Effective Loyalty Reward Schemes

When I worked on Google Pay, we had the opportunity of having Daniel Kahneman, better known as the author of “Thinking Fast and Slow” advising us. By focusing on creating delight, we outpaced other payment apps with only ¼ the marketing spend, and only ¼ as many features as the competition. Here’s how we did it. Nobody at the time thought of payments as an activity that could be fun, or delightful. It was just something that you had to get done, and be over with as quickly, and cheaply as possible. That’s why all the fintech companies were competing to provide more features, better integrations, lower fees, and faster payments. But eventually, everyone starts hawking the same features, and margins start trending to zero. Worse, Google Pay was a latecomer to the payments space! We had nowhere near the same number of features that other payment apps offered. We knew that we couldn’t possibly compete on rational factors alone. Instead, we set out to design the most delightful payments experience of all. In the words of Marie Kondo, we wanted to create moments that could “spark joy” for users. 𝟭) 𝗗𝗲𝗰𝗶𝘀𝗶𝗼𝗻 𝗔𝗳𝗳𝗲𝗰𝘁 𝗧𝗵𝗲𝗼𝗿𝘆 Unexpected good outcomes feel better to our brains. Each time someone paid with Google Pay, they would get a reward in the form of a virtual scratch card. It would reveal either a variable cashback amount or discounts. We turned payments from a painful, dull activity into a delightful surprise. This not only kept people coming back to Google Pay for the dopamine hits, but they even started creating video tutorials on YouTube to tell people about it. 𝟮) 𝗥𝗲𝗰𝗶𝗽𝗿𝗼𝗰𝗶𝘁𝘆 Payments are embedded within human relationships, like splitting a bill from a night out with friends. People feel obligated to return favors. So, we designed a referral program in which both the referrer and the new user, would get a reward for using the app to make payments to a new contact. Existing users started to nudge everyone in their friends and family circles to start sending money to each other using Google Pay. We turned Google Pay into one of the most prominent mobile payment apps in India, and even other countries like Canada, and the US. I’m trying to do the same for personal finance. Today, tracking your net worth, spending, investments, and planning for certain financial goals is dull, overwhelming, and a hassle. I believe there’s a better way. Why can’t it be as delightful as tracking your workouts, or leveling up a character in a video game? If you’re interested to know more, check out our beta program in the comments below!

You don’t build loyalty through rewards—you reward customers for already being loyal. Big difference. Loyalty programs are primarily designed for customers who have already demonstrated consistent engagement and loyalty to your brand. The goal isn’t to create loyalty through rewards, but to recognize and strengthen it. By offering rewards, perks, and recognition, you can maximize their lifetime value, whether by increasing purchase frequency, boosting basket size, or encouraging referrals. Tactics like tiered rewards, exclusive access, and personalized incentives help reinforce their commitment and make them feel valued. 𝗦𝗲𝗰𝗼𝗻𝗱𝗮𝗿𝘆 𝗙𝗼𝗰𝘂𝘀:  For customers with the potential to become loyal, the strategy shifts. These customers have shown higher engagement but haven't fully crossed into the loyal customer category. To convert them, 𝗽𝗲𝗿𝘀𝗼𝗻𝗮𝗹𝗶𝘇𝗮𝘁𝗶𝗼𝗻 is key. Tailor rewards based on their behaviors and preferences to create a sense of exclusivity and recognition. It’s also crucial to stay top of mind through strategic touchpoints—whether via targeted email campaigns, loyalty app notifications, or personalized offers that speak directly to their interests. Offering a path to higher-tier rewards as they engage more frequently can further motivate them to commit to your brand long-term. 𝗖𝗮𝘀𝘂𝗮𝗹 𝗖𝘂𝘀𝘁𝗼𝗺𝗲𝗿𝘀:  Casual customers require a different approach. They won’t become loyal overnight, and the objective here is gradual nurturing. For this segment, it's all about increasing touchpoints and staying relevant. Broader offers, such as discounts, time-sensitive promotions, or entry-level rewards, help keep them engaged without overwhelming them. The goal is to activate them periodically, ensuring they interact with your brand from time to time. By keeping consistent offers flowing, you maintain visibility, and over time, some of these casual customers may transition into the potential loyal customer segment. ----- Ultimately, loyalty is about retention, not conversion. The focus is on maintaining a strong relationship with those who already support your brand and steadily nurturing others to deepen their commitment over time.

🎲 Dishoom didn’t build a loyalty program. They built a moment worth talking about This post converges my love for food with the desire to make financial services more customer friendly. For those who aren’t aware, Dishoom is a wildly successful Indian Cuisine restaurant in London. This post is about their loyalty program. In a world drowning in boring points and generic cashback schemes, Dishoom’s Matka (Roll of Dice 🎲) game is a masterclass in behavioral design Here’s how it works: 🔆 You get a Matka keyring. 🔆 At the end of your meal, you roll a die. 🔆 If it lands on a 6 - your entire meal is free. No points. No tracking. Just dopamine, unpredictability, and a great story to tell your friends. But behind the fun is serious science: ✔ Variable rewards drive deeper engagement than fixed incentives ✔ It triggers FOMO and shareability without burning margins ✔ It makes returning to Dishoom an act of curiosity, not habit And the results? 📈 Customers choose Dishoom just to roll the Matka again 📣 Word-of-mouth does the heavy lifting 💡 Loyalty becomes emotional, not transactional Combine that with their exceptional hospitality, a give-back model (one meal donated for every one served), and immersive brand storytelling and Dishoom becomes more than a restaurant. It becomes a brand you want to be loyal to, not loyal for…. Let’s stop designing loyalty programs that bribe people to return. Let’s create experiences they want to return to. #LoyaltyDesign #CX #BehavioralEconomics #Hospitality #MarketingInnovation #BrandLove #LinkedInInsights

How do I keep a customer for the next 10 years? A topic which came up in a founder group this week. Whether you are starting up or established, each business aims for customer retention. 9/10 executives believe their customers are becoming more loyal. Only 4/10 customers agree. That gap comes straight from PwC's 2025 Customer Experience Survey. It's where businesses bleed revenue. At HomeServe, our whole model was built on keeping customers for at least 5 years. Here's the playbook: 1. Get them on a membership. A subscription changes the relationship from transaction to commitment. McKinsey found members of paid loyalty programmes are 60% more likely to increase their spend with a brand. Free programmes manage half that, and work hardest in year one. Half of all membership cancellations happen in the first 12 months. 2. Make the product brilliant. Then prove it. Outstanding satisfaction is a number. Measure it relentlessly so you know exactly what customers think, not what you hope they think. PwC found 32% of people will walk away from a brand they love after one bad experience. 3. When something goes wrong, fix it fast. Speed of recovery matters more than the mistake itself. A problem solved brilliantly can create more loyalty than no problem at all. 4. Keep enhancing and evolving the product. Loyalty is rented, never owned. Every renewal is a fresh decision. The product someone buys in year one should never be the product they hold in year ten. Your competitors improve every year. 5. Introduce customers to your other products. A customer with two products is far stickier than a customer with one. At HomeServe, someone might start with plumbing cover. Then add electrics or boiler cover. Each product made the next easier to sell and the relationship harder to break. That’s why banks fight so hard for that second account. 6. Give them something extra. A tale as old as time: Wiggle put free Haribo sweets in every parcel. Cereal brands used to put toys in the box. And now, Huel has sent every new customer a free t-shirt since 2015. You now see them in every gym. A freebie became free advertising. People who feel they got a good deal come back. 7. When someone leaves, find out why. Then act on it. Every cancellation is free market research. Ask the question, log the answer, look for the pattern. If the reason is affordability, the customer hasn't rejected your product. They've rejected your payment structure. Offer another route. A cheaper tier or a pause instead of cancellation. Monthly payments through Klarna have made this simple. Don't lose a ten-year customer over a problem you could have solved. Research shows a 5% point improvement in retention can lift profits by anywhere from 25% to 50%. What’s kept you loyal to a brand for five or ten years? For more ideas on how to build and scale a business, subscibe to my newsletter: https://lnkd.in/ergDQtiK 

𝗧𝗛𝗘 𝗖𝗥𝗘𝗗𝗜𝗧 𝗖𝗔𝗥𝗗 𝗜𝗡𝗗𝗨𝗦𝗧𝗥𝗬 𝗜𝗦 𝗖𝗛𝗔𝗡𝗚𝗜𝗡𝗚 𝗥𝗔𝗣𝗜𝗗𝗟𝗬. And this time, I think it's bigger than the reward points. 𝗖𝗮𝘀𝗵𝗯𝗮𝗰𝗸 𝗶𝘀 𝗯𝗲𝗰𝗼𝗺𝗶𝗻𝗴 𝘁𝗵𝗲 𝗻𝗲𝘄 𝗿𝗲𝘄𝗮𝗿𝗱 𝗰𝘂𝗿𝗿𝗲𝗻𝗰𝘆. People have started to adopt cards like the 𝘒𝘪𝘸𝘪'𝘴 𝘊𝘳𝘦𝘥𝘪𝘵 𝘊𝘢𝘳𝘥 𝘰𝘯 𝘜𝘗𝘐 𝘣𝘦𝘤𝘢𝘶𝘴𝘦 it seems to have bet on this shift early. Instead of making consumers calculate points, redemption values and expiry dates, it gives them a simple 𝗺𝗶𝗻𝗶𝗺𝘂𝗺 𝟭.𝟱% 𝗰𝗮𝘀𝗵𝗯𝗮𝗰𝗸 on all everyday UPI spends, with up to 5% cash back on select eligible spends. As a consumer you know exactly what you’re getting before you even pay. Because if you look at what's happening across the industry, the direction is becoming clear. Every few months, another reward programme changes. Lounge access becomes spend-based. Points redemption rules get revised. Premium benefits become harder to unlock. None of these changes are surprising on their own. Banks are building more sustainable reward programmes, and that makes business sense. But for consumers, it also means rewards are becoming harder to predict. Some cards reward points. Some reward spending behaviour. Others change redemption values over time. Eventually, rewards stop feeling like rewards and start feeling like something you need to understand before you can use. What I appreciate about Kiwi isn't just the cashback. It's that the experience is straightforward. I think that's where the industry is headed. The next generation of credit cards won't win by offering the longest list of benefits. They'll win by making cashback predictable, transparent and easy to understand.

Big update from the ICO today, and it’s a pretty significant one for anyone in affiliate, loyalty, or cashback. In the latest guidance, cashback is now explicitly referenced under the “strictly necessary” exemption. Before, this was just in a Q&A on the ICO website, now it's in the actual guidelines. That might sound like a small change, but it’s actually a big shift in how our space is being understood. For a long time, affiliate tracking has been lumped in with marketing cookies meaning consent was required, journeys were broken, and conversion rates took a hit. What this update signals is a different interpretation: If a user actively chooses to earn cashback, then the tracking required to deliver that reward can be seen as part of the service - not just advertising. We've been working since October 2024 (!) to get advertisers to update their tracking and we've seen some amazing results - with a conversion increase on average of just over 30%. That is a lot of sales that were not being tracked and needed customers to put in a claim, which is a terrible experience and impacts the advertiser as much as it does us in terms of their likelihood to buy again. Hundreds of merchants have updated their tracking but there are still many to go. That said, this isn’t a blanket “free pass”. As we've been explaining to advertisers, it’s about strictly necessary tracking only. It needs to be genuinely tied to delivering the cashback. Anything beyond that (profiling, optimisation, etc.) likely still sits in consent territory. It's important for advertisers to understand how their cashback and loyalty sites use this data. From a TopCashback perspective, this reinforces the direction we’ve been pushing in, working closely with networks and advertisers to make tracking more resilient, while staying on the right side of regulation. It also creates a clearer path for the industry to improve user experience without compromising compliance. ICO guidance here: https://lnkd.in/eNuZg9J8 (Note all the above is my own views, always take legal advice as I am not a lawyer!)

💡 [The Cashback Playbook] Why Cashback ≠ Discounts? When we think of cashback, most people assume it’s “just another discount.” But it’s not. 🚫 💰 Discounts reduce the list price; they change the value of a transaction. Customers benefit once. They become loyal to the discount, not the brand or the product. For merchants, it often hurts net revenue and cash flow. 📉 🔁 Cashback, on the other hand, changes a habit. When customers earn Cashback, they’re not only getting great value, they’re building a behaviour loop. They come back. They stack. They grow loyal to the ecosystem and this way of shopping. It’s no longer about chasing the cheapest deal, it’s about the satisfaction of earning every time. And for merchants, that means stronger cash flow and repeat customers. 💪 That’s what makes Cashback so powerful. It shapes behaviour, not just price sensitivity. Millions of users return not for discounts, but for the rewarding experience. 👉 Do you agree that habits drive stronger loyalty than discounts ever could? #Cashback #Discounts #Ecommerce #CustomerBehavior #ShopBack #Loyalty

Cards and Payments Simplified! How Rewards & Cashback Really Work Why this matters: Rewards aren’t free money — they’re structured incentives funded through the card payment ecosystem. ⸻ 1️⃣ Where Does Reward Money Come From? When you swipe your card: • Merchant pays a fee (MDR – Merchant Discount Rate) • That fee is shared between: • Acquirer • Card network • Issuer bank A portion of the issuer’s share funds rewards. Rewards are built into transaction economics. ⸻ 2️⃣ What Is Cashback? Cashback is a direct percentage of your spending returned to you. Example: • Spend ₹1,000 • Cashback rate 1% • You receive ₹10 It is usually credited to your statement or account. ⸻ 3️⃣ What Are Reward Points? Reward points are loyalty units earned on spending. They can be: • Redeemed for vouchers • Converted to miles • Used for statement credit • Exchanged for merchandise Value depends on redemption method. ⸻ 4️⃣ Why Rewards Differ by Category Banks use MCC (Merchant Category Code) to differentiate rewards. Example: • 5% on dining • 2% on groceries • 1% on all other spends Banks promote categories where they want more usage. ⸻ 5️⃣ Why Some Transactions Don’t Earn Rewards Rewards may be excluded for: • Fuel • Wallet loads • Rent payments • Government transactions • EMI conversions These categories have lower margins or higher risk. ⸻ 6️⃣ How “No Cost EMI” & Offers Fit In Sometimes rewards are replaced by: • Instant discounts • Merchant-funded offers • Network promotions In these cases, the merchant may fund the benefit. ⸻ 7️⃣ Why Banks Can Afford Rewards Banks earn from: • Merchant fees • Interest on revolving balances • Annual fees • Interchange income Rewards encourage higher card usage and retention. ⸻ 8️⃣ The Real Strategy Behind Rewards Rewards are designed to: • Increase transaction volume • Shift customers from debit to credit • Encourage specific spending patterns • Improve long-term profitability It’s behavioural economics at work. ⸻ 9️⃣ Simple Example If a merchant pays 2% MDR: • Network and acquirer take their share • Issuer keeps a portion • From that portion, part is shared with you as rewards You get a slice of the transaction economics. ⸻ Key Takeaway Rewards and cashback are not free giveaways — they are funded by transaction fees and designed to influence spending behaviour. Visa Mastercard RuPay National Payments Corporation Of India (NPCI) Reserve Bank of India (RBI)

I teamed up with Zsuzsa Kecsmar, Co-founder & Chief Strategy Officer at Antavo AI Loyalty Cloud , to talk about how to increase loyalty revenue by 4X by adding more engaged and VIP profiles ahead of BFCM 2025. Together with Mailability.io, we built a strategy that combines AI-powered loyalty + AI-powered email intent scoring to drive real Klaviyo revenue. Because here’s the thing: Most brands treat loyalty like a standalone program. But when it’s connected to Klaviyo and powered by intent data it becomes a scalable growth engine. Here’s the 3-step approach we mapped out: 👉 Use Antavo AI Loyalty Cloud to track loyalty tiers, reward history, referrals, and behavior, directly in Klaviyo 👉 Let Mailability.io assign real-time Intent Scores to every profile, so you know who to activate, upgrade, or re-engage 👉 Combine loyalty status + intent to trigger AI flows and campaigns that match real customer behavior What that unlocks: → Push VIPs to repurchase faster with tier-based incentives → Invite high-intent shoppers into your loyalty program at the perfect moment → Re-engage inactive members with personalized offers and AI-driven flows and campaigns The result? → Smarter audience targeting → Stronger pre-BFCM engagement → 4X+ loyalty revenue from your best customers If you’re planning to maximize retention and LTV this holiday season this one's worth a swipe. Full breakdown in the slides. Let’s make loyalty work harder. Want to learn more? → https://lnkd.in/dCdwyQ2d

Most hotels are missing a huge revenue channel by ignoring email marketing. Here's what we've learned building email strategies for hotels 👇🏻 While I've spent the last year showing you how to leverage social media, email marketing remains criminally underutilized in hospitality. Unlike social media followers, your email list is something you actually own. Email gives you direct access to potential guests, allowing you to: ✔️ Send targeted campaigns based on location ✔️ Retarget previous guests ✔️ Personalize messages ✔️ Drive bookings without constant ad spend But for hotels, email marketing has been a black box... Most industries have countless resources for email strategy. For hospitality? Almost non-existent. Even big brands are just running basic discount campaigns and bland promotional emails. Here's what's working in our email strategy: ✅ Building Our List There are two main drivers - previous guests and website sign-ups. For website sign-ups, we skipped the typical discount pop-ups that would cheapen our brand. We focused on value-driven offers like free stay giveaways to build our list while maintaining luxury positioning. ✅ Weekly Content Strategy Weekly emails strike the perfect balance–keeping guests engaged without overwhelming them. Unlike retail where customers buy monthly, hotel guests book a few times a year. We don’t need to flood guests with emails–we're playing the long game. Mix local activities, events, and property highlights. ✅ Personalization That Converts Targeted messaging helped our email strategy standout. We created campaigns for: ✔️ Local guests seeking quick getaways ✔️ Past guests reminiscing about their stays ✔️ Engaged subscribers ready to book All without paid ad costs. ✅ Email Flows That Drive Revenue This is where email marketing became a game-changer. We created automated sequences to: ✔️ Welcome new subscribers with our story ✔️ Re-engage guests who haven't booked in 9-12 months ✔️ Keep inactive subscribers engaged Here's exactly how to get started: 1. Choose Your Platform Klaviyo is our go-to. While there are many options, we've found it works best for hospitality and is easiest to use. 2. Build Your Foundation Start by compiling past guest emails from your PMS. Then create compelling sign-up offers and popup forms for new subscribers. 3. Set Up Your Flows Top priority: a welcome flow introducing your property's unique experience & story.  Then add: - Flows targeting previous guests - Re-engagement campaigns for inactive subs 4. Plan Weekly Content Map out a calendar mixing: - Local events and activity guides - Behind-the-scenes content - Strategic promotions (but keep them minimal) 5. Design Your Template Create a consistent look: - Clean header with logo and booking links - Mobile-optimized layout - Strategic CTA placement Every property's email list is unique. Test different approaches, analyze what resonates, and find what works best for your property.