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Types of rewards

Are you considering engaging your audience by offering cashback or some other types of rewards? Earlier, we’ve covered why it’s a great idea and how it would benefit your business; so we won’t go over that again. 

The bottom line is that rewards and especially cashback drive loyalty and spend, so it’s in your best interest to offer them. 

But deciding to do it is just the first step. The next ones involve choosing between the different types of rewards and the various implementation solutions available. In what follows, we’d like to delve deeper and outline the options that you have.

Let’s start with five types of rewards commonly employed by loyalty, affinity, and perks programs.

Disclaimer: The use of third-party trademarks in this blog post is for reference purposes only, and does not indicate any approval, endorsement, or sponsorship, from the brand owner(s).

5 Types of Rewards to Consider

Depending on the specifics of your business, you may offer your members anything from cash back to points, miles, gift cards, or even create your own, brand-specific rewards. Each option has its pros and cons; so let’s review them one by one. 

1. Cash

With cash rewards, the beneficiary receives back a percentage of the amount they spend. In a way, it is very similar to a purchase rebate. Since it’s cash, they don’t need to worry about calculations or redemption restrictions. They can see the amount in their account (as an example from one of my cashback accounts illustrates below).

Dosh provides cash back on everyday purchases

Depending on your goals, you can let the beneficiaries transfer the cashback they receive to their bank or PayPal account or accumulate it as credit in their member accounts and use it to pay for their next purchases. You may also choose to set a minimum withdrawal or redemption limit. 

Cashback is one of the most straightforward, flexible, widely employed, and effective types of rewards. Unless you sell products or services for which one of the other options is a better fit, you can’t go wrong offering cashback. 

2. Points

Similar to cashback, points are correlated to the amount the buyer spends. However, you get to play with their value as you wish. For example, 100 reward points can be redeemed for $100, $10, or $1. So, first, you need to decide what monetary value each point is going to correspond to; and then you will want to make a call on the redemption options to offer. You may let the buyers redeem their points for cash, products, gift cards, store credit, or anything else.

It’s also possible to assign different values to the same points, according to the redemption method. For example, you can double their value when they’re redeemed for your products or services or at specific merchants. 

Although not as straightforward as cash, reward points end up being a great fit for many businesses. 

3. Miles

Miles, also known as frequent flyer miles, are among the most common types of rewards offered in the travel industry; and as the name implies: primarily by airlines. In credit card contexts (as illustrated in our below example), the beneficiary may get a certain number of miles per every dollar spent.

Citi credit card offers American Airlines miles

In other contexts, the shopper may be able to accumulate even more miles (per every dollar spent) by placing making purchases with participating brands. Below you may find a snapshot of my personal United Airlines MileagePlus Shopping account and a few real transactions — to illustrate this scenario by a real-life example.

United Airlines offer miles on online shopping

There may be limitations to how and when reward miles can be used, the minimum number of miles that can be redeemed, and the number of miles that a free trip may require. 

While miles can be an excellent reward for an airline’s frequent flyer program, a bus company, a train line, and other players in the travel vertical, they are typically not as flexible, straightforward, and versatile as points or cash; so may not fit all rewards programs. 

4. Gift Cards

This category refers less to the types of rewards and more to the redemption method. The beneficiary may receive cash or points in exchange for their purchases, but they will only be able to redeem those for gift cards when they reach a minimum threshold. 

Gift cards can be a great option when you run your own store or are able to offer gift cards at partner stores. While they do not always allow for flexibility, depending on the terms of your offer, they can help strengthen relationships and raise brand awareness, while also letting you control how, when, and where they are redeemed.  

5. Branded Rewards

A great alternative to offering one of the above types of rewards is to create your own. The name should be something short and memorable, preferably close to your brand name, for everyone to be able to make the connection. 

Starbucks Rewards program let’s you earn Stars

Not only would personalized rewards help you raise brand awareness but you also control their value and how they are redeemed. For example, they could be redeemed for free products, access to various service upgrades, discount on future purchases, free classes, and more.

Which Types of Rewards Are Best?

Each of the above rewards options has its pros and cons. The decision of which one to offer should follow the careful consideration of several factors: 

  • Beneficiary profile and interest
  • Your company goals
  • Rewards value
  • Redemption options
  • Minimum redemption value
  • Implementation solution

At the end of the day, you want to build a rewards program that will help you build interest and loyalty among your members. You want them happy and talking about your brand, but while keeping costs under control, using a redemption method that benefits your business, and not having to worry about complicated implementation processes. 


If you’ve reached this part of the post, we have excellent news to share: for a limited time, our cashback API, Loyalize, is available at no setup or maintenance fees. We will enable you to offer any of the above types of rewards on purchases made at any or all of our 6,000+ partner stores. It all comes with an easy, headache-free setup, and with accurate, in-depth, member-level reporting.

Loyalize rewards API solution

Contact us now to learn more about our technology and get specialized help in choosing the best solution for your company. 

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