Shopify Loyalty Programs: Points or VIP Tiers?

Quick answer: For most small Shopify brands, start with points and add VIP tiers only when enough customers already buy repeatedly to fill the top tier. Tiers cost more (a dearer app plan on the apps I checked, plus the perks you give your best customers) and they only change behaviour for people who can see the next rung. Before either, check that your first-order conversion and your repeat-purchase flow are working, because a loyalty program mostly talks to people who have already bought. The worked example below shows how to test the reward cost with your own numbers.

A loyalty program is one of the first things founders reach for when they want repeat orders. The pitch skips is that a program has a running cost, and that many of the people it rewards would have bought anyway.

This guide is for the owner of a Shopify store doing roughly A$150K to A$1M a year who is choosing between two designs. A points program gives a customer points for orders and actions, which they swap for a reward. A VIP tier program sorts customers into levels, such as Silver and Gold, with better perks at the higher levels. Most apps can run both.

Two notes first. Most of what ranks for this question is written by loyalty app vendors, who earn when you install, so I used their pricing pages and Shopify App Store listings for prices and plan features only, not for claims about revenue. And Prism3 does not build or run loyalty programs, email or SMS; we work on Shopify SEO, GEO and CRO. I cover it because it is a common early spend at this store size, and the decision comes down to arithmetic you already have.

Points and tiers: what each one costs you

Points. A customer earns points, say one per dollar spent, and redeems them for a discount or a free product. Your cost is the value of points redeemed, not points issued. Unredeemed points cost nothing, which is why the redemption rate matters in the calculation below.

VIP tiers. A customer moves up a level by passing a threshold, usually orders or spend within a period, and each level carries perks such as a higher earn rate, free shipping or early access. Your cost is the perks you give everyone on a level, including customers who would have ordered just as often without them.

Tiers are a status ladder, and a ladder only works when people stand on different rungs. If almost everyone has ordered once, there is nobody to be Gold.

What the apps cost and which plans include tiers

Shopify loyalty runs through apps. I opened the pricing and plan details for three well-known ones on 31 October 2026. Prices are the monthly US dollar prices as listed. I have not converted them to Australian dollars or checked GST treatment.

Sources: Smile.io’s pricing page (reviewed 25 September 2026) and its Shopify App Store listing; Rivo’s Shopify App Store listing; Yotpo’s loyalty pricing page (last updated August 2026) and its Shopify App Store listing. Yotpo’s page and listing describe usage fees and the free plan differently (the listing limits the free plan to stores under 100 monthly orders), so read the live page before you decide.

On Smile.io and Rivo, points sit on free or cheaper plans and tiers on a higher one. The listed price of tiers runs from USD $49 to USD $199 a month and rises as monthly orders grow.

Illustrative arithmetic, assuming an average order value of A$90 (use your own): A$150K a year is about 139 orders a month, A$500K is about 463 and A$1M is about 926. A store at the low end sits inside the free plans’ limits. One near A$1M is close to the top of a USD $79 plan’s 1,000-order limit and needs the higher plan for tiers.

The decision test: four questions from your own admin

You need four numbers from your own store, not a vendor benchmark. I have no sourced threshold for any of them, so the reading rules below are my judgement, not data.

Question 1: how many customers have ordered twice or more?

In your Shopify reports, open the Returning customers report, which Shopify describes as showing customers whose order history includes two or more orders (Shopify Help Center, Customers reports). Count them over the last 12 months. Shopify also defines a returning customer rate as returning customers divided by all customers who placed orders, and its field reference says most stores display 20 to 40 percent. That describes what stores show, not what is good for your category, so do not treat it as a target. Our guide to calculating and raising your repeat purchase rate covers the sum.

How to read it: tiers need people on each rung. If a Gold tier starts at three orders a year and only a dozen customers reach it, you have a dozen people. You can thank a dozen people personally in an afternoon, so software would add a monthly fee to something you can do by hand.

Question 2: how long is the gap between the first and second order?

Open the Customer cohort analysis report. Shopify groups customers into cohorts by the date of their first order, and you can switch the metric to customer retention rate and the view to a retention curve (Shopify Help Center, Customers reports). Our guide to reading the cohort analysis report explains the grid.

How to read it: a reward has to land inside a normal buying cycle. If people reorder every six to ten weeks, points that become usable after two or three orders arrive before the next purchase is due, and the program has a chance. If the natural gap is a year or more, points are a very long wait and tiers have nobody climbing. A referral offer or a bundle may suit that product better.

Question 3: how often do your best customers order in a year?

The Returning customers report lists the number of orders each customer has placed (Shopify Help Center). Look at your 10 or 20 most frequent buyers over the last 12 months. Is it four or five orders a year, or two?

How to read it: tiers reward frequency. If your best customers rarely pass two orders a year, there is no behaviour a Gold level would speed up. If a visible group orders often, they are who a tier is for, and the question becomes whether the perk is cheap enough to give them.

Question 4: can the store afford the reward?

That is the arithmetic in the next section. If the program only pays for itself when members order far more than they do today, stop there.

What the answers suggest

A worked example of reward cost (illustrative)

This is a made-up store. None of these numbers is a benchmark or a result from any real store. Replace each assumption with your own.

Assumptions:

• 400 orders a month at an average order value of A$90 (A$36,000 a month in sales).
• A$30 contribution per order before any loyalty cost, which is what is left after product cost, shipping and payment fees. Our worked example on contribution margin per order shows how to find yours.
• Members place 150 of the 400 orders.
• Members earn one point per A$1, and 100 points redeem for A$5 off, a nominal 5 percent. Assume 60 percent of points are ever redeemed (replace this with your app’s redemption rate), so the real cost is 3 percent: A$2.70 per member order.
• Gold tier: three or more orders in 12 months. Gold customers place 40 of the 150 member orders. Perks are 1.5 points per dollar, worth A$1.35 more per order after redemption, and free shipping that costs you A$9. That is A$10.35 per Gold order.
• App plans of A$25 a month for points only and A$300 for a plan with tiers. These are rounded-up stand-ins for USD $15 and USD $199 plans at an assumed 1.5 Australian dollars to the US dollar.

Under those assumptions, points need about 11 percent more member orders (16 on 150) just to cover their cost. The Gold tier needs Gold orders to roughly double (41 extra on 40), because the perk is paid on every order those customers already place. I am not predicting a lift for your store; the structure is the useful part.

The rule to carry away: the cost of a program lands on every member order, including the ones that would have happened anyway, while the benefit comes only from the extra orders.

Extra orders needed = (reward cost on existing orders + app fee) divided by (contribution per order minus reward cost per order)

The same formula shows where tiers get cheap. If the Gold perk is early access, a first look at new products or priority support, the A$9 free-shipping line disappears and the break-even number drops sharply. If free shipping is the perk, our guide to setting a free shipping threshold against order value and margin covers the same sum from the shipping side.

When a loyalty app is the wrong next job

This is the section the vendor blogs do not write. A loyalty program is a retention tool that sits on top of a retention system. If the system underneath is missing, the program largely rewards people for what they were doing already. On a store in the A$150K to A$1M range, three things usually come first.

1. First-order conversion and tracking. A loyalty program talks to people who have bought. Conversion work talks to every visitor, including everyone who leaves without buying. If you cannot trust your conversion rate or your repeat-rate numbers, you cannot tell whether a program worked either. Our guide to what to fix first, in order sets out the sequence.

2. The messages that already follow an order. A shipping update, a review request, a reminder when the product is due to run out and a note to lapsed customers can all push towards a second order without paying a reward. Our first 90 days after purchase plan lists what belongs in that window. Prism3 does not set up or run email or SMS, so this is advice, not an offer, but it can cost less than a points budget.

3. Discount habits. Points redeemed as money off are a discount program under another name. If your customers already buy mainly on promotion, a points program can deepen that habit, so check how rewards stack with sale codes by placing a test order with both.

The app itself also adds weight to every page and a line to the monthly bill. Our Shopify app audit guide shows how to price an app before you add it.

If those are in place, repeat orders show up in the cohort report and the arithmetic above comes out sensibly, a loyalty program is a reasonable next step. If not, it is likely to be a distraction: setup time and a monthly fee while the leak elsewhere stays open.

Design choices that matter more than points versus tiers

Match the tier basis to your category. Order count tends to suit low-priced, frequent products and spend high-ticket items. Decide whether the period is a rolling 12 months or lifetime, whether people can drop a level, and write the rules in plain text on the program page.

Measure by cohort, not by member against non-member. Members tend to be your best customers already, so they will usually beat non-members, which proves little about the program. Instead, compare the share of customers who place a second order for cohorts acquired before and after launch. It is not a controlled test, because seasons and campaigns also move behaviour, but it misleads less.

Points expiry, store credit and consent: three Australian checks

This is general information, not legal advice. Have a lawyer check your program terms before launch.

Points expiry. Smile.io and Rivo list points expiry on the same plans as tiers, so you can switch it on. The ACCC’s page on gift cards and discount vouchers says gift cards bought on or after 1 November 2019 must be redeemable for at least three years, and that this rule does not apply to gift cards that are part of a customer loyalty program. The same page lists loyalty stamp cards and their online or in-app equivalents as discount vouchers, and says a business must clearly state all conditions and restrictions on how they can be used. It does not say how a points balance is classified, so I cannot tell you whether a short expiry is acceptable. If you expire points, say so plainly where the member sees it and get the wording checked.

Keep purchased gift cards separate. The ACCC’s three-year minimum is the general rule for gift cards a customer buys, with its own list of exceptions. If you also sell gift cards, keep them apart from rewards in your terms and your app settings, and ask an adviser how any store credit you sell should be treated.

Joining a program is not the same as agreeing to marketing. The ACMA says that if you plan to send marketing emails or messages, you must first have consent from the person who will receive them, that ticking a box on a website is one way to give express consent, and that it is up to you to prove it. It also says inferred consent does not cover messages sent just after someone has bought from you. The ACMA page does not mention loyalty sign-ups, so this is my reading: use a separate marketing tick box that the customer chooses to tick, and keep a record of who agreed, when and how.

Privacy. The Office of the Australian Information Commissioner (OAIC) says a small business is one with annual turnover of $3 million or less. It also says a business trading in personal information is covered regardless of turnover, and describes that as providing a benefit, service or advantage to collect personal information, without the individual’s consent or legal authority. Whether a referral reward (a benefit for passing on a friend’s details) falls within that is a question for an adviser. The OAIC page I read mentioned no change to these rules as at 31 October 2026, but check the current version.

Key takeaways

• For most small Shopify brands, points come first. Tiers need enough repeat customers to put people on different rungs.
• Four numbers from your own admin decide it: customers with two or more orders, the gap to the second order, how often your best customers order, and whether the reward is affordable.
• A program’s cost lands on every member order, but the benefit comes only from extra orders. Run the break-even formula with your own numbers.
• The perk matters. Early access costs little; free shipping is where tier budgets disappear.
• On the apps I checked, tiers sit on a higher plan than points, from USD $49 to USD $199 a month on Rivo and Smile.io, as at 31 October 2026.
• At A$150K to A$1M, fix conversion, tracking and post-purchase messages first. A loyalty program on top of a leak is usually a distraction.
• Measure with cohorts, not member against non-member, and keep marketing consent separate from program sign-up (general information, not legal advice).

FAQs

Should a small Shopify brand start with points or VIP tiers?

Start with points. They are simpler to explain, they work from the first order, and on the Smile.io and Rivo listings they sit on free or low-cost plans while tiers sit on a higher one. Add tiers when a visible group of customers already orders often enough to want recognition.

How many repeat customers do I need before tiers make sense?

I do not have a sourced number and I would not trust one from a vendor blog. If the top tier would hold only a handful of people, thank them personally. If a meaningful group already orders several times a year, a tier is worth costing out with the formula above.

How much does a Shopify loyalty app cost?

As at 31 October 2026, Smile.io lists a free plan for up to 200 orders a month, paid plans of USD $15, $79 and $199 a month, and VIP tiers on the $199 plan. Rivo lists a free plan, a USD $15 plan and VIP tiers on a USD $49 plan. Yotpo lists a free plan, a Pro plan from USD $199 and VIP tiers on a custom-priced Premium plan. Prices are in US dollars and change, so check each listing.

Can loyalty points expire in Australia?

I cannot give you a definite answer, and this is not legal advice. The ACCC says the three-year minimum for gift cards does not apply to gift cards that are part of a customer loyalty program, and that loyalty stamp cards and their online equivalents count as discount vouchers whose conditions must be stated clearly. It does not address points balances directly, so get your terms checked before you set an expiry.

Does joining a loyalty program count as consent to marketing emails or texts?

Not by itself, on my reading, and this is not legal advice. The ACMA says you need consent from the person before sending marketing messages, that ticking a box on a website is one way to give express consent, and that you must be able to prove it. It does not address loyalty sign-ups specifically. A separate marketing box on the sign-up form, with the answer recorded, is the safer design.

How do I know whether the program is working?

Compare the share of customers who place a second order for cohorts acquired before and after launch, using Shopify’s Customer cohort analysis report. Do not compare members with non-members, because members tend to be your best customers to begin with. Track the reward cost as a share of member revenue alongside it.

Will a loyalty program raise my conversion rate?

It mostly affects returning customers, not first-time visitors, so do not expect much movement in your overall conversion rate. First-order conversion is a separate problem, and usually the larger one to solve first.

Keep reading

• How to calculate customer lifetime value on Shopify
• How email lifts customer lifetime value on Shopify

Want to see where your store loses buyers first?

A loyalty program works on customers who have already bought; first-order conversion is usually the larger problem to solve first. Book a free 30-minute diagnostic: we look at where your store loses buyers after the click, using your own numbers, and tell you what to fix first. We do not run ads or email. No pitch. No email gate. We do not sell loyalty apps. Whether your program terms and member messages meet the law, including gift card and spam rules, is a question for your lawyer, not for us. If conversion or tracking is the weak spot, see how our Shopify CRO service works.