Definition of Rewards Program

by Christopher Cross - Updated September 26, 2017

A rewards program is when a company gives out incentives in order to encourage a particular behavior. This is a marketing strategy that allows companies to promote brand loyalty, while allowing the consumer to think he is getting something for free.

Types

Rewards programs are a marketing strategy for various types of companies. You may get rewards for using your credit card, buying products from a certain company or even from your employer.

Function

Rewards programs work by issuing points to the recipient each time he engages in a certain behavior, such as buying a product or using his credit card. The recipient then redeems his points for gifts from the company.

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Benefits

Gifts may include gift cards, cash back, or a free or discounted products or services from the company. For example, an airline will give you a certain amount of rewards points each time you book a flight and then you can redeem those points for a free flight.

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