Is Your Loyalty Programme Building Relationships or Just Discounting?

Loyalty programmes are one of the oldest tools in retail and can easily drift into autopilot without notice. Mindera worked with an operator whose scheme is functional and widely adopted, across 2 million members, and relies on the standard mechanic of converting points into blanket price reductions.

That mechanism is simple to run, which is why it's so common. On its own, it does very little to build a relationship beyond the attached transaction. A traveller redeeming points for a discount on a bottle of whisky isn't necessarily more attached to the brand; they're responding to a lower price, the same way they would with any retailer offering the same discount.

Recognition and access > markdown

While working through this operator's loyalty strategy, Mindera built out an alternative direction that kept some of the same underlying currency, points, tiers, membership, but changed what they mean for the customer. For example, instead of converting to blanket discounts, points unlock things a discount normally can't: fast-lane access through airport security, early access to curated pre-trip bundles, and even a voice in what gets stocked, through a "community loop" where members vote on future limited-edition products.

The shift in language matters here, and it is a useful lens for any loyalty team to hold up against their own programme, retail or otherwise: viewing loyalty as recognition, access, and utility rather than a mere discount. A member who gets waved through security faster, or who gets first access to a product they helped choose, is being treated differently from a non-member in a way that a 10%-off code simply doesn't replicate.

This model doesn't have to be funded entirely out of retailer margin, either. High-margin, exclusive items can be weighted to earn more points specifically because a brand or supplier partner has an interest in seeing them move, meaning some of the value a member experiences is being funded by the partner who benefits from that engaged customer. In one version of this model, high-margin exclusives earned five times the standard points, funded jointly with the brands supplying them. Members could burn half their accumulated balance on an in-lounge experience, like a mini facial, that they'd naturally share on social media, extending the brand's reach without a single euro spent on a discount.

The same logic applies to acquisition, not just redemption. A one-click loyalty opt-in embedded at airline check-in or an airport Wi-Fi splash page, for instance, could plausibly bring a large share of departing passengers into the programme before they even reach the store, turning "silent sign-up" itself into a data asset, funded by the value of simply being recognised rather than by a discount offered at the door.

What this means for any retailer running a mature loyalty scheme

The economics are the real point here, wherever you sit in retail: a loyalty programme funded entirely out of your own margin has a ceiling built into it. Every point issued is a small amount of margin given away, and the more successful the programme is at driving redemption, the more it costs to run, a structural tension that caps how generous the programme can ever afford to be.

However, a programme co-funded by brand and supplier partners doesn't have that same ceiling, because the parties funding part of the reward have their own commercial reason to do so: visibility for a new product, movement on high-margin stock, access to a loyal and identifiable customer base. It's the same logic that makes co-branded credit cards and supplier-funded retail media work, just applied to the loyalty stack instead.

If your own loyalty programme is showing signs of margin pressure, the useful exercise isn't necessarily to build a new programme, but rather auditing the existing one against the recognition-versus-discount framing. It’s helpful to identify which rewards could plausibly be reframed as partner-funded access rather than retailer-funded markdown.

Ultimately, points-for-discount is the easiest loyalty mechanic to build, and that’s exactly why so many programmes default to it and stay there. The more sustainable model treats loyalty as something a partner ecosystem has a stake in funding, not a cost the retailer carries alone.

Key takeaways

• Most travel-retail and grocery loyalty programmes convert points primarily into blanket price reductions.
• An alternative model reframes points around recognition and access, like fast-lane security, curated bundles, a say in what gets stocked.
• A loyalty programme funded entirely out of retailer margin has a structural ceiling; one co-funded by brand and supplier partners doesn't.
• The practical first step for a mature programme is auditing existing rewards against a recognition-versus-discount lens, and not building a new scheme from scratch.
• This is a change in loyalty economics, not just a change in tone or branding.

If you're reviewing your own loyalty programme's economics, we're happy to talk through what a recognition-based, partner-funded model could look like for your business.