to Redeem Loyalty Points.
The fields 'Loyalty Point', 'Redemption Account', and 'Redemption Cost Centre' will be displayed here. The account and cost center will be retrieved automatically from the loyalty program for the customer.
The customer has a total of 15 points available for redemption before they expire. On trying to redeem more points than are available, an error will be displayed.
Here we have entered 2137 points to redeem. This does this to make available another field which displays the figure calculated via the formula:
Loyalty Points × Conversion Factor.
As the conversion factor is 1, the amount of GBP 2137 will be subtracted from the invoice amount.
