Drive Customer Retention with Magento’s Rewards

Katarzyna Zaleska-Sobecka - Business Development Executive
7 minutes read

Did you know attracting a new customer can cost even six to seven times more than retaining an existing one? No wonder, then, that keeping clients coming back for more is one of the current golden goals for eCommerce.

But how do online businesses create a sense of loyalty?

Well, with eCommerce loyalty solutions that compensate customers for their purchases and build a feeling of community and appreciation.

The best part is that Magento has its own rewards system.

This eCommerce platform shines here by offering powerful options to create effective reward systems tailored to your business needs.

So, if you're running a Magento store and want to turn customers into loyal fans, keep reading. We'll explore Magento's built-in capabilities for creating effective programs that keep customers happy and eager to come back for more.

Setting Up Magento’s Reward System

Magento's reward system is an option designed for Magento eCommerce platforms that allow businesses to implement a loyalty program for their customers. This system is available on the premium version of the platform.

Here's how it works:

  • Earning rewards – Customers can earn points for various actions such as completing purchases, registering for an account, writing product reviews, or even celebrating their birthday (depending on your program setup).

  • Reward points – These points act like virtual currency within your store. You define the conversion rate between points and actual money.

  • Redeeming rewards – Clients can redeem their accumulated points for discounts on future purchases, or even use them for complete product redemptions.

So, how to set up a Magento loyalty system?

It’s quite simple.

Step 1: Enable Reward Points System

To start, navigate to Stores > Settings > Configuration > Customers and locate the "Reward Points" section.

Set "Enable Reward Points Functionality" to "Yes" and "Enable Reward Point Functionality on Storefront" to "Yes".

Step 2: Configure Settings of Rewarding Points

  • Set point acquisition rates Define how many points customers will earn for various activities (e.g., per dollar spent, for registration, for subscribing to newsletters, etc.).

  • Set point redemption rates – Specify how many points are needed for specific discounts or benefits.

  • Expiration settings – Configure if and when points expire according to how you will encourage customers to use them within a certain timeframe.

Step 3: Create Reward Points Earning Rules

Now, navigate to Marketing > Promotions > Reward Exchanges. Click on “Add New Rule” for point earning. Next, define the rule:

  • Its Name and Description for internal use.

  • Website and Customer Groups that the rule applies to.

  • Conditions under which points will be earned (e.g., X points for every $Y spent).

  • Actions: Define the number of points to be earned.

Save the rule.

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Step 4: Create Reward Points Spending Rules

Now it’s time for spending rules. Repeat the steps above to create a spending rule under the same Reward Exchanges menu.

Set conditions under which points can be spent and how points translate to monetary values or discounts.

Step 5: Manage Customer Reward Points

Go to Customers > All Customers. Here, you can check individual customer points and manually adjust them if needed. Go to the “Reward Points” tab and adjust points, view balance, and history.

Best Practices

That’s not all. With these steps, you will set up your program, but you will need something else.

We have some best practices for your Magento loyalty program so you can start seamlessly and adjust it to match your business perfectly.

  • Test the system – Before going live, ensure all rules work as intended and thoroughly test your eCommerce loyalty solution in a staging environment.

  • Leverage seasonality and events – Adapt your program to seasonal shopping trends, holidays, or local events that matter to your company. For example, offer double points during the holiday shopping season and you will encourage repeat purchases.

  • Communicate the program – Update your website and marketing materials to inform customers about the loyalty program. Also, explain how to earn and redeem points and highlight any terms and conditions.

  • Provide support – Be prepared to address any customer questions or issues with the points system. Provide clear channels for support, such as FAQs, dedicated support lines, or chatbots.

  • Listen to your customers – Collect and analyze feedback about the rewards and other customer retention strategies. Use this data to adjust the point-earning and redemption process to meet customer expectations better.

Integrating Customer Feedback

Let’s talk more about customer feedback.

There are many ways to collect and effectively use input from users and adjust your offerings to meet customer needs better. Here are some ideas:

  1. Surveys and polls – Directly after purchase or interaction, prompt customers to fill out a survey. Show them in automated emails or directly on the site after checkout. Keep them short and ask specifically about the experience with the loyalty program.

  2. Feedback forms on the website – Place feedback forms inaccessible areas of your site, e.g., where customers interact with their rewards. Thanks to this, users can offer feedback whenever they have thoughts on the program.

  3. Social media – Monitor social media channels and community forums for unsolicited feedback. Customers often share genuine insights in comments and DMs, which can be incredibly valuable.

  4. Analyze customer behavior – Use data analytics to observe how customers interact with your eCommerce loyalty solutions. Are points being redeemed? What gifts are most popular? This data can provide indirect feedback on their preferences and satisfaction.

  5. Customer support interactions – Train your support team to log feedback received during their interactions. This can provide another layer of detailed, qualitative data.

Magento Features and Extensions for Integrating Customer Feedback

And how does Magento help integrate customer feedback? What options and extensions does it offer? Check out some examples.

Magento 2 Product Reviews

Magento 2‘s built-in product reviews feature allows buyers to leave feedback and rate products directly on your online store. This feature builds a sense of community and transparency, grows trust among potential buyers, and ultimately helps retain visitors. It’s accessible through the Admin panel > Stores > Settings > Configuration > Catalog > Product Reviews.

Magento customer feedback extensions

Thanks to Magento extensions like JaJuMa and Yotpo, you can collect and gather insight from your customers more easily. Such add-ons even let you display reviews to enhance customer loyalty and respond to customer votes with customizable messages.

Magento 2 advanced reviews extension

Enhancing the review system gives customers a voice not only regarding your products but also about their overall shopping experience. Here, the Magetop extension allows users to add titles and attachments to their reviews. It also provides a summary for each product and shows the number of reviews for each rating.

Benefits of a Strong Loyalty Program

A well-designed reward system can supercharge your Magento store, that’s for sure. How? Well, there are direct benefits here like increased customer retention, higher lifetime value (LTV), and improved satisfaction, as well as indirect benefits such as enhanced brand reputation and customer advocacy. Let’s check them out in more detail.

Increased Customer Retention

Imagine this: a customer loves your store but gets tempted by a competitor's sale. However, they remember the gifts they've accumulated with you and that little nudge is all it takes for them to stay loyal.

When customers feel appreciated for their purchases, they're more likely to stick with your brand instead of shopping around. So, yes, with a good eCommerce loyalty solution, you’ll keep seeing those same faces more often. The best part is that this leads to predictable revenue streams from repeat purchases.

Higher Lifetime Value

Now consider the lifetime value of a customer. It essentially measures the total revenue a customer brings over their entire relationship with your brand. With a strong loyalty program, customers tend to spend more and shop more frequently.

Think about it, if they’re earning points that lead to discounts or special offers, why wouldn’t they choose to spend more? Clearly, this boosts their LTV significantly, so it's a win-win.

Improved Customer Satisfaction

Programs that reward loyalty directly impact how happy customers feel about your service. If they know that buying from you means more than just a transaction, like maybe they’ll earn points or get a birthday bonus, it makes them feel valued.

Happy customers are the ones who come back, and they’re also the ones who will drop positive reviews. That's the magic of eCommerce loyalty solutions.

Enhanced Brand Reputation

Moving to indirect benefits, here's something cool. Rewards systems polish your brand’s image. When customers talk about how great your program is, that buzz builds a positive reputation. It’s not just about looking good, but about genuinely being a brand that values its customers.

This kind of reputation makes you a magnet for new customers who crave a similar positive experience.

Customer Advocacy

Lastly, think about the power of word-of-mouth – loyal customers are your biggest cheerleaders. When they're happy with your gifts, personalized offerings, and overall shopping experience, they're more likely to recommend you to friends and family.

This organic referral marketing is invaluable and spreads the good word without any direct costs.

Advanced Tips and Techniques

If you have a solid loyalty program up and running, that’s fantastic! But how can you take it to the next level and keep your customers engaged over time?

With tiered rewards, gratification, and personalized offers, for example.

Create a multi-tiered program through which customers unlock exclusive benefits as they accumulate points. Think of bigger discounts, early access to sales, or special product offerings for top-tier members. These can all encourage customers to strive for higher levels and keep them motivated.

Incorporate game mechanics like points, badges, or leaderboards. Make customers "level up" by completing tasks such as product reviews or social media sharing.

Moreover, caters to individual preferences by offering personalized rewards based on past purchases or browsing behavior. Show your customers you care about their unique interests and keep them coming back for more relevant gifts.

The Future of eCommerce Loyalty Programs with Magento

We know Magento is constantly evolving, but future updates might introduce even more exciting features for reward programs. 

For example, think about updates in Magento analytics and reporting tools that would allow businesses to optimize loyalty structures for maximum impact. Also, a tighter integration between Magento and marketing automation platforms could allow for more targeted and personalized gift program communications.

Future updates may also include Magento AI-powered recommendations, thanks to which customers get personalized rewards based on analysis of their purchase history and browsing behavior to recommend prizes that are truly enticing for each customer.

There is also the possibility of developing omnichannel prize schemes. Customers could earn and redeem points seamlessly across all channels, creating a more cohesive shopping experience.

Start Your Loyalty Program Setup Now!

Visit our website to get a step-by-step guide and see how easy it is to create a rewarding experience for your customers. Plus, contact our team at Polcode for personalized assistance and expert advice on optimizing your Magento store.


Magento's built-in functionalities and integrations can help you create customer retention strategies that result in many benefits, including increased customer retention, lifetime value, and brand advocacy.

Now you know that the best programs go beyond basic perks – they also offer tiered structures, gamification elements, and personalization to keep your customers engaged and excited.

As your program evolves, remember the importance of customer feedback. An eCommerce loyalty solution that adapts to customer needs thrives, hence you should actively solicit suggestions, continuously optimize your incentives, and ensure they keep resonating with your audience.

Plan Magento-based loyalty programs or improve your current reward system effectiveness with Polcode.

Contact us anytime to discuss your specific needs and explore how we can help you turn customers into loyal fans.


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