3 Responses

  1. Carl
    Carl at |

    I think this quote is key to the value of loyalty programs:

    “the opacity of the specific value actually increased the perceived value, making the customers feel that they were getting a better deal and allowing the programs to remove the liabilities more quickly”

    It motivates purchase decisions based on a reward that is perceived to be high in value but which can be delivered more cheaply, and where many customers may redeem cheaper rewards. A penny a point is a 1% discount and will be much less to motivate purchases. Loyalty programs that directly monetize their points do so at their own peril

  2. RakSiam
    RakSiam at |

    Yeah…for those of us who redeem miles for international F or C class tickets this would certainly be an enormous blow. And it would likely mean I basically bow out of the game because it just wouldn’t be worth it to me at that point.

  3. Frequent flyer points are now just money, for real - The Wandering Aramean

    […] of your points, at least in one program. There was talk about this back in April and at the time I expressed some concern that the margins for arbitrage in the programs are eroding. These sorts of redemption options are definitely a move in that direction and as of this past week […]