How are loyalty cards profitable for companies

Question

I literally don’t understand how it’s profitable to spend points ie free money ??
Edit : I’m partially talking about spending points earned

In: 0

Answer 1

Loyalty cards lower the margin but increase volume. They are a “nudge” that can lead shoppers to choose their loyalty program over a competitor more often. They are especially common in high margin industries where there is still a profit even with deep discounts, e.g. airlines