A Reward Point is the fundamental building block of a Loyalty Program. Brands give reward points as a token of appreciation of purchases of their products made by consumers.
Typically, brands belong to the following industries:
- Airlines, which give reward points for number of miles flown on their flights.
- Banks, which give reward points for spends made with their credit cards. Some banks also give reward points for making digital banking transactions such as electronic fund transfers.
- Hotel Chains, which give reward points for number of room nights booked at their properties.
- Retailers, which give reward points for purchases made by consumers at their stores.
Traditionally, reward points have been abstract constructs that come to life only to the extent to which they can be redeemed against gifts offered by brands or coalition loyalty programs such as Payback.
But, in the recent past, some brands have started giving reward points in the form of blockchain-based alt-coins that can not only be redeemed against gifts but also traded for other alt-coins – or even fiat currency – on cryptoexchanges.
The value of reward points is captured by the metrics explained in the following exhibit.