If you want to exclude product items e.g. sale items from the rewards, you can add the non-sale items to a product collection/category and create rewards that apply to that collection/category only such that customers won't be able to apply rewards redeemed from their loyalty points on the sale items.
Please note that although customers won't be able to apply rewards on these items, customers will still earn points when they purchase them.
Setup your reward e.g. $10 off and change"All Orders" into"Category"
copy and paste the Category Name
Fill in points required for the reward and click"Create"
What if I have existing rewards that apply to all products?
If you have existing rewards that apply to all items, you will need to switch off all existing rewards and create new rewards that apply to the specific product collection/category only. Customers who redeemed existing rewards earlier will still be able to use the rewards on all products even though the rewards are switched off and all rewards that are redeemed going forward will be applied to specific product collection / category only.