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  • Gaurav Reddy

The History of Reward Programs



Once upon a time, loyalty programs pertained to a very niche market. Customers got copper tokens to redeem for future purchases. These tokens helped in loyalty and retained customers. Some believe that the early roots of customer loyalty programs started with “premium marketing” in the late 18th century. At this time, American retailers began to give customers copper tokens with purchases that could be later redeemed for products on future purchases. This customer retention strategy would remain popular throughout the 19th century and would pave the way for the loyalty programs we know today.

A decade later, copper tokens were replaced by redeemable stamps in the future. Green Shield stamps became one of the first retail loyalty programs, and could arguably be considered a predecessor of what popular programs like Air Miles and Aeroplan do today. Green Shield awarded stamps for purchases at select retailers that could be later redeemed for catalog products. Such a method attracted customers giving them incentive to continue purchasing from them.


Followed by this, individual brands and retailers introduced box tops or brand specific programs. Betty Crocker introduced their box top program in 1929, laying the framework for loyalty programs as we know them today. The latter years of the 1900’s would see retailers adopt what I call "loyalty aggregators"programs that reward points regardless of the retailer they were originally earned from. The points accumulated can then be used to purchase items through a separate retailer. These programs are similar to the aforementioned S&H Green Stamps, and include popular programs like Air Miles and Aeroplan. These laid the roots of the most popular programs, frequent fliers.


In the 1990s, next came the Frequent fliers and similar loyalty programs that brought about a change in loyalty as we perceive it today. The latter years of the 1900’s would see retailers adopt what I call "loyalty aggregators", programs that reward points regardless of the retailer they were originally earned from. The points accumulated can then be used to purchase items through a separate retailer. These programs are similar to the aforementioned S&H Green Stamps, and include popular programs like Air Miles and Aeroplan. These programs are still immensely popular today.

A more recent program was coalition loyalty which focussed on themselves and not the brand. Many of these programs do not follow the customer-first approach and failed to retain and engage the customer. There is a growing need for a loyalty platform focusing on the brand and customer first. This approach can take such programs to greater heights.


In 2020, loyalty programs and market are set for another transformation. Due to changing customer preferences, there is a rising need for new reward programs. The next step will focus more on offering flexibility and easy redemption options to customers. The programs will satisfy instant gratifying needs of the customers, such that they can redeem it anywhere, anytime. The markets will get flooded with these options. Great time to be a loyal customer with unlimited rewards and rewarding experiences. So customers, get ready to welcome reward programs in 2020.

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