The honest arithmetic of loyalty
Do you run a loyalty program today?
Six numbers, two minutes. Runs in your browser; nothing is stored.
You get the number a program has to earn to pay for itself. Sometimes the honest answer is "don't."
To pay for itself, this program has to add
—in revenue you wouldn't have had without it.
A loyalty dashboard would have to show a — lift from members before that's real. The rest is customers who were coming back anyway.
What your loyalty app claims
Revenue from orders where a reward was used — the number its dashboard reports.
—
What it likely really earned
Most of those customers were coming back anyway. Research puts the program's true share at 15–40%; sources below.
—
What it costs you
The app fee plus rewards given out.
—
Members who've gone quiet
Signed up, no longer active. Around 74% is typical.
—
What it would cost you
Rewards given out, plus the app fee.
—
What customers get back
What the rewards are worth to them. Money off costs you exactly that; free product or early access can be worth more to them than it costs you.
—
When the first reward lands
If it takes more than two orders, most members give up before earning anything.
—
Points you'd owe after a year
Points earned but not yet spent sit on your books as an IOU. Your accountant will ask.
—
A grade for sharing. The break-even pair above is the real answer.
Estimates from your inputs and published research: Leenheer et al. 2007 (the 15–40% share — measured on Dutch grocery share-of-wallet; applying it to DTC revenue is our extrapolation) · Bombaij & Dekimpe 2020 · McKinsey 2021 · Antavo 2026 (vendor).
Argue with it
Reward mix — weight each type
What it feels like: —. What it costs you: —.