I don't have a problem with 'retention incentives'; I do have a problem concluding that customers retained thereby are loyal and/or more profitable.
Which leads us to the issue of profits and profit metrics: how to track profit and with what measures? The process of making marketing a sophisticated discipline has resulted in a number of different layers of tracking - ranging from brand preference to OTS (communication frequency), to purchase intent to more esoteric stuff like 'lifetime value' and 'churn'. Ultimately though, all marketing metrics should eventually contribute toward the simplest of business equations: profit = revenue - cost.
If marketing metrics don't ladder up to this equation, they're likely to be of questionable value, which should pose the question 'why am I tracking this information?' But lets get back to loyalty, and reconsider it through the lens of this equation. Tracking profitability at a customer level is less difficult than it's made out to be. I've often argued the reason marketers don't want to track profitability at this level is because it takes away the ability to (internally) sell marketing initiatives.
While this may have worked to date, beware the informed CFO saying 'I'm not approving this budget as too much money is being spent on customers we don't make money from.' If marketers track profitability they'll be able to leverage this information to target and focus their programmes on better customers - and actually prove ROI at a profits level. That's powerful information that your CFO won't challenge!
Marketers need to also work to identify metrics that help track the value of current operations (current profitability) even as they seek to create substantial sources of future value. In a plateauing innovations and new products environment, and a growing customisation environment, the need to layer customer metrics on top of traditional brand metrics will soon become imperative - particularly if marketers take the view that current customers are sources of future revenue.
This may be a long way to say loyalty is the wrong metric, but I then have to recognise that many of my peers have done a top job selling the notion that loyalty leads to profit. It may well do so, but that's usually based on half the data (the revenue side). I sleep better knowing the short route to profit metrics.