An interesting finding about the effect of successfully redeeming frequent flyer miles, from the head of the Aeroplan program:

One thing that’s very interesting is that when they do a redemption for an airfare or a gift card or an iPod they actually become more loyal afterwards for about a six-month period. Actually, the accumulation rate of the currency goes up substantially.

He suggests that frequent flyer programs aren’t just a rebate, they’re a way to leverage a relationship.

[B]y developing a longer term relationship with a consumer, you actually encourage them to focus their spending in a way that they wouldn’t normally do. And, it’s not normally because they get 1 or 2 per cent cash back, because that’s what loyalty schemes essentially represent. You’re actually becoming part of their behaviour and their everyday lives as opposed to just a transaction.

Read the whole interview.