I don't think that's because loyalty doesn't work. It's because most programs only operate during the purchase. You earn at checkout, and then nothing. No nudge, no reason to think about the program again until you happen to buy something else. So the rewards just sit there, not because they're worthless, but because nothing in the rest of the experience ever points back to them.

Here's how I think about it now. A loyalty program is really just compensation. You're paying customers to do something, and that's a good thing, it's the whole point of having one. The question is what you pay them for. Most brands put all their focus on the purchase and nothing on what happens after.

Customers earn on the purchase. They climb tiers by buying more. And then the program goes quiet for the entire rest of the relationship.

That back half is where the pain points are. A package gets stuck, someone wants a refund, or an order shows up wrong. Those are the moments that decide what a customer thinks of you, and they're usually costing you money. Your loyalty program is almost never anywhere near them.

A loyalty program does its best work when you use it to reward a customer and shape what they do at the expensive moments.

Say a package is stuck in transit. Don't wait for the angry email and the refund request. Get out ahead of it and drop some store credit in their account before they even ask. A bad experience turns into a reason to come back, and you've spent a few dollars instead of eating a full refund and maybe losing the customer for good.

Or someone asks for their money back. Offer store credit with a little extra on top instead of cash. A lot of people will take it. You keep the revenue, you keep the relationship, and the refund turns into a future order.

It pays for your next inventory order, or your next ad. That's loyalty doing something real for your cash flow instead of sitting in a marketing deck.

The pattern to work toward is not paying customers to buy. It’s about meeting customers at the moments that usually go sideways, and making those moments work for both of you.

If you want to know whether your program is doing anything, start with your redemption rate. It's the fastest gut check, and for most brands it's going to be ugly. After that, stop staring at the vanity stuff. Enrollment counts, rewards issued, how many "members" you technically have, none of it tells you much. Look at how much revenue you kept and how many refunds you avoided. That's the program earning its keep.

Three things worth doing this week:

Hit reply and tell me one post-purchase moment where you've never once used a reward to change the outcome. The stuck package, the return, the late delivery, whatever it is for you. I'll anonymize the data and pull the patterns together in a later issue.

—Josh