intuition

I get your point and I should probably avoided including the cost/value part of discussion. I think itis difficult to set a cost on points and segments, as we here all tend to think in the lowest possible achievable price there is, and the extrapolate from there. Also, there is the whole revenue vs margin discussion we don't need to go into once again.

There also is the complication of value of award-points like you say. As we talked about tiers, I purposely ignored them, but IRL they do exist and matters.


Anyway, what I did miss was to correct for tier bonus that only applies to points. So I did a new analysis, where I compared tier by tier with the question "How much does it take to advance to next tier, compared to what it took to qualify for this tier".
This is an important question, as this is what a loyalty program works towards. You don't just want people to qualify, you want them to increase the business with you.

Finding is still that it always takes a relatively greater effort to upgrade to next tier, if qualifying by points.



A newly baked silver needs to add 26 more segments or 50 000 points to get to gold. However, compensating for the tier bonus of 10%, it is only 45 455 points effort, as 4545 points are added for free.
Adding 26 segments on top of the already done 20 segments, is an extra 130% effort. (You need to fly another 26/20=130% segments).
Adding 45 455 points on top of the 30 000 the silver already has is an added 152% effort.

Going from Gold to Plat is a much lesser added effort. Still, the pointer needs 76% more while the segmenter needs 65%.

And going from plat to lumo is the most unequal leap. The segmenter does not even need to double his flying (+97%) while the pointer needs to add 160% more flights.