Loyalty programs are broken. They don’t work because they offer only closed value.
When a business issues thank-you points, these essentially function as IOUs. A customer can redeem points by exchanging them for in-house goods or services. In reality, the fact is that – more often than not – they don’t bother. Only 24 percent redeem the rewards they earn. Since market research tells us that 50% of US shoppers have quit a loyalty program, it’s clear that businesses don’t always get it right.
The trouble with loyalty programs
Typically, points racked up are redeemable only through the business issuing said points. Points are usually not transferable, nor do they carry over beyond a set expiry date, and depending on the merchant, can even be limited to the extent of…