Loyalty glossary · 9. Program models (20)
Points Program
A points programme is a loyalty model where members earn points for qualifying activity and later redeem those points for rewards, discounts, or cash equivalents. The operator sets both the earn rate and the redemption value, which determines the programme's cost and appeal.
A points programme is the default loyalty model because it gives the operator the largest number of price levers. The earn side and the burn side are both prices, and the operator sets both. The member only discovers the real value at redemption, which can be years after the earning moment.
Accrual is the first lever, because the earn rate sets how many points a member gets for a qualifying action. Active member rate is the second lever, because it shows what share of enrolled members are actually earning points in a given month. Activity-based qualification is the third lever, because it forces earning into specific patterns rather than steady accumulation. Each lever can be adjusted without changing the headline rate.
The trap is treating the earn rate as the return. Most points programmes publish a headline number of points per dollar, but many do not publish the redemption value per point. That asymmetry is not accidental, it is the business model. A high earn rate paired with a low redemption value is a loyalty programme in name and a discount in practice, but the member cannot see the discount until too late.
Work the arithmetic on a simple model. Programme A gives 2 points per 1 dollar spent and sets a redemption value of 0.5 cents per point, so the member earns 1 cent of value per dollar, a 1 per cent return. Programme B gives 3 points per 1 dollar spent and sets a redemption value of 0.25 cents per point, so the member earns 0.75 cents per dollar, a 0.75 per cent return. The higher earn rate is worth less.
A points programme that will be worth joining states its earn rate, its redemption value, and its expiry policy in the same place. It reports its active member rate honestly and designs activity-based qualification around how members actually spend. A programme that hides any of these is pricing for breakage, not for loyalty.