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Loyalty program

A loyalty programme is a scheme that rewards a store's customers for buying again, with points, cashback, member prices, free shipping or membership tiers.

How it works

A member gets something back for each order: points, cashback, a member price, free shipping, or a higher tier once their spending passes a threshold. Every reward is a discount, given now or later. It is paid out of contribution margin, the money an order leaves after its costs, not out of revenue.

A programme pays off when members buy more often, or for longer, than they would have anyway. That shows in customer lifetime value, counted from the store’s own orders. Which rewards a margin can carry: loyalty and referral programmes for online stores.

Google works with loyalty programmes in two places. In Merchant Center, a programme linked to the account can show member prices, points and free shipping in free listings, Shopping ads and local inventory ads, in supported countries only. In Google Ads, a loyalty retention goal multiplies the conversion value of members’ purchases by a factor the store sets. The store marks members by tier on its customer lists.

Where you see it

Merchant Center: the Loyalty program add-on. Each product can then carry a member price, points, cashback and a shipping benefit for each tier.

Example

Example store, not client data.

The tableware shop’s average order is 600 and its gross margin is 35%, so an order leaves 210 of gross profit. Points worth 5% of the order cost 30 when spent, about 14% of that profit. A member price 10% below the regular price costs 60, or 29%. Google shows a member price in ads only if it is at least 5%, or 5 currency units, below the regular or sale price.

Not to be confused with

  • Referral programme — rewards a customer for bringing in a new one. It wins new customers; a loyalty programme works on existing ones.
  • Customer retention goal — a Google Ads setting that gives purchases by lapsed customers a higher value. It changes bidding and offers the customer nothing; loyalty members have a goal of their own.

Right and wrong readings

  • Wrong: “5% cashback costs us 5%.” Right: it costs 5% of revenue, which at a 35% margin is 14% of the gross profit on that order.

Sources

  • Overview of loyalty programs — Merchant API: benefits, where they appear, countries, the 5% rule, the add-on. Checked 2 October 2026.
  • ProductAttributes — Merchant API: loyalty fields per tier. Checked 2 October 2026.
  • Lifecycle goals — Google Ads API: the loyalty retention goal, tiers on customer lists. Checked 2 October 2026.