Loyalty Program in ERPNext
A Loyalty Program in ERPNext allows customers to earn points on purchases and redeem them in future transactions. It is a structured marketing system designed to increase repeat purchases and customer retention.
Loyalty programs help businesses reward repeat customers through points, tiers, and redemption benefits directly linked with Sales Invoices.
Access Path
Home > Retail > Retail Operations > Loyalty Program
1. Prerequisites
Before creating a Loyalty Program, ensure the following exist:
2. Creating a Loyalty Program
- Go to Loyalty Program list and click New.
- Enter program name.
- Select Single Tier or Multi Tier program.
- Define start and end dates.
- Select applicable Customer Group and Territory.
- Enable Auto Opt-In if required.
- Define tiers with:
- Tier Name
- Collection Factor
- Minimum Amount
- Set Conversion Factor (e.g., 10 = 1 point).
- Save the document.
3. Redemption Settings
- Conversion Factor: Defines value of each loyalty point.
- Expense Account: Tracks redemption cost.
- Expiry Duration: Points validity period in days.
4. Assigning Loyalty Program to Customer
A Customer can be linked to a Loyalty Program in the Customer master. Once assigned, points are automatically tracked during invoicing.
5. Loyalty Point Entry
Every transaction generates a Loyalty Point Entry which records earned or redeemed points against a Sales Invoice.
6. How Loyalty Program Works
6.1 Earning Points
- Create a Loyalty Program and assign it to a Customer.
- Submit a Sales Invoice.
- Points are calculated based on amount spent and tier rules.
- Higher spending moves customer to higher tiers automatically.
Example
If a customer spends ₹3,000:
- Eligibility: Silver Tier (minimum ₹2,000)
- Earned Points: 15 (based on collection factor)
6.2 Redeeming Points
- While creating a new Sales Invoice, enable “Redeem Loyalty Points”.
- Enter points to redeem.
- ERPNext automatically adjusts invoice amount.
- Redemption uses Conversion Factor from Loyalty Program.
7. Loyalty Point Entry Behavior
- New invoice → positive points entry
- Redemption → negative points entry
- Return invoice → reverses original entry
8. Key Accounting Impact
On submission of Sales Invoice:
- Loyalty points are recorded as liability/expense tracking entries
- Redemption reduces invoice value
- Expense Account is used for redeemed points
