What to Use as Loyalty Rewards on Shopify

Quick Answer

A Shopify loyalty program can offer several reward types, and choosing the right mix matters more than picking just one. Keystone Loyalty Rewards supports discounts, gift cards, free gifts, and free shipping as redemption options. The setup involves matching reward types to your margins and to what your customers actually want. Most stores find a combination of two or three reward types works better than relying on a single option.

Introduction

This guide is for merchants deciding what customers can actually redeem their loyalty points for. The reward type matters as much as the earning structure, since a reward that does not appeal to customers will not drive redemption.

You will learn about the main reward types available on Shopify loyalty programs, when each one makes sense, and how to combine them without overcomplicating the redemption experience. This decision affects both how customers perceive the program and how it performs against your margins over time.

What Is a Loyalty Reward Type?

A loyalty reward type is the specific thing a customer receives when redeeming points, such as a discount, a gift card, a free product, or free shipping. Each type has different implications for margin and customer appeal. Most Shopify loyalty programs offer a small set of reward types rather than a single option.

Who Needs Reward Type Selection?

Choosing the right reward types matters for any store running a points-based loyalty program.

• DTC brands wanting to protect margin while still rewarding loyalty
• Fashion and apparel stores with frequent promotions
• Beauty and cosmetics brands with strong product lineups for gifting
• Stores with high shipping costs relative to order value
• Subscription businesses looking for non-discount reward options

Why Reward Type Selection Matters for Your Business

The reward type directly affects how appealing redemption feels and how much margin a program costs the business.

• Discounts are simple and familiar, but repeated discounting can affect perceived value
• Gift cards encourage a future purchase rather than reducing the current one
• Free gifts can highlight specific products without cutting into price
• Free shipping removes a common purchase barrier at low cost
• The right mix keeps the program appealing across different customer segments

How to Choose Loyalty Reward Types on Shopify

Step 1: Define Your Loyalty Goal

Decide what outcome matters most, whether that is protecting margin, moving specific inventory, or removing friction at checkout. This will point you toward which reward types fit best. A store focused on margin protection will lean differently than one focused on reducing cart abandonment.

Step 2: Install and Configure Keystone Loyalty Rewards

Install Keystone Loyalty Rewards app from the Shopify App Store and open the rewards section. Keystone supports discounts, gift cards, free gifts, and free shipping, so you can enable the options that fit your store.

Step 3: Create Earning Rules and Rewards

Set the point cost for each reward type based on its value to the business. A free gift tied to a specific product often costs less in margin than an equivalent cash discount. Compare the actual cost of each reward option before setting the point price customers will see.

Step 4: Add the Loyalty Experience to Your Store

Show the available reward options clearly in customer accounts so shoppers can compare what their points can get them. A visible list of reward options often increases how often points get redeemed. Consider placing this list somewhere visible on the account page rather than a hidden settings tab.

Step 5: Test the Program

Test redemption for each reward type separately, from applying a discount code to generating a gift card. Confirm free shipping rewards apply correctly at checkout without conflicting with other shipping settings. Testing every reward type on its own catches configuration issues before customers run into them.

Step 6: Go Live

Before launch, review the point cost of each reward type to confirm the margin impact is acceptable. Check that customer messaging clearly explains what each reward option includes, and confirm the mobile view looks right.

Loyalty Reward Type Examples

Industry: Beauty brand
Problem: Customers redeemed points for discounts so often that margin on repeat orders became thin.
Setup: The brand introduced free gift rewards alongside discounts, giving customers a non-cash option.
Result: Customers had another appealing way to redeem points that did not reduce order value directly.

Industry: Apparel brand with high shipping costs
Problem: Cart abandonment was common due to shipping costs at checkout.
Setup: The brand added a free shipping reward as a low point cost redemption option.
Result: More customers redeemed points for shipping, which removed a common barrier to completing the order.

Read more case studies for our apps to see how other stores structure their reward mix.

Best Practices

A few practices help a store choose reward types that work well together and stay easy for customers to compare.

• Offer at least two different reward types so customers have a choice
• Match reward types to your margin structure, not only customer preference
• Use free gifts to highlight specific products worth promoting
• Consider free shipping if cart abandonment due to shipping cost is common
• Review which reward types customers actually redeem and adjust over time
• Avoid offering so many reward types that the redemption screen feels cluttered

Summary

Choosing the right loyalty reward types means balancing customer appeal against margin impact. Discounts, gift cards, free gifts, and free shipping each work differently, and most programs benefit from offering more than one. Testing a small mix of reward types is usually more effective than committing to just one from the start.

If you want flexibility in how customers redeem their points, Keystone supports discounts, gift cards, free gifts, and free shipping as reward options.