Loyalty math reveals the truth in point valuation and redemption

Are you a one-percenter?

Think carefully before you answer the question because it could land you in two vastly different camps of people.

Being a “One-percenter” can mean you are part of the wealthiest 1% of the population, or it can refer to members of outlaw motorcycle clubs, also known as 1%ers. The term came from an interview with a member of a biker gang who said that “99% of motorcyclists are law-abiding citizens. We’re the One Percenters.”

The One Percenter may be an outlier in society, but not in Loyalty Marketing.

Building a loyalty program around a one percent deferred rebate, expressed to the customer in a points or mileage currency, is the OG loyalty model. In 2025, the new standard rebate percentage for e-retailers ranges between 2-5%. With the US inflation rate estimated at 2.7% as of July 2025, it makes sense that the “standard” loyalty rebate has crept above the one percent mark.

It’s safe to say that if you are still operating a program that offers a 1% rebate, you need to stock up on whiteboards and markers, then gather your team together. If you don’t change that program, you will bleed marketing budget by wasting money on a program that won’t change behavior.

The Loyalty Math of Unfulfilling Redemption

If the OG loyalty rebate percentage is creeping to a higher level, why does redemption feel so unfulfilling these days?

I recently was planning travel and wanted to use points to pay for air fare and a hotel stay. Before redeeming points with Marriott Bonvoy and JetBlue TrueBlue, I did some loyalty math.

• The value of 47,000 Marriott Bonvoy points was $.0068/point. That’s 68 basis points, less than 1 percent.
• To top up my account, Marriott offered to sell me points 19,000 points at a price of $.0125 per point. That’s 125 basis points, nearly double the value of my points in redemption.

My loyalty math illustrated that the actual value of Bonvoy points is weak. Have my years of dedicated brand loyalty been worthwhile? Loyalty math also showed that Marriott is enjoying a margin of 45.6% on point sales. Could they have narrowed that margin for a customer with high-tier lifetime status?

Moving on to book airfare, JetBlue offered me a mix of points and cash as points don’t apparently cover the cost of premium seat selection and taxes. I experimented with three combinations of points and cash, thinking that I might realize more value from my points if I was willing to pay more in cash.

My loyalty math told me just the opposite.

• When I minimized the cash component, my points were valued at $.015 or 1.5%.
• As I increased the cash component of the transaction (moving from $36 to $100 towards a $272 fare) my point values slipped all the way down to $.0116 or 1.16%.

Airlines commonly sell miles to third parties at $.017 – $.02 each, so the margin on mileage sales by JetBlue was calculated to be less aggressive than Marriott. Overall I didn’t feel that my points were being overly diluted in this redemption example, though the sliding scale on the cash and points mix bothered me.

What’s the Future of Loyalty Currency?

There’s been a lot of debate about whether the future of customer loyalty programs will include point systems. It’s a more complicated debate than you may imagine. But the illustration I’ve shared in this article makes it clear that if you do choose to use a point system, you must consider these key points:

• Consumers can do loyalty math. Don’t make changes to your program that encourage a higher level of scrutiny. Program devaluations have been noticed by the US DOJ and are the subject of pending federal legislation.
• Simplicity is important to consumers, but overly transparent point valuation systems encourage a transactional mentality. You must imagine a system that centers on experiences and transcends even today’s version of the OG model.
• Resist the easy path. Out-of-the-box loyalty configurations from ecommerce software platforms (yes, the one or two with the greatest market share today) result in program value propositions that will bleed your marketing budget while delivering less than expected behavior change.

A CEO of a large retailer recently told me that “people buy experiences, not programs”. Never lose sight that customer loyalty should be a top-down planning exercise, integral to the C-Suite customer strategy.

When you prioritize brand loyalty and build loyalty programs as an amplifier of your brand promises, points may still play a role, but they won’t be the focal point of your customer loyalty outreach.