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3 Ways Points Schemes Make Money — From Airlines, Credit Cards, and Coffee.
In Australia & New Zealand, everybody loves “Flybuys.” They claim to be New Zealand’s most loved loyalty program. They probably are.
As Airlines suffer from COVID, some claim that the loyalty schemes are what is helping keep them afloat.
Today I want to cover just how these points schemes make money. From Airline points, credit card points, and more. Here are the basics on how they make money.
1. Selling Points
The points owner sells points to brands that want to offer points at a premium. For example, Air New Zealand has a loyalty scheme called Airpoints. They go to a brand like Samsung Electronics and say
“Hey Samsung, we have x million customers using our platform who buy want to buy from Apple, but a large % want to earn loyalty points and would likely buy a Samsung if they knew you offered points.”
Samsung thinks, “Oh, wow, tell me more.”
Air New Zealand says, “Well Samsung, you pay us $1.30 per point, and we will allow you, customers, to redeem those points for flights for $1.00 per point.”
Samsung pays a 30% margin to Air New Zealand for the points which are redeemable to its customers for $1.00. Depending on how many…
