The short answer
Headline give-back is what your customer feels: the reward value divided by what they spent to reach it. Your true cost is the cost of the item, not its price. The gap between those two numbers is the programme’s profit, and it is usually about two thirds of the headline figure when the reward is your own product.
How the results are calculated
- Cycle spend = average ticket × stamp count. This is what the customer spends before earning the reward.
- Headline give-back = reward value ÷ cycle spend. This is the rate the customer feels and compares against competitors.
- True cost = reward value × cost-of-goods rate, because a free cup costs you its ingredients rather than its menu price.
- Effective cost rate = true cost ÷ cycle spend. This is your number, and it is what you should compare against your margin.
How to read the result
| Rate | Reading | What to do |
|---|---|---|
| Under 3% | Conservative | The reward may not motivate. Raise its value or cut the stamp count |
| 3% to 7% | The healthy range | Leave it and watch the redemption rate |
| 7% to 12% | Generous | Acceptable at launch, review after three months |
| Over 12% | Dangerous | It eats your margin. Add stamps or pick a cheaper item |
Note that these rates assume every card completes. In reality not all of them do, so your actual cost is lower than the result — a safety margin in your favour, not a reason to get more generous.