Why would any firm feel the need to reward consumers with an unrelated service or product in order to increase loyalty? Oddly enough many firms regularly engage in this behavior. Many firms reward their consumers with airline points for consuming their products. One of the first people to exploit this loyalty reward was David Phelps, a 35-year-old Davis, California, engineer who earned 1.25 million frequent flier miles by cleverly exploiting a Healthy Choice promotion that offered air miles for products purchased. Philips ended up with $25,000 to $75,000 in free travel by spending only $3,140 on pudding cups, the least expensive product in Healthy Choice’s brand family. Thus, earning Phelps his nickname as the “Pudding Guy”. Ironically, Phelps did not even consume the pudding cups, but rather he donated them to a local food shelter.
Many more “loyal” consumers have followed the Pudding Guy’s lead by exploiting other offers in order to earn loyalty rewards paid out as through airline miles. According to Wall Street Journal article, Miles for Nothing: How the Government Helped Frequent Fliers Make a Mint, by Scott McCartney, “At least several hundred mile-junkies discovered that a free shipping offer on presidential and Native American $1 coins, sold at face value by the U.S. Mint, amounted to printing free frequent-flier miles. Mileage lovers ordered more than $1 million in coins until the Mint started identifying them and cutting them off.” One patron, “identified by his online moniker, Mr. Pickles, claims to have bought $800,000 in coins.” In all, Mr. Pickles earned over two million miles through American Airlines. Similarly, Mr. Pickles did not use the coins, but rather deposit them at his local bank.
Link to: Miles for Nothing: How the Government Helped Frequent Fliers Make a Mint