I literally don’t understand how it’s profitable to spend points ie free money ??
Edit : I’m partially talking about spending points earned
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Loyalty points are exactly what their name is: Points for your loyalty to that company. The only way to get them is to continuously go to that company, often ignoring other companies that you don’t have a loyalty card for.
This means that you are more likely to visit that company more often, and therefore spend more overall than you otherwise would, even with spending those points to get discounts or even get free stuff. It just doesn’t feel like it because your brain tells you, “Hey, you’re getting a free thing!”, when you had to already spend $10 to get that $3 product for free.
As well, most products are sold at an incredibly high markup in most cases. So, companies can give you a discount or give you something for free and still make a profit because just selling two or three more of that product will make up for it. And they can easily sell those two or three because they have more people trying to get those same points, so they spend more, creating an endless cycle.
Some companies even give incentives to spend more and get those points by saying that if you spend a certain amount a month, you get an even better bonus (Which often hardly adds up). If you were already spending that much, then this is just a bonus, but most people weren’t going to and now will just so they can get those extra points, thus bringing in more money.
The points themselves aren’t profitable, but their impact on customers is.
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