Question

Customer loyalty programs. What exactly is the issue?

For instance, let's say customers earn one point for every ten dollars spent at Rocky & Riley's Dog Treat Center, famous for its bacon-flavored protein biscuits. (They are so good that many families give them to their kids in lieu of junk food). After a customer accumulates 10 points, they can use those points for $10 off their next purchase, so each point is worth $1. If at the end of 2018, R&R had sales of $700,000, issued 40,000 points, and 20 percent of them were redeemed during 2018. The company's recent history also revealed that 30 percent of issued points would never be redeemed.

Couldn't the company simply record sales of $692,000 for 2018 [$700,000 sales less $8,000 (40,000 points x 20% x $1 per point)]?  

Share your thoughts.

Answer 1

thank you hope you understand