Retail Therapy: Loyalty Economics

Retail Therapy is a LinkedIn series where the industry’s sharpest minds (Damian Lucas, Carly Neubauer and Adam Posner) dissect the myths, metrics and mechanics behind what truly drives loyalty, profit and repeat behaviour in modern retail. This season introduces the next evolution of loyalty: 𝗟𝗼𝘆𝗮𝗹𝘁𝘆 𝗘𝘅𝗽𝗲𝗿𝗶𝗲𝗻𝗰𝗲 (𝗟𝗫) where programs become outcomes, loyalty becomes profit, and customers stay because they belong.

In Episode Three, the team unpack the truth behind loyalty economics, the financial mechanics that decide whether your program creates value or quietly destroys it. Here is what we break down:

• 𝗪𝗵𝘆 𝘁𝗵𝗲 𝗳𝗶𝗿𝘀𝘁 𝗽𝘂𝗿𝗰𝗵𝗮𝘀𝗲 𝗶𝘀 𝘁𝗵𝗲 𝗺𝗼𝘀𝘁 𝗲𝘅𝗽𝗲𝗻𝘀𝗶𝘃𝗲 𝗼𝗿𝗱𝗲𝗿 𝘆𝗼𝘂 𝘄𝗶𝗹𝗹 𝗲𝘃𝗲𝗿 𝗮𝗰𝗾𝘂𝗶𝗿𝗲 And why the second purchase is the one that decides your profit.

• 𝗧𝗵𝗲 𝗲𝗰𝗼𝗻𝗼𝗺𝗶𝗰 𝘀𝗶𝗴𝗻𝗮𝗹𝘀 𝗺𝗼𝘀𝘁 𝗯𝗿𝗮𝗻𝗱𝘀 𝗻𝗲𝘃𝗲𝗿 𝗲𝘃𝗮𝗹𝘂𝗮𝘁𝗲 Contribution margin, cost to serve, payback, repeatability.

• 𝗪𝗵𝘆 𝗲𝗻𝗴𝗮𝗴𝗲𝗺𝗲𝗻𝘁 𝗶𝘀 𝗻𝗼𝘁 𝗹𝗼𝘆𝗮𝗹𝘁𝘆 Only repeatable behaviour increases bankable profit.

• 𝗧𝗵𝗲 𝗳𝗶𝗿𝘀𝘁 𝘁𝗼 𝘀𝗲𝗰𝗼𝗻𝗱 𝗽𝘂𝗿𝗰𝗵𝗮𝘀𝗲 𝘄𝗶𝗻𝗱𝗼𝘄 The critical moment where loyalty flips from loss-making to compounding.

• 𝗛𝗼𝘄 𝘁𝗼 𝘁𝗲𝗹𝗹 𝗶𝗳 𝘆𝗼𝘂𝗿 𝗽𝗿𝗼𝗴𝗿𝗮𝗺 𝗱𝗿𝗶𝘃𝗲𝘀 𝗯𝗲𝗵𝗮𝘃𝗶𝗼𝘂𝗿 𝗰𝗵𝗮𝗻𝗴𝗲 Or if you are simply buying back the same customers one discount at a time.