Tradable Loyalty Flywheel
Make earned loyalty rewards transferable to strengthen acquisition and retention incentives.
- Difficulty
- Advanced
- Time to result
- ~months to results
- Steps
- 4
- Confidence
- 88%
The tradable loyalty flywheel extends a conventional points program by allowing earned rewards to carry utility and potentially be sold or transferred through a secondary market. Existing customers have a stronger reason to accumulate rewards because they can use or exchange them, while new customers may join to participate in the same opportunity. The mechanism can therefore support both retention and acquisition. Its discipline is to begin with useful customer behavior and ecosystem value, not a speculative token price. Transferability is an enhancement to a functioning loyalty system, and its success should be judged by retained usage and customer growth rather than liquidity alone.
Origin
Extracted from Marketing Against The Grain.
Core principles
- 01Rewards become more motivating when recipients can transfer value.
- 02A secondary market can attract both existing and new participants.
- 03Utility should drive behavior inside the ecosystem.
- 04Speculation should not replace underlying customer value.
How to run it
- 1
Choose the target behavior
Specify the repeat customer action that creates value for both the participant and the business.
Pro tip Favor behaviors tied to retention or healthy ecosystem participation.
Watch out Do not issue rewards for activity that creates noise without value.
- 2
Create useful rewards
Give the points or tokens a clear use inside the customer ecosystem.
Pro tip Start with utility that works even if no secondary market develops.
Watch out A reward whose only use is resale is vulnerable to speculation.
- 3
Add controlled transferability
Allow customers to exchange or sell rewards when doing so creates meaningful additional value.
Pro tip Model how transferability affects supply, demand, and customer behavior.
Watch out Assess legal, tax, fraud, and regulatory implications before launch.
- 4
Measure the dual effect
Track whether the program increases both repeat participation and acquisition of suitable new users.
Watch out Liquidity is not evidence of product adoption or loyalty.
In the wild
Instead of restricting airline points to the traveler who earned them, a transferable version would let that traveler sell accumulated rewards. The additional utility could encourage existing travelers to collect more and attract new participants who value the exchange option.
→ The same loyalty mechanism could support user retention and new-user growth.
Common mistakes
Designing for speculation
A liquid reward can attract traders without producing genuine usage, retention, or ecosystem value.
Adding transferability without utility
A secondary market does not repair a reward that has no meaningful underlying use.
Is it for you?
Best for
Businesses with repeat customer behavior and a credible ecosystem in which rewards have genuine utility.
Not ideal for
Companies using tokens mainly to stimulate price speculation or mask weak customer value.
From the transcript
“What she thinks is the crypto winter will get us back to token as a utility.”
“In the future, I could collect those points and I could sell them on the secondary market.”
“What would that do? It would incentivize me to collect more points and it will incentivize new users to join to collect points so they…”
From the episode
Customer Acquisition Has Changed: A New Approach For 2022