Decisions · Layer 1
How should you set loyalty earn rates
Set earn rates from the incremental behaviour the reward must create and the margin available to fund it. Cap or vary the rate when product economics differ.
Set earn rates from the incremental behaviour the reward must create and the margin available to fund it. Cap or vary the rate when product economics differ.
## The decision boundary An earn rate converts a qualifying event into programme currency. The design needs a qualifying event, an accrual rule, an adjustment rule, and a funding owner.
## The options
### Fixed rate Choose this when margin and member value are stable. The cost is additional operating complexity.
### Variable rate Choose this when product, channel, or partner economics differ. The cost is more measurement and exception handling.
### Targeted accelerator Choose this when a specific action needs a temporary lift. The cost is a stronger funding and review obligation.
## What it costs you The currency is liability, margin, engineering time, operating capacity, or member trust. In a hypothetical illustration, 2 points per dollar on 400 dollars of spend creates 800 points. At a hypothetical 1 cent value, that is 8 dollars of liability. Ten comparable cases therefore represent 80 dollars of stated value.
## How to decide 1. Name the behaviour or obligation the rule must control. 2. Identify the independent evidence that proves the event. 3. Price the member, operating, and liability cost of each option. 4. Choose the least complex control that protects the least reversible outcome. 5. Set the evidence that would cause a later review.
## What breaks The failure mode is a rule that measures its own success. Keep source evidence, eligibility, issuance, adjustment, and fulfilment separately observable. Revisit the recommendation when the balance has no meaningful value or the event cannot be independently verified.