The myth: Rewards should be cash. Rewards should be experiences.
By Tim Tyler, published 13th October 2026
The debate about what loyalty programs should offer has a right answer — and whichever side you're on, you're probably certain about it.
Walk into any loyalty industry conference, and you'll find two camps. One argues that cashback and discounts are what members want: tangible, immediate, and easy to understand. The other argues that experiences and emotional rewards are the future, harder to copy, more memorable, and more likely to build genuine preference. Both camps tend to present their position as if the other side simply hasn't thought it through. But both explicitly agree that loyalty propositions require a mutual investment of resources.
There is a useful frame Ellipsis uses to understand how brand relationships form and what makes them stick.
Academic work1 on relationship resource exchange identifies six types of resources that parties in a relationship invest in each other: money, goods, services, information, status, and love. These resources differ along two dimensions: how tangible they are and how personal they are.
Cash and discounts sit at the tangible, impersonal end. They require no trust to accept and no time to feel the benefit. A new customer with no prior relationship with a brand will happily take a discount on their first purchase. The exchange is immediate and uncomplicated.
Status and what the researchers call "love"; recognition, belonging, being genuinely known by a brand, sit at the intangible, personal end. These take time to offer meaningfully, because a brand can only deliver genuine personalisation once it knows something about the customer. And customers will only share the information required to make that possible once they trust the brand enough.
This is where the cashback-versus-experiences debate goes wrong. It treats the choice as a fixed design decision when it's a question of where the customer is in the relationship.
A stranger walking in for the first time has no reason to trust the brand with their preferences, their habits, or their data. The right investment at that stage is tangible: a clear, immediate reward that gives them a reason to come back. Not because cashback builds loyalty, but because it lowers the cost of the first few interactions while trust is being established.
The problem is that many programs never move beyond that stage. They keep the relationship on a transactional footing indefinitely, with points for purchases, cashback for spend, and then wonder why members switch the moment a competitor matches the offer. Tangible, impersonal rewards are easy to replicate. A competitor can always post a better discount. What they can't replicate, at least not quickly, is a relationship that has accumulated genuine knowledge of the customer.
Programs that work over the long term create a path. Early engagement is supported by tangible rewards. As the customer transacts and shares more, the program learns enough to offer something more personal, like relevant recommendations, recognition of their actual behaviour, access or acknowledgement that feels specific to them rather than generic. The investment from the brand becomes less about money and more about attention. The customer's reciprocal investment shifts from spend to information and, eventually, to advocacy.
If they care enough. Many do not.
The design implication is that a program architecture built solely around cashback is optimised for the beginning of a relationship and never grows beyond it. A program built only around experiences assumes a level of trust and personalisation that most new members haven't yet extended. Neither is wrong exactly — they're just incomplete.
Cashback gets customers in. Knowing them well enough to give them something a competitor can't is what keeps them.
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References:
For example, Morais, Dorsch & Blackman “Examining the Influence of Customer-Provider Investments on Loyalty” Journal of Travel Research
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