Skip to main content

Set Up a Loyalty Program

Learning Objectives

After completing this unit, you’ll be able to:

  • Outline how to set up a loyalty program.
  • Explain how to add partners to a loyalty program.
  • Describe how to add members to a loyalty program.

Create a Loyalty Program

Now that Mary has access to Loyalty Management, she’s keen to play around with the app to understand it better.

Mary heads to the Loyalty Management app first. The Loyalty Management app is a one-stop-shop for all things Loyalty Management. Mary can design her loyalty program here.

Mary creates a loyalty program named Cloud Kicks Inner Circle and activates it. The first and most important piece of the puzzle is ready.

The New Loyalty Program window where a loyalty program named Cloud Kicks Inner Circle is created.


Although Cloud Kicks is currently looking to roll out a loyalty program for its customers, Loyalty Management allows organizations to run both a B2C loyalty program for customers and a B2B loyalty program for channel partners simultaneously.

Set Up Loyalty Tier Groups and Tiers

Ever played a video game? The flow is fairly simple-you cross hurdles and collect rewards to unlock a higher level, and once you level-up, you unlock better rewards. In a loyalty program, tiers and rewards work in a similar way. The program measures member engagement and moves them to higher tiers for better benefits. 

Mary must create a tier group and associate it with the Cloud Kicks loyalty program. When initializing a tier group you define three integral attributes: tier period, qualifying period, and tier model.

  • Tier period is the period after which tier assessment takes place or, to put it another way, the duration for which a newly allotted tier can be retained by a member. You can also choose to extend the expiration of a tier for a member till the end of the expiration month, the member’s loyalty program enrollment month, or the date on which the qualifying points of the member is reset.
  • Qualifying period is the time during which the program measures member engagement and forms the basis for tier assessment. It’s a continuous cycle, and at the beginning of each qualifying period, the member’s qualifying points balance resets to zero. At this point, they start earning qualifying points from scratch. If a tier group has multiple qualifying currencies, all the currencies adhere to the same reset cycle.
  • Tier model is an attribute that influences the start date of the qualifying period. A tier group can be based on either a Fixed model or an Anniversary model.
    • In the Fixed tier model, the qualifying period starts and ends on preset dates for all loyalty program members, for example, Jan 1 to Dec 31 every year. The qualifying points balance for all members collectively resets to zero at the end of the qualifying period.
    • In the Anniversary tier model, for a member, the qualifying period starts on the day the customer joins the loyalty program and the qualifying period ends on the member’s enrollment anniversary—counted in years.

Mary creates a fixed-model tier group named Inner Circle Tier Group. The tier period is one year and the qualifying points are reset once a year on December 31. 

The tier group contains the following tiers.

Tier Tier Criteria


0–1,999 tier points


2,000–5,999 tier points


6,000–14,999 tier points


15,000+ tier points

A tier group that has four tiers associated with it.

Mary reviews the tiers in the program setup. Next, she adds currencies that help determine the tiers. 

Define Program Currencies

Points are also known as currency in Loyalty Management. Each loyalty program requires one or more currencies that you use to measure and reward member engagement and purchases. Although points are the most prevalent form of reward, businesses are going beyond traditional incentives and providing alternative currencies, like free shipping, access to exclusive events, complimentary coffee, and more. Rewards encourage members to engage with the program to build loyalty. 

Loyalty Management offers two types of currency that Mary can incorporate in the program structure. 

  • Non-Qualifying Points are based on the traditional currency system and hence can be financially quantified. This is the currency that members can redeem directly to purchase products or services.
  • Qualifying Points count toward a member’s tier status. Even though this type of currency doesn’t translate into immediate financial value, it’s the rail that supports a member’s climb up the tier ladder. It essentially measures the engagement of the member within a tier group.
    Note: Qualifying points can be associated with only one tier group. Though, tier groups can be associated with multiple qualifying points.

A loyalty program can have multiple currencies of each type to recognize and reward various member behaviors. Mary decides to use two currencies: one non-qualifying and another qualifying. She names the non-qualifying currency as Regular Points and the qualifying currency as Tier Points.

To seal the deal on the setup of Regular Points, Mary has to decide on its expiration model. Setting non-qualifying points to expire is an effective way to create urgency in your customers and get them to return for a purchase. The two expiration models that you can apply to non-qualifying points are:

  • Fixed model: With this option, each non-qualifying point in a member’s balance expires after a fixed period as specified for this point type. The start date of the expiration period is determined by the date of accrual.
  • Activity model: With this option, a member’s entire non-qualifying points balance expires if there’s no member activity for the duration specified for this point type. The member’s Last Activity Date determines the number of days the member is inactive.

After some deliberation, Mary adopts the 3-year Activity model for the non-qualifying, Regular Points. This specifies that if a member doesn’t have any purchases or activity for three years, the entire Regular Points balance expires.

Fixed model non-qualifying currency created by Mary.

Qualifying points reset based on the reset period defined at the tier group level. The reset can be on a fixed date or the member’s enrollment anniversary date, based on the tier model.

Escrow Points

The Cloud Kicks Inner Circle loyalty program credits points to members for their purchases. For example, Alan Johnson buys a pair of shoes and receives 500 points. The next day, he notices an offer on a set of dumbbells and realizes he has enough points to cover the entire purchase. He’s excited to start his new exercise regime. A week later, Alan receives his orders, but unfortunately, he must return the shoes because they don’t fit. 

When a customer returns a product, the loyalty program refunds the cost of the product and debits the points related to the purchase. But in this scenario, Alan has already used his points to purchase the dumbbells, so he has no points left in his points balance. This is a potential loss to Cloud Kicks. To avoid this, Loyalty Management lets you wait for a period before crediting points to members after they complete a transaction. If the return period is 30 days, you can hold members’ points in escrow for that period, and automatically release the points after the escrow period ends. You can hold both qualifying and non-qualifying points in escrow. 

Mary decides against having an escrow period as she prefers that members are credited their qualifying and non-qualifying currencies right away. 

Associate Program Partners and Partner Products

Establishing a strategic partnership with a business that provides complementary products or services grants numerous opportunities to both businesses. From using each other’s customer base to providing cross-purchasing power to customers, you’re filling many needs with one deed.

Cloud Kicks aspires to have a great loyalty program, not just a good one, and so Mary takes the route of partner integration. She talks to potential partners and forges a partnership with Ursa Major Solar, a Southwest-based supplier of solar components and systems. Cloud Kicks decides to partner with Ursa Major Solar because a large part of Cloud Kicks’s existing customer base consists of young adults who are more inclined toward adopting sustainable energies. Ursa Major Solar decides to become a program partner because it’s currently aiming to increase its presence nation-wide and the partnership with Cloud Kicks comes at the right time. 

A vital question Mary asks herself while assimilating Ursa Major Solar’s offerings into the loyalty ecosystem is whether the program members benefit from the partner during accrual or redemption or both. A redemption partner is one that members can spend their non-qualifying points with. And an accrual partner is one that members can do business with to earn points or other rewards as part of the loyalty program. By default, Loyalty Management configures the host business, Cloud Kicks in this case, as both the accrual and redemption partner. But Loyalty Management provides organizations the flexibility to decide whether a partner is an accrual partner, a redemption partner, or both.

Mary designates Ursa Major Solar as an accrual partner, which means the program members are rewarded with Regular Points when they buy selected items from Ursa Major Solar.

While processing partner products into the program, Mary can assign products in two ways. She can either assign each product individually or assign products that are part of product categories.

A partner and a partner product associated with a loyalty program.

Mary goes ahead and adds Ursa Major Solar’s speakers, batteries, torches, and cooker as partner products.

Add Program Members

Mary has set up the basic framework of her loyalty program; the only thing left is to enroll program members. She sends an email inviting customers to enroll through the Cloud Kicks website. 

Both individuals and corporations can sign up for a program. Mary however decides to restrict the enrollment to individuals because she plans to set up a B2B loyalty program in the future for partners and vendors. For individual type members, the member’s details are already part of a Contact record. For corporate members, the details are already part of an Account record. Corporate-type members can be either a personal account or a business account.

Here’s what the members' section looks like now.

The Members And Partners tab where you create and manage program membership.

Members can also request a group for friends and family. Members of the group can contribute non-qualifying points to the group's point balances. For example, a group can be created for family members. Any member that earns non-qualifying points can contribute a percentage or the entire points to the group’s point balance.

Woohoo! Mary has created the loyalty program, its currency, tier groups, and assigned a partner for the loyalty program. She has also added the members of her loyalty program and associated partner products. Next, she wants to focus on member rewards.


Keep learning for
Sign up for an account to continue.
What’s in it for you?
  • Get personalized recommendations for your career goals
  • Practice your skills with hands-on challenges and quizzes
  • Track and share your progress with employers
  • Connect to mentorship and career opportunities