The Economics of Loyalty Programmes
The Psychology of Points and Status
Rewards, progress bars and tiers encourage more spending, using ideas like loss aversion and the goal-gradient effect.
Why people chase points.
Goal gradient
People accelerate effort as they approach a reward, like the last stamps on a card.
Status tiers
Silver, gold and platinum levels make customers strive to keep their status.
Loss aversion
People dislike losing accumulated points or status.
Gamification
Badges, streaks and challenges add a game feel.
A status run
A traveller books an extra flight near year-end to keep gold status.
Believing rewards always match the extra spending
People may overspend to earn small rewards.
Key takeaways
- Goal gradient speeds effort near a reward.
- Tiers create status.
- Loss aversion keeps people engaged.
- Gamification adds fun.
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