When a client asks me why their points program isn’t moving the needle on customer lifetime value (LTV), the answer is rarely “points are bad.” More often it’s “your program is doing the wrong things well.” I’ve seen dozens of well-intentioned points schemes that generate vanity metrics — sign-ups, points issued, coupon redemptions — without lifting repeat purchase frequency, basket value or long-term retention. Below I’ll walk through the typical failures I encounter and five practical fixes that actually work for SMEs.
Why points programs so often fail to improve LTV
Here are the common patterns I see in loyalty programs that look healthy on the surface but don’t deliver real value.
Fix 1 — Reframe the exchange: make value immediate and meaningful
Customers respond to perceived value and timing. A single £5 voucher that’s usable today can be more motivating than £20 of points that take months to accumulate.
I recommended this approach to a mid-sized fashion brand: we introduced a “welcome reward” redeemable on a first repeat purchase within 30 days and moved larger experiential rewards to higher tiers. The result was a clear lift in 30- and 90-day repeat rates.
Fix 2 — Start with a clear LTV-focused measurement framework
If you can’t quantify the impact of your program on LTV, your optimisations will be guesses. Build a simple measurement framework early and make it part of every test.
| Metric | Why it matters | Target |
|---|---|---|
| 30/90-day repeat rate | Shows immediate behaviour change | Lift vs non-members |
| Average order value (AOV) | Measures change in basket size | Increase for members |
| Customer retention rate (12 months) | Directly impacts LTV | Net lift over baseline |
| Cost per incremental LTV | Profitability check | Below unit margin |
Set up cohort analysis so you can compare members vs non-members and see whether changes persist. I often use simple SQL or Google Sheets exports for early-stage clients before recommending heavier analytics investments.
Fix 3 — Segment intentionally and personalise rewards
Not all customers are equal. Your best performing segments likely include recent purchasers, frequent buyers, and high-ticket shoppers. Treat these segments differently.
For one food subscription brand I worked with, a targeted campaign offering an immediate sampler add-on for inactive subscribers reactivated a large portion of churned members at a much lower cost than mass discounts.
Fix 4 — Make the funnel frictionless: onboarding, visibility, and redemption
Many programs die because customers don’t understand how to earn or spend points. Remove friction at every touchpoint.
I once audited a retailer whose redemption required call centre approval. Unsurprisingly, many redemptions never completed. Switching to in-cart redemption increased conversion among members by double digits.
Fix 5 — Test offers, sequence and scarcity; avoid blunt discounts
Points or discounts are tools, not goals. Use A/B testing and sequencing to find what nudges each segment. Tests to run early:
One useful pattern I favour: use small, time-limited incentives to activate, then shift members to earned, status-based benefits that are harder to discount away. Starbucks and Sephora show how tiered benefits plus exclusive experiences can protect margin while increasing LTV — you don’t need their budget, just the structure.
Finally, guard against treating your program as a coupon machine. If every reward is a straight discount, you’ll train behaviour that reduces margin and inflates purchase cannibalisation. The best programs mix monetary and non-monetary rewards, sequence benefits to encourage incremental behaviour, and measure cost per incremental LTV.
If you want, I can help you run a rapid audit of your points program — map the member funnel, identify the 1–2 low-hanging levers, and sketch a test roadmap you can run with your existing tech. I find clear, fast experiments usually reveal the changes that drive measurable LTV improvements.
