A point is worth whatever it redeems for in riyals, and that figure sets the cost of your entire programme. Divide the reward value by the points it takes to earn it. Start from the give-back rate you can afford and derive the value from that, never the other way round.
A point is not a number, it is a liability
When you announce "a point for every riyal" you have not yet said anything. A point is a unit with no meaning until you attach it to something it trades for. The figure that decides your whole cost is not how many points you hand out, but what a loyalty point is worth at the moment the customer spends it.
This is what makes points more dangerous than stamps for an inattentive merchant. A stamp costs you a specific item whose cost you already know. A point costs you whatever you declared it to be worth — and you are the one who declares it. A number written without arithmetic on launch day stays with you for years.
Setting the value in three steps
- Start from the give-back rate, not the point Ask what percentage of sales you are willing to hand back. For most trades the healthy answer sits between three and seven per cent.
- Turn the rate into a value If you give a point per riyal and want a five per cent give-back, a point is worth five halalas. A hundred riyals of spend earns a hundred points worth five riyals.
- Test it against a real bill Take last month's largest receipt and work out what that customer would claim. If the number alarms you, your rate is too high; if it looks trivial, it will move nobody.
| Point value | Your give-back | What a 2,000-riyal customer takes |
|---|---|---|
| 1 halala | 1% | 20 riyals |
| 5 halalas | 5% | 100 riyals |
| 10 halalas | 10% | 200 riyals |
Nobody notices the first row, and it will make your programme a running joke among your own customers. The third is generous enough to swallow the entire margin of most retail. The middle row is where successful programmes live, and it is also what the working rule "a hundred points equals five riyals" produces.
Why the tidy number on the sign costs triple
Because merchants pick a figure that is comfortable to look at rather than one that is comfortable to pay. "Every hundred points is ten riyals off" reads neatly, but if a point comes from every riyal spent you are returning ten per cent of every bill. That is double the healthy ceiling and, usually, about triple what you intended.
And note these percentages are calculated against member sales, not against everything you sell. If only a third of your customers are enrolled, your real cost across total revenue is a third of the headline rate. That is one of the very few pieces of good news in this calculation.
Three guards that protect the number once it is set
- A redemption minimum Do not let anyone spend five points. A sensible floor cuts the number of trivial redemptions and turns the reward into an event worth waiting for rather than a permanent discount.
- A per-bill redemption cap Preventing a huge balance being spent in one go protects you from a completely free bill, which is the experience that makes an owner cancel the whole programme in a single afternoon.
- Exclusions announced in advance If particular lines run on thin margin, exclude them clearly from day one. A late exclusion looks like a retreat; one written from the start looks like a rule.
More important than all three: write the point value plainly somewhere the customer sees it. "100 points = 5 riyals" is one sentence that ends every later misunderstanding, and stops the question "what is my balance worth?" from ever reaching your cashier.
Common questions
Can I change the value later?
Raising it is safe and popular; lowering it feels to the customer like money taken out of their account. If you must cut, announce it a month ahead and honour balances already earned at the old value. That alone is a reason to open conservatively and raise later, rather than the reverse.
How many points per riyal should I give?
The count itself makes no financial difference, since one point at five halalas equals ten points at half a halala. What matters is the product. Pick whatever makes the arithmetic easy for your customer: one per riyal is clearest, ten per riyal feels more generous and is identical.
What about points nobody ever redeems?
Some share never will, and that pulls your real cost below the headline rate. But do not build the programme on that gap: unredeemed points are a deferred balance in your books that can be claimed at any time, and pricing around it is a risk you do not need to take.