Τop strategies to reduce point liability in a loyalty program
You can minimize the liability of a loyalty rewards program when the redemption rates are low. However, if the redemption rates are low, it also means that customers are not redeeming rewards points, and therefore, it decreases the effectiveness of the rewards program.
A great loyalty rewards program should aim to minimize rewards program liability while maximizing the redemption rate.
Finding a way to encourage your loyal members to redeem points reduces your liability and increases the program’s engagement factor.
Unspent Points and Point Redemption
Customers can see the value in joining a loyalty program, but a significant portion of customers has never claimed their rewards. There would be a considerable boost to the economy if everyone started redeeming loyalty points. With COVID significantly impacting several industries where loyalty programs are prevalent, there is an opportunity to drive customers to spend by unfastening that unredeemed value.
Keeping that in mind, let’s explore how you can quickly reduce point liability by keeping customers happy!
1. Point expiration
Have a clear plan for points expiry, typically 12 months, with a trigger CRM program to encourage customers to ‘burn’ the points, ideally personalized to their preferences and shopping behaviors.
Users can renew the validity of their points by making another purchase. This is an excellent incentive for users to make another purchase within a deadline.
Reminder emails about point expiry act as a catalyst for the user to make a purchase.
The email United Colors Of Benetton sent to customers about unused points aims to make customers care again. (Source: Mindbox)
2. Προσφέρετε βιωματικές ανταμοιβές
Create a program that allows customers to redeem loyalty points for products, promotions, and experiences rather than regular cashback systems. Using this strategy to exchange points to high perceived value products that cost very little would be best.
For example, if a user was allowed to redeem 5,000 points for a product valued at 500 euros when the actual cost of the product is only 20, that brings down the deferred revenue liability.
Experiential rewards also provide a more emotional view of loyalty, an essential component of successful programs.
Check now how wadata can help your brand offer more experiential rewards!
3. Auto-Redeem Points
Enable ‘Auto redeem’ points and convert them into expirable coupon- codes. For example, if a 10 euros voucher is redeemable for 1,000 points, change the points into an expirable 10 euros voucher automatically when the user gains 1,000 points. In this way, you encourage users to make another purchase.
4. Motivate members to spend points on special events
Create a community-related redeem option as opposed to cash-back systems because it drives more emotional connection. This is a great initiative to support local causes and re-distribute charity budgets to a more targeted experience that brings customers on the journey with you.
You generate an emotional bond with members by encouraging customers to redeem loyalty points on charitable causes as you align yourself with their values.
5. Encourage points swapping through loyalty wallets.
Digital wallets, such as wadata, allow brands the chance to decrease their points liability while offering customers the ability to exchange points for points in other loyalty schemes, products, and promotions from other brands.
Transferring loyalty points across multiple brands can be a huge selling point for a loyalty program, as the potential for pleasure and new engagement grows significantly.
Want to give more to society?
Give your members a new alternative way of redeeming points loyalty to partner companies and NGOs, minimize the cost of “open” reward points and at the same time gain new members with zero cost!