Loyalty Program Sign Up Bonus: How Many Points to Give New Members
By Alva Chew · Updated
In short Give new members a welcome bonus worth 10% to 20% of your first reward, for example 10 to 20 points when the first reward costs 100 points. Research on reward cards (Nunes and Drèze, 2006) found that what matters is the share of the goal the bonus completes, not its dollar value, so a small bonus does most of the work. Cap it at one award per member and cost it before you launch.
How many points should you give for signing up?
Give 10% to 20% of the points your first reward needs. If your first reward costs 100 points, a welcome bonus of 10 to 20 points is enough. The customer sees a balance that has already started, and you still give them most of the first reward to earn with purchases.
The bonus works by changing where the customer starts, so its size relative to the first reward matters more than the number itself. Work in that order: set your earn rate and first reward, then size the bonus as a share of it.
Why does a welcome bonus work?
Because progress that has already started feels worth finishing. Nunes and Drèze called this the endowed progress effect. They tested it with stamp cards, and the findings they reported carry over to points.
| Finding | Scope | Source |
|---|---|---|
| People given artificial advancement toward a goal showed greater persistence toward it, which raised the likelihood of completion and cut completion time | Field and lab studies of reward cards | Nunes and Drèze, 2006 |
| The dollar value of the bonus mattered much less than the fraction of the promotion it completed | Same studies, as reported in the journal’s press release | University of Chicago Press release, 30 January 2006 |
| Where no reason for the bonus was given, the effect appeared only when the bonus was issued in an alternative currency such as points | Same studies, as reported in the press release | University of Chicago Press release, 30 January 2006 |
Source: Nunes and Drèze, “The Endowed Progress Effect: How Artificial Advancement Increases Effort”, Journal of Consumer Research 32(4), 2006 (abstract), and the EurekAlert release of 30 January 2006.
Two points follow for you. First, a small bonus can do the job, because the share of the goal it covers is what counts. Second, points are a currency that suits a welcome bonus, so you do not need to invent a special card or an extra scheme. The authors studied card programs and not small-shop points programs, so treat the direction as reliable and the exact size as something to test.
How do you size the bonus?
Start from the first reward and take a share of it. The table uses the earn rate from our points earn rate guide: 1 point per US$1, with 100 points worth US$5. The figures are illustrations, so replace them with your own.
| Bonus | Share of first reward | Face value | Spend still needed to reach the first reward |
|---|---|---|---|
| 5 points | 5% | US$0.25 | US$95 |
| 10 points | 10% | US$0.50 | US$90 |
| 20 points | 20% | US$1.00 | US$80 |
| 50 points | 50% | US$2.50 | US$50 |
Below about 10% the customer may not notice it. Above 20% you start giving away the reward before the customer has bought anything, and a customer who joins, collects and never returns costs you real money. For most shops, 10 to 20 points is the range to test first.
What does a welcome bonus cost?
Multiply new members by the bonus, then value it at what the points redeem for. This is the most you can owe, since some members will never redeem.
| New members | 10 point bonus | 20 point bonus |
|---|---|---|
| 100 | US$50 | US$100 |
| 500 | US$250 | US$500 |
| 1,000 | US$500 | US$1,000 |
These use the same 100 points for US$5 rate. If you reward with a drink that costs you far less than its menu price, the real cost is lower. The unredeemed points still sit on your books as a liability, which our points liability entry explains. A bonus of 10 points at 1,000 members is 10,000 points, so include it in that count.
When should the bonus land?
On the member’s balance the moment they join. The customer scans, enters an email address and sees points on their card before they leave the counter. That visible balance is the reason to join today.
Holding the bonus until a first purchase turns it into a promise, and a promise is easier to ignore. If you fear people joining just to collect, keep the bonus small. A small bonus limits the loss and makes repeat sign-ups pointless.
Should the bonus be a points award or something else?
A points award. Free items, vouchers and a second set of rules add something the customer has to learn. KPMG’s 2019 survey of over 18,000 consumers in 20 countries found 60% said programs are too hard to join or that earning is a challenge, and 55% of enrolled consumers use them a few times a month or less.
| Finding | Scope | Source |
|---|---|---|
| 60% say programs are too hard to join or that earning rewards is a challenge (80% in Brazil and China) | Over 18,000 consumers, 20 countries | KPMG, 2019 |
| 55% of enrolled consumers use programs a few times a month or less | Same survey | KPMG, 2019 |
Source: KPMG International, The Truth about Customer Loyalty, released 26 November 2019, via PR Newswire.
A welcome balance in the same points your customers earn on every purchase adds no new rule. Our case for points only covers why a single rule beats a stack of them.
How do you get people to claim it?
Say the bonus out loud at the till, in one sentence: “Scan this and you start with 10 points.” Put the same line on the QR poster. The guide to getting customers to join covers the script and the poster in full.
How do you know it worked?
Measure two numbers for a month before and after you add the bonus.
- Join rate: new members divided by transactions in the week.
- Second visit rate: the share of new members who return within 30 days.
No independent public figure says what a welcome bonus should lift these by in a small shop, so be wary of any number quoted to you. If the join rate rises but few members return, lower the bonus. If neither moves, the ask at the till is probably the problem, not the points.
How does Gimify handle sign-up?
Gimify is points only. Customers join by scanning a QR code and entering their email, with no app and no password, and the card sits in Google Wallet. The free plan covers one outlet with unlimited members and no time limit, so you can test a welcome bonus size before you pay for anything.
Questions owners ask
How many points should a sign up bonus be?
10% to 20% of the points needed for your first reward. If the first reward costs 100 points, give 10 to 20. The bonus should be visible on the member's balance straight away and still leave most of the first reward to earn.
Is a sign up bonus worth giving?
Usually yes, because it gives a customer a reason to join at the till today and a balance that is already moving. Research by Nunes and Drèze (2006) found that artificial progress toward a reward increased persistence and shortened time to completion. The cost is small and you can calculate it before launch.
Should I give the bonus at sign up or after the first purchase?
At sign up, so the customer sees a balance the moment they join. A bonus that waits for a first purchase asks the customer to take your word for it. If you worry about people joining and never returning, keep the bonus small, which limits what you lose.
How much does a sign up bonus cost?
Members multiplied by bonus points, valued at what the points redeem for. At 1 point per US$1 and 100 points worth US$5, a 10 point bonus is worth US$0.50 at face value, so 1,000 new members cost at most US$500, and less if some never redeem.
Can members sign up more than once to collect the bonus?
Tie the bonus to one email address and one award per member. A small bonus also keeps repeat sign ups from being worth the effort. Check your member list for obvious duplicates when you review the program each month.
Do I need a sign up bonus if I have no app?
It helps more when joining is quick. With a QR sign-up that takes one scan and an email address, the bonus is the reason to scan now rather than later. Without a reason, many customers say they will join next time and do not.
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