Hi!
Great question. This is a fantastic opportunity to show mature thinking, similar to how real top strategy consulting partners think! If you are able to show and articulate this kind of thinking in an interview, you will blow essentially all other framework-brainwashed candidates out of the park.
1. Verify the objective! Without this, structuring is impossible! --> Let's say it is "Maximizing long term profits"
2. Disaggregate your objecive (=your focus metric) into its components. Revenue, Costs, and further down.
3. Then think through how a loyalty program can impact each sub-branch of your tree into the desired direction (e.g., how can a loyalty program increase frequency of store visits? How can a loyalty program encourage larger basket sizes? How can a loyalty program encourage purchase of more expensive products, how can a loyalty program decrease customer lifetime costs, etc.).
4. Check whether and how the current loyalty program performs on the identified levers and identify pain points
5. Outline options for adapting the current program to address the identified pain points (start with the highest impact/lowest effort options!)
That's it.
Cheers, Sidi
(edited)