Points are a delayed reward. The customer earns now and benefits later, and later is doing a lot of work in that sentence.
For your best customers, that delay is the wrong shape. Someone who orders from you every month does not need another accumulating balance. They need to feel that ordering from you every month is recognised.
What it does
A percentage off, applied automatically at the cart for customers who qualify. No code to enter, nothing to remember, nothing to ask for.
Usually tied to tier, so it becomes what reaching a tier actually delivers. Gold status means every order is discounted, permanently, without any action.
Why automatic matters
A discount that requires a code is a discount most eligible customers will not use.
They will not have the code to hand. They will not remember they qualify. They will get to checkout, not see a saving, and either look for a code elsewhere or conclude the programme is not worth much. Every one of those is worse than not offering it.
Applying it silently means the reward is received every single time, by every eligible customer, with no failed attempts and no support conversations about codes that do not work.
It reads as a relationship
There is a real difference in how these land. A customer who enters a code has claimed a discount. A customer who sees a lower price without doing anything has been recognised.
The second is what a loyalty programme is supposed to feel like, and it costs the same.
Alongside points
The two work on different customers.
Points reward accumulation and pull people back to spend a balance. A standing discount rewards being an established customer and shows up on every order. Newer customers are motivated by the first, regulars by the second.
Running both means the programme has something for people at both ends, which is what stops it going stale in year two.
Setting it up
A percentage, and who qualifies. Most shops attach it to their top one or two tiers and leave it there.
Worth doing the arithmetic against your margin before you set the number, since unlike points this comes off every order rather than occasionally, and a standing discount is very hard to reduce later without annoying exactly the customers you most wanted to keep.