Question 1

Should brands stop rewarding loyal customers?

Accepted Answer

No. Loyal customers should be recognized and retained. The argument is against automatically paying customers for behavior they would have demonstrated anyway. Recognition and incremental behavioral incentives should be designed separately.

Question 2

What is incremental behavior in loyalty?

Accepted Answer

Incremental behavior is an action that probably would not have happened, or would have happened less frequently, without the loyalty intervention. Examples include an additional purchase, category trial, referral, reactivation or increased frequency.

Question 3

How do you measure loyalty program ROI?

Accepted Answer

Measure the incremental commercial value created by the program and compare it with reward, technology, operational and fulfilment costs. Where practical, controlled testing or credible comparison groups should be used to estimate what customers would have done without the program.

Question 4

Are loyalty points ineffective?

Accepted Answer

No. Points can work extremely well. Their effectiveness depends on what behavior they encourage, their perceived value, redemption experience and program economics.

Question 5

Is cashback better than loyalty points?

Accepted Answer

Neither is universally better. Cashback provides immediate and easily understood value. Points can create progression and longer-term engagement. The right mechanism depends on the audience, behaviour and commercial objective.

Question 6

What is the biggest mistake brands make with loyalty programs?

Accepted Answer

Starting with the reward instead of the behavior. A stronger program begins by defining precisely what the business wants the customer or channel partner to do differently.

Loyalty Program ROI Tag