The verdict in three sentences
We spend a lot to acquire (3,000 to 8,000 FCFA per customer) and too little to retain (500 to 1,500 FCFA), even though retention is far more profitable. A points program with tiers raises purchase frequency by 22 % and lifts the 90-day repurchase rate from 18 % to 34 %. Well calibrated, it costs 3 to 5 % of revenue and boosts customer lifetime value by 30 %.
Without a program vs with a points program
With no retention mechanic, every sale is a one-shot: the customer leaves and you must reacquire them at full price. A points program creates a reason to come back.
| Metric | Without program | With points program |
|---|---|---|
| Acquisition cost | 3,000 to 8,000 FCFA | unchanged |
| Retention cost | high by default | 500 to 1,500 FCFA |
| Purchase frequency | Base | +22 % |
| Customer lifetime value (LTV) | Reference | +30 % |
| 90-day repurchase rate | 18 % | 34 % |
| Program cost | 0 | 3 to 5 % of revenue |
The math is clear: retaining an existing customer costs up to five times less than acquiring a new one, and they spend more.
Tiers, rewards and margin
A good program rewards without destroying margin. Set a modest point value and tiers that encourage regular repurchase.
| Tier | Points threshold | Reward | Cost on margin |
|---|---|---|---|
| Bronze | 0 to 500 pts | 3 % in points | ~3 % of revenue |
| Silver | 501 to 1,500 pts | 4 % + free shipping | ~4 % of revenue |
| Gold | 1,501 to 3,000 pts | 5 % + private sales access | ~5 % of revenue |
| VIP | 3,000+ pts | 5 % + birthday gift | ~5 % of revenue |
Safety rule: total value distributed stays between 3 and 5 % of revenue. Favor non-cash rewards (free shipping, exclusive access) that cost less than plain discounts.
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Mini case study
Sylvie runs a cosmetics store in Johannesburg: 300 active customers, average basket 20,000 FCFA, 2 purchases a year without a program. Her annual revenue per customer is 40,000 FCFA. With a points program, frequency climbs 22 % (2.44 purchases/year) and the 90-day repurchase rate rises from 18 % to 34 %. Her lifetime value grows by 30 %, from about 40,000 to 52,000 FCFA per customer. Across 300 customers, that's 300 x 12,000 = 3,600,000 FCFA of additional annual revenue. The program costs 4 % of the extra revenue, or 144,000 FCFA: the return is strongly positive within the first quarter.
FAQ
What does a loyalty program really cost? As a rule 3 to 5 % of revenue in point value distributed. That's far less than the 3,000 to 8,000 FCFA of an acquisition cost.
Does loyalty really bring customers back? Yes: the 90-day repurchase rate typically rises from 18 % to 34 %, nearly double, and purchase frequency climbs by 22 %.
Which tiers should I choose? Three to four tiers (Bronze to VIP) are enough. Each should offer a concrete benefit: point rate, free shipping, access to private sales.
Should I favor discounts or perks? Non-cash perks (shipping, exclusivity, gift) cost less than plain discounts while retaining just as well. Keep total value under 5 % of revenue.
When does a program become profitable? As soon as the lifetime value uplift (+30 %) exceeds the cost of points. For an average store, the return is visible within a quarter.
Let's talk about your project. We design your tiered points program to retain customers and grow lifetime value. WhatsApp +221 77 596 93 33.
Mohamed Bah
Fondateur, Kolonell
Passionate about digital and entrepreneurship in Africa, Mohamed has been helping Sénégalese businesses with their digital transformation since 2020. Founder of Kolonell, he believes every SME deserves a professional and accessible online présence.
