View Full Version : Loyalty Points
Is it possible to do this - I am about to sell dog food through my site and wanted to introduce Loyalty Points to keep people buying. Is there a way I can set different points for different products, keep a total for each customer and then allow people to redeem their points for certain gifts?
If anyone replies, please do it in English and not Bluepark jargon or I won't understand!
Thanks
Llynda
www.BigDogStuff.co.uk:rolleyes:
youre probably looking for something automated and i dont think that exists on bluepark - yet!
alot of loyalty scheme work by simply adding up spending over a calender month and giving discount based on spending. if you had a lower limit for spending, say £100/month it should be easy enough to monitor yourself at the end of the month by downloading orders into excel. then for those customers over the £100 limit and any other limits you set you could give them a discount code. they then only get the benefit if they come back and spend. i think from memory a discount can be issued for any amount eg £2.88.
i think what you suggest is a good idea. i think the greatest upside of it comes if you sell it well on your site ie make a big deal of it. rather than how it actually works behind the scenes.
what do you think?
entertaintoday
11-04-2008, 18:26
FYI - the link in your signature doesn't seem to be working
Jonathan Read
11-04-2008, 18:35
We operate a loyalty scheme in our Garden Centre but not on-line and have quite a lot of experience with running it. We have approx 12,000 active members and the system is handled automatically via our EPOS system with customers having cards etc.
It is marketed as a Garden Club (try to avoid the word 'loyalty') and 1 point is earned for every £1 spend. Points are available to the customer immediately and may be redeemed on their next purchase. We carry out periodic mailings which show thier current points value and what they are worth and encouraged to come back with additional offer vouchers. Its very successfull and is now nearly our only main source of marketing. If we get the letter and offer right we expect up to a 40% return.
We have tried the collect points and mail-out a voucher option but this added to administration and did not have the response we receive now with the instant feedback available. A customer can see their points total on their receipt and can use it right away on their next purchase without waiting for our mailing. The mailing is now a reminder as well as an incentive to come back. We now also tailor the mailing dependant on the average purchase.
We would love to have a similar system on Bluepark and would be available to help with any advice if necessary as we have been running our scheme very sucessfully for over 8 years. Take a look at our current site as we do detail our Podington4You scheme here (stating that it is only available for personal callers at present).
I believe Rich has this on his wish list for new features, we have discussed this and the way that Bluepark works is compatible with a points scheme.
Perhaps anyone interested could post here to give Rich an idea of the level of interest and detail how they would want it to work.
I personally would like a points scheme that customers could redeem against future purchases only, not a cash back scheme but I can see benefits in both ways of running it.
Possibly a method could be evolved to give the choice of cash back on points or higher level of reward against purchases.
I was just looking into a Reward Points scheme two days ago, so I would also be very interested in this enhancement. I was looking at the iPoints system (http://www.ipoints.co.uk/), but would prefer something that we administered ourselves, for redemption against our own products.
Pete
roobyroo
12-04-2008, 12:10
I also would like to see a points earned scheme for customers. It's not something that I'd thought of previously but having read all of your posts I can certainly see how this could generate more business in the way of repeat orders.
John
Character Planet.co.uk (http://www.characterplanet.co.uk)
little-linguist
12-04-2008, 13:11
Yes - I think we'd find this feature useful. I think we'd prefer something fully automated whereby the points accumulate automatically and then the customers redeem them against a future purchase. Perhaps each time they make a purchase a message at checkout would come up and say "you have previously earned xx points worth £y.yy. Would you like to redeem them now or save them for a future visit?".
agreed it would be a great enhancement. id like to see the following:
- points earned, notified at checkout, to be redeemd against future purchases
- act as a cash equivalent, variable to be set by merchant
- merchant can choose to show product points cost alongside product prices on each product page
- customer points balance to be shown in customer account along with points earned and spent this month, year, etc.
- choose whether scheme is restricted to not allow use without other customer discounts available?
what about points decaying? with unused points you will have £x cash equivalent outstanding in points. this will sit as a liability in the balance sheet and i can see it growing over the years as x% of people dont redeem. whilst it should help save tax it would be nice to see it taken to the P&L by decaying points (like gift voucher time limits) over time.
one idea i had which i like but might be difficult to do would be to have possibility to discount products according to points but not cash. so for example a product normally costs £10 or 1000 points. you could discount the product so it costs only 7500 points but still £10 for those paying cash and could be advertised on a loyalty scheme current offers page. this would encourage interest and use of the loyalty scheme and signups.
Blimey, now I have started something. Rich, if you are reading this, what I want to do is allocate points for each dog food product ordered, then, have a page of items they can get with loyalty points. I suppose they could have my usual products but, because I can print items (and for anyone else interested!!!) they could have say a rucksack or a holdall or mug which could have BigDogStuff on thereby being more publicity for me. For extra points, I could put their name or kennel club affix on. I can print onto lots of things, do small runs and also don't charge VAT at the moment so if anyone is interested... Come on Rich = you are a genius - take the challenge...
Sorted the link - I hope - thanks for telling me.
Rich,
Is this something on the wishlist and if so any idea of timescale?
This is definitely coming, certainly within the next few months.
Great... I would really like this feature as well.
Gill
www.ever-so-sexy.com
just wanted to add another idea:
could product reviews be tied to points? a customer could be rewarded with x points for completing a review once published.
This is definitely coming, certainly within the next few months.
With the launch of Microsoft Live Cashback in the US and the inevitable later rollout here IMHO a site specific loyalty points scheme for Bluepark just became much higher priority.
Microsoft will concentrate on the large merchants and people will start to use Live Search in droves (unlike now) and it will only be a matter of time before the Big G does the same, customer loyalty will be out of the window and a redeemable against next purchase points scheme will be essential.
Please Rich, crib the code from somewhere and integrate this as soon as possible, you know it makes sense!
I'm happy to announce that you can now run a loyalty point scheme on Bluepark! Check your Latest Updates for more information.
The majority of suggestions on here were used in designing the feature, more may be added in the future. It's quite configurable "out of the box". :)
little-linguist
10-06-2008, 06:16
Blimey Rich - you were burning the midnight oil last night! Or are you abroad!?
This looks fantastic!
Thanks Rich,
Fantastic response to getting this turned around so quickly. Once again this shows Bluepark's commitment to their customers and is another poke in the eye for their competition.
Off to have a play with this new feature now :)
Bloody Brilliant turnaround Rich, please don't forget us all when you make your first million!
Actiwho? oh I remember they were that outfit stuck in the 90's
Rich,
Been doing some testing this morning and have to say its looking pretty good but there are a few things I would like to see
1) Under the our price text on the product page could it calculate and display the the points available for this product ie Earn 10 Loyalty Points.
2) The points seem to be calculated based on the value including vat & delivery and I think it should be exclusive of vat
3) On the order information page where it shows the orders. Could the loyalty points summary show Points Awarded, Points Redemmed, Points Available
4) On the view basket could it should something like xxxx Loyalty Points Will Be Added To Your Account For Placing This Order
5) Can the order completed e-mail give a loyality points summary as per item 3
6) The help text for loyality points value in the admin is giving the wrong description
Please take the above as constructive comments. What you have done in such a short period of time is fantastic!
little-linguist
10-06-2008, 08:00
Rich,
2) The points seem to be calculated based on the value including vat & delivery and I think it should be exclusive of vat
I think we'd prefer inc. VAT but ex. shipping so perhaps if you do decide to change this Rich, it should be selectable by user as to whether points are earned on ex / inc VAT prices and whether or not shipping value should be included.
I think we'd prefer inc. VAT but ex. shipping so perhaps if you do decide to change this Rich, it should be selectable by user as to whether points are earned on ex / inc VAT prices and whether or not shipping value should be included.
Hi L-L,
Just for my curiosity, can you explain why you would want to give points (cash) away when someone pays VAT which you presumably dont get to keep?
little-linguist
10-06-2008, 08:34
It's just because the majority of customers are consumers rather than businesses and so see inc. VAT prices as "the price", and don't even consider the ex. VAT price. If we advertise that they can "earn x points per pound" they will expect those points per complete pound, not per £1.18 - which is how they, as the public, see it. Just like in Tesco, you earn 1 clubcard point per £1 inc. VAT.
Also, some of our products (books) are rated for VAT at 0% and others are standard rate. It would make it more complicated to explain the difference so, for the sake of a few pence here and there, I'd be happy to just leave it as total spend inc. VAT.
It's just because the majority of customers are consumers rather than businesses and so see inc. VAT prices as "the price", and don't even consider the ex. VAT price. If we advertise that they can "earn x points per pound" they will expect those points per complete pound, not per £1.18 - which is how they, as the public, see it. Just like in Tesco, you earn 1 clubcard point per £1 inc. VAT.
thanks. makes sense. i guess any merchant could then adapt the points/pound value to take account of margins.
it would still be nice to have the vat&shipping configuration in the hands of the merchant if Rich can add this.
By the way - thanks Rich!
I agree with L-L on this one. Loyalty points are purely a customer incentive, and therefore needs to be geared towards the customer understanding it.
If you're selling to the public, they don't give a monkeys whether you are VAT registered or not. The points should be calculated based on the price the customer sees and pays.
If Rich makes it calculate purely on how the product items appear in the basket then everyone should be happy. If you're selling to trade then your prices will be shown ex-vat, whereas public need to see prices including VAT.
I never think of it as giving away cash. You're gaining a sale that may have gone to a competitor.
I also agree that it should not include the delivery charge. Although making it selectable would be ideal.
----------------------
Apologies - I posted my reply at exactly the same time as L-L who said the same thing.
Great new feature! Well done for once more pulling the cat out the bag so effortlessly (welll it looks that way from here...).
Regards
Pete
Interesting debate on the VAT issue. My personal feeling is that the human understanding element is very important, i.e. £1 spent = 1 point earned. Otherwise you're likely to get lots of questions. The Tesco example is the best, as it's probably the most famous loyalty point scheme in the UK. It's a good benchmark, and people understand how it works.
I can see why it would be a good idea to leave shipping out of the calculation, however. I'm not sure whether this should be optional or automatic. I'd like to avoid unnecessary options if possible. Is there any argument for awarding points for shipping costs, or shall we just leave them out of the calculation altogether?
I vote to leave it out. The shipping is generally nothing to do with customer choice, it's just a mandetary charge made by the seller. Otherwise it's like saying "buy this shipping charge and earn points".
Brillliant to have this option so quickly by the way, just to reiterate the other comments already made.
Rich,
Any chance you can turn-on the discounts on your demo site so we can see how it may operate? I want to make sure i think of as much as i can before turning it on including setting the value, creating an information page and adding link from basket/account, etc.
Secondly, it looks as if customers will automatically receive points rather than opt to join the scheme fisrt? One advantage of the opt-in/apply would be you could commit customers to the 'Club' idea where they would also receive marketing newsletters (reminders you exist) from the site.
Thanks,
Is there any argument for awarding points for shipping costs, or shall we just leave them out of the calculation altogether?
I also agree that shipping should be left out of the calc. I don't think customers could reasonably expect to earn points on the shipping costs.
I do agree that VAT should be included, though.
question on redeeming points...do they work as discounts do to reduce the vatable amount in the basket?
eg an item sold for £10 includes vat of £1.49 @17.5%. with a 10% discount gives a £9 net figure and vat of £1.34. i checked this the other day on the site so i hope im right.
i think points should have the same effect as discounts on reducing vat. so £10 (inc. vat £1.49) total less points valued at £1 will reduce the vat to £1.34.
at the moment im worried we may be receiving £9 cash + £1 points but paying vat of £1.49. ie we would be paying too much vat to Alistair.
vat should be payable on the net amount after discounts given at the point of purchase. i think it is correct to think of points as discounts under this definition since they are given to customers and redeemed before/at the point of purchase.
i know it only looks like a few pennies but i think its correct to understand it now at the start. but hopefully im worrying unnecessarily!:confused:
I am going to take full responsibility for this points lark. I pestered and bullied and the lad has come up with the goods. Well done Rich. Now, I know I should have a play with it but, the whole idea for me was to add loyalty points to the sacks of dog food I sell and then they could redeem the points against a number of products such as umbrellas, rucksacks etc - all with my logo printed on them so they are promotional for me too. So:
Will I be able to add them just to certain products
Will they be able to redeem them against only certain products
Will they be able to redeem them just as points and not as cashThey won't actually be paying for the goods so it wont be like a discount on their purchase, they will just be swapping points for something free really. I could use it on all my purchases but I wanted to do it to get the dog food supply going.
Llynda the challenge master
I vote to leave it out. The shipping is generally nothing to do with customer choice, it's just a mandetary charge made by the seller. Otherwise it's like saying "buy this shipping charge and earn points".
Agreed, and there's no need for this to be optional. Points will not be awarded for shipping costs, only for goods purchased. Points will also, logically, not be awarded for points redeemed - only for physical cash spent in the store.
i think points should have the same effect as discounts on reducing vat. so £10 (inc. vat £1.49) total less points valued at £1 will reduce the vat to £1.34.
Actually, no - loyalty points work more like gift vouchers. They essentially generate "cash back" to be spent on your site. Points are converted to a monetary value which can be used to purchase goods, alongside a normal payment method.
I totally understand the example you present above - the customer is charged the same amount either way, it's just a question of whether the VAT is calculated on the total value of the order or the physical pound notes handed over. It's more of an issue of presentation on the invoice. I think the existing implementation is a valid model, however you could choose to account for such payments in a different way via Sage/Quickbooks etc.
So:
Will I be able to add them just to certain products
Will they be able to redeem them against only certain products
Will they be able to redeem them just as points and not as cashThey won't actually be paying for the goods so it wont be like a discount on their purchase, they will just be swapping points for something free really. I could use it on all my purchases but I wanted to do it to get the dog food supply going.
Well I feel awful now! I realise you set this thread in motion, but the loyalty points feature we've integrated is very much a generic solution (to appeal to the widest possible cross-section of Bluepark clients). It works in a manner common to most loyalty point schemes, in that points are converted to store credit. They apply to all purchases made, and can contribute towards any future purchases.
To be able to specify which products generate points, and on which products points can be redeemed, is a fairly complex and bespoke requirement. We can certainly look into this as the system evolves, but a certain degree of simplicity was essential for the launch of a complex feature such as this.
I'm hoping that you'll be able to find a satisfactory use for the feature.
It looks as if customers will automatically receive points rather than opt to join the scheme fisrt? One advantage of the opt-in/apply would be you could commit customers to the 'Club' idea where they would also receive marketing newsletters (reminders you exist) from the site.
For now, the customer qualifies automatically when they make their first purchase. To add an opt-in aspect to the feature would complicate matters considerably. The difficulty involved in weaving such a complex feature into Bluepark's existing account/payment structure has meant we've had to keep certain aspects as straightforward as possible.
In time, I'm sure this feature will evolve and grow - as with all aspects of Bluepark's software.
Any chance you can turn-on the discounts on your demo site so we can see how it may operate?
Certainly, I've done this now. However, I'm not sure how helpful it will be! The system doesn't physically credit the user's account with their points until the order is completed. This way, users can't simply rack up points that they can use immediately (before refunds are made and orders are cancelled - affecting point totals).
I have to admit to being a little confused. I have enabled Loyalty Points, and I presume that to let the customer know about them, I will have to put up an announcement. What does seem unclear is where the points present themselves - it would be useful to have a message against each product and at the Shopping Basket stage to tell the customer how many points they will earn by placing the order, and I can't see any indication of this. It would be good if the Customer Order Confirmation e-mail also told them how many points they have accumulated.
I also notice that looking on the User Manager, a new column for Points has been added, but it is showing as zero, even after an order has been placed and funds taken. As I said, I'm confused. Do the points only get applied after dispatch? Has anyone got this working?
Regards
Pete
little-linguist
10-06-2008, 20:06
I also notice that looking on the User Manager, a new column for Points has been added, but it is showing as zero, even after an order has been placed and funds taken. As I said, I'm confused. Do the points only get applied after dispatch? Has anyone got this working?
Regards
Pete
I think in an earlier post Rich said that they are only added when an order is completed. Therefore yes, the order would need to be dispatched first I guess.
OK thanks, I'll wait 'till they are dispatched tomorrow. Does anyone know what the customer sees during the order process - is there a message about how many points they have earned?
Actually, no - loyalty points work more like gift vouchers. They essentially generate "cash back" to be spent on your site. Points are converted to a monetary value which can be used to purchase goods, alongside a normal payment method.
I totally understand the example you present above - the customer is charged the same amount either way, it's just a question of whether the VAT is calculated on the total value of the order or the physical pound notes handed over. It's more of an issue of presentation on the invoice. I think the existing implementation is a valid model, however you could choose to account for such payments in a different way via Sage/Quickbooks etc.
im happy with how they work akin to gift vouchers. its just the calculation of vat i want to raise again.
i dont think it is just a matter of presentation since the customer must be charged the correct amount of vat as per HMRC rules as well as merchants paying the correct amount over to HMRC. this is not such an issue if the customer never knows how much vat we're charging but since customers are shown the amount of vat charged then it needs to be correct. also i think we should have vat per bluepark equal to vat payable otherwise a nasty reconciliation is going to be required.
ive attached an extract and link below from the HMRC website. basically my reading is that this scheme would fall under 'money off coupons'. no vat is due when we give them away with a purchase and we only charge vat on the additional (ie net) amount paid when redeemed.
page link (http://www.hmrc.gov.uk/vat/charge-discounts.htm)
Coupons and vouchers
Money-off coupons
Money-off coupons, vouchers or similar, offer customers a discount off a future purchase. If you give them free at the time of a purchase, no VAT is due, but if you sell them for a discount, VAT is due on the price charged.
When your customers redeem money-off coupons, VAT is due only on the additional amount, if any, that the customers pay you.
Question! What happens to the loyalty points if a customer returns an item for refund. Does their points total get a debit?
Just a few points about points!
The points on our site so far have all been awarded on the value inc shipping where paid, I believe Richard's last post says that he has changed this so todays orders when despatched this afternoon will not include points for shipping, we will check this later.
The points value is set by you, if you can't afford the incentive from your margins, either make the value less, don't operate the points scheme, or take a serious look at your margins or if you should be in this business. Affiliate schemes cost around 15% of your sales, the same with Amazon Marketplace etc., if you can't take the points costs. how on earth will you stay in business?
Richard has done this scheme very quickly after long discussions with us and I presume other users, he has incorporated as many features as possible to satisfy as many users as possible. You were asked on this thread to post your views and requirements and a lot of you did, if you didn't and the points scheme isn't to your liking, well that's tough.
I'm not sure about the VAT aspect and we will have to get a definite ruling on this, it would appear to be a retrospective discount, so the future purchase would have the VAT element reduced by the use of points.
On the subject of wether the points should be pre or ante Vat, if you sell predominantly to the public, you are a retailer and the selling price must be shown including Vat, therefore the points should be on your selling price, the Vat inclusive price, anything else is a deception and probably illegal.
This loyalty points scheme is a valuable marketing tool which will help you expand your business, use it and see, or don't use it and watch others take your sales, Internet retailing is no longer an amateur part time pin money option, you either do it right or you WILL fail.
Many thanks Rich.
Adva Trading
11-06-2008, 08:23
The best thing since sliced bread. Rich, you got my loyalty forever now. THANK YOU.
Rich,
Been doing some testing this morning and have to say its looking pretty good but there are a few things I would like to see
1) Under the our price text on the product page could it calculate and display the the points available for this product ie Earn 10 Loyalty Points.
2) The points seem to be calculated based on the value including vat & delivery and I think it should be exclusive of vat
3) On the order information page where it shows the orders. Could the loyalty points summary show Points Awarded, Points Redemmed, Points Available
4) On the view basket could it should something like xxxx Loyalty Points Will Be Added To Your Account For Placing This Order
5) Can the order completed e-mail give a loyality points summary as per item 3
6) The help text for loyality points value in the admin is giving the wrong description
Please take the above as constructive comments. What you have done in such a short period of time is fantastic!
Rich,
I seem to have opened a right can of worms with regards to the topic of whether the points should be awarded inclusive or exclusive of vat. It is really a difficult one and does in my view depend on your target audience. As most of our clients are business users and also taking into account what some of our competitors offer I still think for us exclusive of vat is the more sensible approach.
Would also be interested in your comments regarding my other comments.
Many thanks
Rich,
I seem to have opened a right can of worms with regards to the topic of whether the points should be awarded inclusive or exclusive of vat. It is really a difficult one and does in my view depend on your target audience. As most of our clients are business users and also taking into account what some of our competitors offer I still think for us exclusive of vat is the more sensible approach.
Would also be interested in your comments regarding my other comments.
Many thanks
Sorry Dave, can't agree, most Bluepark users sell to the public and have a legal obligation to sell at Vat inclusive prices, it would be ridiculous to try to tell customers they could have points on the bit we keep and not on the bit that goes to supporting Northern Rock etc.,
If you want to make it only on the net of Vat price, just adjust the value per point i.e. 5% = .0425 per point then tell the customers the points are worth 5 of the pre Vat price. (not sure if Rich has allowed so many decimal points, but I am confident he can amend to cover this!)
By the way, the points are now ex shipping on today's orders, will have to try and tell the customers what it's all about this week, we've stared giving them points but haven't had time to announce it on site! too many things going on - thank goodness!
TeamTorquesteer
11-06-2008, 09:49
Has anyone added the rules/regulations with regard to Loyalty Points in their terms and conditions ??
Would be interested to see a draft to check my wording and if Ive missed anything obvious !!
Cheers
Martin
Jonathan Read
11-06-2008, 10:09
This is going to win the 'longest thread' competition - great to see the loyalty feature added.
Regards terms & conditions take a look at our site under 'Podington4You' - this is for our shop loyalty scheme but you might like to glean some stuff from there.
My input here is regarding email mailings - is there a way to incorporate current points total and values into emails so that we can have 'Thank you for shopping at..., you have earned ? points worth £? on your next visit...' etc. We would really like to have the ability to add a few extra custom fields from a CSV file if possible.
I agree with a bit of added visability on the site such as how many points could be earned on item pages and a points summary on checkout pages (points earned this order, total points earned to date etc.).
Agree with the points on total value (inc VAT) - too confusing for the customer otherwise we would be forever answering queries on this one.
Well done otherwise.
Regards
Just a few points about points!
The points on our site so far have all been awarded on the value inc shipping where paid, I believe Richard's last post says that he has changed this so todays orders when despatched this afternoon will not include points for shipping, we will check this later.
The points value is set by you, if you can't afford the incentive from your margins, either make the value less, don't operate the points scheme, or take a serious look at your margins or if you should be in this business. Affiliate schemes cost around 15% of your sales, the same with Amazon Marketplace etc., if you can't take the points costs. how on earth will you stay in business?
Richard has done this scheme very quickly after long discussions with us and I presume other users, he has incorporated as many features as possible to satisfy as many users as possible. You were asked on this thread to post your views and requirements and a lot of you did, if you didn't and the points scheme isn't to your liking, well that's tough.
I'm not sure about the VAT aspect and we will have to get a definite ruling on this, it would appear to be a retrospective discount, so the future purchase would have the VAT element reduced by the use of points.
On the subject of wether the points should be pre or ante Vat, if you sell predominantly to the public, you are a retailer and the selling price must be shown including Vat, therefore the points should be on your selling price, the Vat inclusive price, anything else is a deception and probably illegal.
This loyalty points scheme is a valuable marketing tool which will help you expand your business, use it and see, or don't use it and watch others take your sales, Internet retailing is no longer an amateur part time pin money option, you either do it right or you WILL fail.
Many thanks Rich.
Why so angry John?? I am sure we are all delighted with the point scheme. As usual Rich has done us proud.
Question! What happens to the loyalty points if a customer returns an item for refund. Does their points total get a debit?
If the order is cancelled, the points are removed. If it's a partial refund, however, the user's points will need to be altered manually via the User Editor. This function also allows you to add points, at your discretion, as well.
1) Under the our price text on the product page could it calculate and display the the points available for this product ie Earn 10 Loyalty Points.
3) On the order information page where it shows the orders. Could the loyalty points summary show Points Awarded, Points Redemmed, Points Available
4) On the view basket could it should something like xxxx Loyalty Points Will Be Added To Your Account For Placing This Order
5) Can the order completed e-mail give a loyality points summary as per item 3
I've made some further additions to the system, which has made things a little clearer for customers:
Points to be earned are listed on the product page, a line which can be toggled on or off via Site -> Configuration: Product
Points to be earned are also listed in the shopping basket, on the same line as the order total
Points earned are mentioned in the confirmation email to the customer, in the same way that they are mentioned on the final page of the checkout
If the customer has points "pending", these are detailed separately in the customer's account, and they are marked on the orders with [square] brackets
As most of our clients are business users and also taking into account what some of our competitors offer I still think for us exclusive of vat is the more sensible approach.
In line with displaying the points to be earned on the product page: if you're showing prices on your site exclusive of VAT then the VAT will not be considered in the "points earned" calculation. I think that's reasonable, as it's what the customer sees in their shopping basket - and I think that's what you're after.
Hi Rich,
Many thanks for incorporating the suggested changes to the loyality points so quickly. As usual its much appreciated by us all
Hi Rich,
Many thanks for incorporating the suggested changes to the loyality points so quickly. As usual its much appreciated by us all
Seconded.
Regards
Pete
Why so angry John?? I am sure we are all delighted with the point scheme. As usual Rich has done us proud.
If I sound angry it's because Rich has really put a massive effort into this and all I see are comments of we wanted this and we wanted that, I have spent hours discussing this scheme with Rich over the last 6 months and did ask everyone to put their requirements on this thread to assist Rich, if you didn't post your requirements and they ain't there, it's no good asking for them now.
Rich has tried to include as many options as people could reasonably want and has done a fantastic job of it, any Bluepark user that migrated from Craptinic will appreciate just how good a job he's done.
Anyway, we have adopted it and called it a "Cashback Points" scheme, only because we think it sounds more up to date, the basic details are on our site, the next step is some punchy banner and an email to all our 20 odd thousand customer list. The improvements from Rich seem to be appearing on site every time I update a page, the Points earned showing on each product is a definite sales maker!
You think I sound angry? this is me pleased as Punch!:D
Hi Rich
Phew! You certainly are working at speed on this one. Just checked out my site products for the points value and found that it is showing 0.01 /£1 points when I had already configured for 0.03/£1 in the configuration/e-commerce section. Is there something else I should do.
Gill
John, I am not aware of asking for any extra features. Though I did notice some in the other posts. I am really delighted and my posts have only been thank you's and clarification questions. Yes - there was a lot of discussion about VAT (which I was not part of) but this is a forum - designed for discussion - and the overwhelming tone of the thread was positive and delighted with Rich which was why I was puzzled by your angry post. I have been with Bluepark since 2006 when I too came over from Actinic and have never never regretted the move. Glad you are pleased as punch now... we all ought to be over the moon with all that Rich has done and continues to do. We are all very lucky to be with Bluepark.
Gill
Hi Rich
Phew! You certainly are working at speed on this one. Just checked out my site products for the points value and found that it is showing 0.01 /£1 points when I had already configured for 0.03/£1 in the configuration/e-commerce section. Is there something else I should do.
Gill
What it's showing you on the product page is the number of points earned by purchasing the product. £1 spent = 1 point earned regardless of what the point is worth.
Its been a long day - thanks Rich. Sorry for being so dumb.
im happy with how they work akin to gift vouchers. its just the calculation of vat i want to raise again.
ive attached an extract and link below from the HMRC website. basically my reading is that this scheme would fall under 'money off coupons'. no vat is due when we give them away with a purchase and we only charge vat on the additional (ie net) amount paid when redeemed.
I've had a detailed read of the page you're referring to from HMRC:
http://www.hmrc.gov.uk/vat/charge-discounts.htm#4
My understanding is that loyalty points constitute Face Value Vouchers:
Face value vouchers have a monetary face value. These are used instead of money for a future purchase. If you sell them at or below their monetary value, no VAT is due.
When a customer redeems a face value voucher, the transaction is treated as though the face value voucher was cash, and VAT is due on the full value of the transaction. If you can show the voucher had been sold at a discounted amount, VAT is due on the discounted value, rather than the face value of the voucher.
A loyalty point, by definition, has a stated monetary face value, i.e. 1 point = 5 pence. It is possible for a customer to pay for an entire order purely by using their accrued loyalty points.
I think this is quite a grey area, the advice from HMRC is open to some interpretation and loyalty points could potentially fall into either category. To change the way they work is a significant alteration to the system, so we need to be 100% sure (110% really!) before any work is done.
The points are used as cash or gift voucher as payment against a future sale, they are a form of payment not a part of the selling price, therefore your Vat liability is on the full selling price, the method of payment is completely irrelavent.
I is not a discount on your selling price, you have to treat it as you would a commission to Amazon etc., your Vat has to be paid on the full EU selling price, you cannot deduct the points value before calculating the Vat.
The real cost of redeeming is therefore whatever percentage you decide on plus at present 17.5%.
I can't see how changing the way they work could change the Vat liabilty, if they have a payment value, they are cash equivalent, not a discount, if anyone knows better, please let us hear it.
I've just read the HMRC guide and I don't think they are Face Value Vouchers because we're not selling them to the customer in the first place.
We're giving them free at the time of purchase. Just like when you receive a voucher in Argos when you buy something, that you can use in Homebase etc. When you use the voucher it goes through the till and effectively discounts the price that you are paying.
HMRC Guide : "If you give away face value vouchers and redeem them for no further payment, the goods purchased are usually treated as if they were free gifts for VAT purposes."
Free gift explanation...
Where there is no VAT chargeable
"If you occasionally give away as gifts or free goods to different people an item from your stock that cost less than £50. There must not be a series or succession of gifts to the same person."
If your free gifts exceed £50 then VAT is payable. They do not say over what time scale. I imagine that they wouldn't care if the same customer was making several ordinary purchases (and therefore generating VAT revenue) in between being able to claim on their points.
If I'm right on the above (which I may not be as it's soooo confusing!) then the points should be used as a discount rather than cash equivalent.
firstly, thank you again Rich and John for all your work on this. this post is not a criticism but just a wish to discuss the correct treatment of points for vat purposes.:)
obviously, but just for clarity, its up to each individual merchant to charge and pay the correct amount of vat to hmrc. so what you do for us here Rich is merely helping us achieve that aim and (obviously) doesnt reduce the liability on any of us to comply with vat rules. that said it would obviously be great to get it nailed within bluepark before we transfer information to sage/quickbooks...
as you would expect, whether these points are considered 'money off' or 'face value vouchers' doesnt change the vat treatment, ie you only charge vat on the discounted amount of the purchase against which the points are redeemed.
Originally Posted by HMRC - from Rich's post
When a customer redeems a face value voucher, the transaction is treated as though the face value voucher was cash, and VAT is due on the full value of the transaction. If you can show the voucher had been sold at a discounted amount, VAT is due on the discounted value, rather than the face value of the voucher.
the key point here is "If you can show the voucher had been sold at a discounted amount, VAT is due on the discounted value, rather than the face value of the voucher."
in this scheme we give away the 'voucher' with purchases so imo vat is due on the discounted value of the purchase against which they are redeemed and no vat is due on the voucher amount since it was 'sold' at nil value.
my approach to tax is always to try and understand what the rules are trying to achieve since in any decision by hmrc that is how they will interpret their rules.
imo, what the whole area of discounts/money off/vouchers it trying to achieve is for vat to be charged on revenue which ultimately is equal to cash generated by the business. ill give you an example which shows this.
consider a product (an oil painting) company A prices at £1m on their website but its true value is only £5 (its not really a great painting!). they could keep giving away points in competitions to visitors to their site until a buyer, Company B has points worth £999,995 with which to make up the difference. if A charges vat on £1m they dont have the cash with which to pay the vat since they only receive £5 cash and the vat bill is £148,936. now imagine company A sold that item to Company B within the EU. since company B has settled the invoice for £1m which shows vat of £148,936 and not £5 they would receive a vat credit for £148,936. they could then export the product outside the EU and receive £148,936 from the Treasury for vat paid. it doesnt matter whether Company A pays their vat bill, the Treaury must still pay the Vat to company B.
if vat should be charged on £1m nothing in the above would be illegal, both company A and company B are going about their normal business. company A would find it couldnt pay its vat bill and company B would profit. the issue arises because company A is overstating the value of its products
so on 2 counts charging vat on these points doesnt make sense. firstly you are not generating the cash with which to pay the vat (regardless of whether you can afford it) and secondly you could see your sales increase for the wrong reasons!
as for resolving this discussion (shame since im enjoying it!)........
i dont believe you will get a signed opinion out of hmrc on this scheme - they dont give them! you can of course get an opinion from an accountant but that is an opinion and can still (obviously) be contested in court. the only real comfort you can get is look for case law examples on similar schemes to see how the Courts ruled - im not aware of any....
Plushpaws
12-06-2008, 09:52
We spoke with HMRC yesterday and gave details of how this loyalty scheme will work. They confirmed that with Face Value Vouchers, VAT is due on the full transaction value.
We spoke with HMRC yesterday and gave details of how this loyalty scheme will work. They confirmed that with Face Value Vouchers, VAT is due on the full transaction value.
but what did they say about the second sentence?
"If you can show the voucher had been sold at a discounted amount, VAT is due on the discounted value, rather than the face value of the voucher."
Plushpaws
12-06-2008, 10:27
We can not show that the voucher has been sold at a discounted rate, as they are given away. Therefore VAT is due on the full transaction value.
We can not show that the voucher has been sold at a discounted rate, as they are given away. Therefore VAT is due on the full transaction value.
not sure why giving them away means you cannot show the voucher has been sold at nil (ie discounted 100%)? all customers will receive points recorded in their account. i dont know whether Rich is making this part of the export but in my limited mind it would just be another field.
i just spoke to hmrc as well and got the answer they would not be vatable on redemption (or issue). i am going to try and get the same confirmed by email and will post once done.
vat is a consumption tax not a business tax. if you charge vat on points/free vouchers you will be suffering vat as a business. again this doesnt make logical sense - to me anyway!
here is another useful link (http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_PublicNoticesAndInfoSheets&propertyType=document&columns=1&id=HMCE_CL_000091#P214_29197) on the hmrc website to which i was referred
As far as I can see it, if you are registered for Vat, you are responsible for interpreting the rules regarding Points discounts, we must all make up our own minds how to declare the sales figures on our Vat and Tax Returns.
We are going to work on the basis that our Vat liability is on the selling price of the goods before points payment deductions, that way we are playing it safe until/if we get a definitive ruling from HMCR.
It seems that if we were on cash accounting for Vat then we would be able to pay Vat on the net price after points payment deductions, sadly (or thankfully) we have far too high a turnover to qualify for cash accounting schemes.
Please, all check with HMCR and get a ruling for your own business, preferably in writing, then when you get your next inspection (inquisition) you will have this to fall back on.
Shame we can't all up sticks to the Channel Islands!!!
I've lost somewhere in this thread where the Loyalty points suddenly became vouchers. As I see it they are simply a discount off of future purchases. When a discount is offered on a vatable item(s) VAT should be calculated on the discounted price only regardless of whether or not that discount is taken. The only difference that I can see is that the customer will decide when to take the discount and when that happens VAT should be applied to the discounted price only.
I do agree with Paul's logic on this. However personal experience tells me that where Tax is concerned logic can go out of the window.
We will see how this all develops before offering the Loyalty points and at the moment we are not VAT rated but if and when we do register we shall be charging VAT at the discounted rate.
Okay, this issue is now resolved! In Site -> Configuration: E-Commerce Options, set the Loyalty Point Behaviour to either Gift Voucher or Discount.
The first option behaves as the system has until now, and will remain the default. It's the "safest" in terms of VAT, points are simply used as part-payment (in the style of a gift voucher).
The second option is the one that has been requested, the value of the order is reduced by the value of the points (along with the VAT).
This will enable everyone to use and account for their loyalty point scheme in the way that suits them best. The nice thing about this option is that it doesn't actually change anything in your database. It simply alters the way the data is interpreted and displayed throughout your site. So you can start off with one setting, then switch across later (should you wish).
That's great Rich, now everyone can make their own mind up abouit how to account for Vat (when they are registered!) and leave you to concentrate on the software.
Hope you get a good lie in after that marathon!:asleep:
That's great Rich, now everyone can make their own mind up abouit how to account for Vat (when they are registered!) and leave you to concentrate on the software.
Hope you get a good lie in after that marathon!:asleep:
John
You do seem to like adding those cutting little remarks now and again.
FYI I have three businesses registered for VAT, the oldest since 1978 and plenty of personal experience in dealing with VAT on discounts in particular.
Okay, this issue is now resolved! In Site -> Configuration: E-Commerce Options, set the Loyalty Point Behaviour to either Gift Voucher or Discount.
The first option behaves as the system has until now, and will remain the default. It's the "safest" in terms of VAT, points are simply used as part-payment (in the style of a gift voucher).
The second option is the one that has been requested, the value of the order is reduced by the value of the points (along with the VAT).
This will enable everyone to use and account for their loyalty point scheme in the way that suits them best. The nice thing about this option is that it doesn't actually change anything in your database. It simply alters the way the data is interpreted and displayed throughout your site. So you can start off with one setting, then switch across later (should you wish).
Fantastic Rich,
Have a good weekend
You deserve another holiday after this week :)
John
You do seem to like adding those cutting little remarks now and again.
FYI I have three businesses registered for VAT, the oldest since 1978 and plenty of personal experience in dealing with VAT on discounts in particular.
Hi Mike,
John seems to be a bit of cross bunny in this thread. I have already queried him on this as I was puzzled by his apparent anger at the rest of us. Specific to this recent spat perhaps he should be reminded that Bluepark itself has only just gone VAT registered... which surely proves that VAT registered or not does not actually indicate the merit of the company as we are, I am sure, all agreed that Bluepark is the best. Being VAT registered is only an indicator of turnover and every business - even John's was once new start/small. Or did he land fully formed with 20K mailing list, VAT registered and with full understanding of everything business related? :eek: Perhaps he would like to let us know if this miracle occurred.
Gill
Please lets not go down the route of other forums (for example craptinic) where members seem to slag each off on a daily basis
Please lets not go down the route of other forums (for example craptinic) where members seem to slag each off on a daily basis
Agreed - better attitude would be great.
Please lets not go down the route of other forums (for example craptinic) where members seem to slag each off on a daily basis
Hi Dave
I wholeheartedly agree as well.
BTW what is this craptinic that members go on about?
Hi Dave
I wholeheartedly agree as well.
BTW what is this craptinic that members go on about?
It is another e-commerce package that a number of bluepark users including myself have tried in the past. It is called Actinic and without going into too much detail we decided to rename it on this forum as craptinic!
Bet you can now guess what we all thought of it!
It is another e-commerce package that a number of bluepark users including myself have tried in the past. It is called Actinic and without going into too much detail we decided to rename it on this forum as craptinic!
Bet you can now guess what we all thought of it!
It's got quite a ring to it. Perhaps someone should register it!
Not sure if I've missed this or not - I thought I saw somewhere that we could configure whether a product would be part of the points scheme or not - i.e. we could choose for some items not to earn loyalty points?
The reason for doing this is that some customers only buy from one range of very low margin items, and we can't really afford to further discount them, so would like to exclude them from the rewards scheme.
I can't find where this option would be selected, so I guess it's not there. Could I suggest it as a future enhancement?
Regards
Pete
The reason for doing this is that some customers only buy from one range of very low margin items, and we can't really afford to further discount them, so would like to exclude them from the rewards scheme.
Hi Pete, im sure youve thought of this so excuse me for pointing it out if you have but......did you consider raising the price on the low margin item leaving it the same margin after giving away the points? you might need to promote the net price of the product after receipt of points to make it clear to customers the price hasnt acutally changed since before the points? you never know customers may then not use the points later which means you would actually gain....
just a thought but it would mean you could then implement the scheme across your whole range
A question for Rich here I think.
The default expiry date for the points is 12 months. If we put a zero here will that make them valid with no expiry date (which is what I'm considering as - see below)?
Are customers able to find out how long they have left until the points expire (where there is an expiry date)?
Finally as customers accrue points over a period of time I assume they will have different expiry dates. A way around this may be to revalidate older points to the same date as any newer points accrued (good incentive to buy in order to maintain existing points). That way you could possibly add an expiry date to the customer's account page and maybe even send a reminder email a week or two before they are due to expire.
Sorry about this Rich but the brain has finally slipped into (or out of) gear and is now in Loyalty Points mode!;)
Hi Pete, im sure youve thought of this so excuse me for pointing it out if you have but......did you consider raising the price on the low margin item leaving it the same margin after giving away the points? you might need to promote the net price of the product after receipt of points to make it clear to customers the price hasnt acutally changed since before the points? you never know customers may then not use the points later which means you would actually gain....
just a thought but it would mean you could then implement the scheme across your whole range
Thanks Paul. It's a thought. Though I wouldn't really want to suggest to customers that I have raised prices to cover my costs on the points scheme. Not a great message to send out...;)
Regards
Pete
Thanks Paul. It's a thought. Though I wouldn't really want to suggest to customers that I have raised prices to cover my costs on the points scheme. Not a great message to send out...;)
good point!!:eek:
A question for Rich here I think.
The default expiry date for the points is 12 months. If we put a zero here will that make them valid with no expiry date (which is what I'm considering as - see below)?
Are customers able to find out how long they have left until the points expire (where there is an expiry date)?
Finally as customers accrue points over a period of time I assume they will have different expiry dates. A way around this may be to revalidate older points to the same date as any newer points accrued (good incentive to buy in order to maintain existing points). That way you could possibly add an expiry date to the customer's account page and maybe even send a reminder email a week or two before they are due to expire.
Sorry about this Rich but the brain has finally slipped into (or out of) gear and is now in Loyalty Points mode!;)
Hi Mike,
What about setting a really long period? I set 10 years on the basis that I would be extremely pleased if I retained a customer that long and more than happy to have them use long unused points.
Gill
Each order generates a number of points earned. Those particular points will expire after the period you've specified - relative to the date of the order - and will be deducted from the user's points total. Imagine a printed voucher with a "use before" date.
The best place to mention the expiry of points is on your T&C page, or a dedicated page concerning your points scheme. There is limited space in the account section, but you can mention it there also (via the Language Manager).
We have set the expiry for 6 months, on the basis that you want to encourage the customers to come back and buy regularly. If the points are valid forever there is no time incentive to encourage them to shop again.
Of course you could have a "points worth double" week or month to give those with points already earned a real push to come back and buy!.
You have to consider that the cost of the points to you is only crystalised when a customer makes a further purchase, so if they spent the same on each order, say £100 each time and you value the points at 5 pence, the cost you is spread over £200, therefore 2.5% with a further 5% of £95 carried over to the next order.
The cost to you of these new points is then a total of the points value redeemed spread over the total value of all the orders involved.
Sorry if this is not too clear, suffice to say that the cost to you is not just as simple as the value you set for each point, the more repeat orders you get, the less the percentage cost overall becomes and since you have no liability until the points are redeemed, the cost of awarding points is zero, not a bad cost for a great selling point!!
The worst case will be if like us you set no minimum spend for points (you can use just one at 5p) and the customer comes back and buys the cheapest product to use the points, then the cost is almost the full value you put on them, but at least they came back!
Must stop rambling but I hope you get my point, you can afford to be very generous with the points value, particularly if you set a minimum purchse for points redemption (unlike us):D
Each order generates a number of points earned. Those particular points will expire after the period you've specified - relative to the date of the order - and will be deducted from the user's points total. Imagine a printed voucher with a "use before" date.
The best place to mention the expiry of points is on your T&C page, or a dedicated page concerning your points scheme. There is limited space in the account section, but you can mention it there also (via the Language Manager).
If you have an expiry date set presumably the system will delete the points automatically if they are unused. Can this expiry date not be shown against the customers points on their account page?
These points are a great idea and it would be a shame if they were just allowed to expire without being able to send an auto reminder. I know you can set a longer expiry date but I think this could be a great way of getting customers active by setting a shorter expiry date like Gill suggests, 6 months, and getting a reminder out a week or two before expiry.
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