Tag: financial performance

Should You Shorten Your Loyalty Program Expiration Policy?

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For many loyalty program providers, program financial liability is a serious concern. Since members can redeem their points for rewards anytime, the business carries liabilities toward these potential future obligations. Such liabilities can be quite large. For example, American Airlines’ 2017 10-K filing reports $420 million worth of loyalty program liability. For Hilton Hotels, the guest loyalty program liabilities are valued at $889 million, according to the company’s form 10-K. With new accounting guidelines for loyalty programs about to take effect, liabilities will become an even more salient issue for loyalty program providers.

One common way of limiting liabilities is to set a point expiration policy so that points automatically expire after a set period of time (or a set period of inactivity). If your program points do not expire or expire after a longer period of time than you’d like, you may want to consider tightening up the expiration policy. But how will that affect your customers? Should you make the switch? Let’s look at the pros and cons for such a policy shift.

Pros of a Shorter Loyalty Program Expiration Policy

  • A shorter expiration time reduces the number of redeemable points in the long run and decreases program liabilities.
  • Because of the time pressure, a shorter expiration policy discourages your customers from shopping elsewhere. If they want to earn enough points for rewards before the points expire, they may need to put all their eggs in one basket.
  • According to motivation research, cutting the expiration time may motivate members to work harder, either because of the increased challenge level or because of their desire to regain control.

Continue reading “Should You Shorten Your Loyalty Program Expiration Policy?”

Do Social Good and Earn Customer Respect

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Today is a special day for social media and society. Mashable together with (Red) have named today the Social Good Day to show what social media can do for social good. It is intended to “celebrate, share, and educate and engage in a discussion on how social media can be used to tackle some of the world’s social challenges and issues, in particular how it can be used to help fight AIDS in Africa.” For this reason, I have teamed up with a few fellow bloggers. Each one of us will write a special blog post today, and for every comment on these special posts, we will donate $1 to the UN’s Global Fund. Please consider joining us to make the world a better place by commenting on these blogs (see a list at the end of the post), tweeting or blogging about the Social Good Day, or donating to the Global Fund yourself.

Social Good Day 2010

In keeping with the spirit of the Social Good Day, in this post, I would like to talk about how companies can contribute to social good and at the same time earn their customers’ goodwill and respect. Although all businesses operate under a profit motive, they are also obligated to give back to the society and fulfill their role as a corporate citizen. Starbucks, for instance, challenges and encourages its employees to contribute to their local community. Brands such as Gap, Nike, and Apple have all become part of Product (Red), where up to 50% the profit from these products’ sales go to fight AIDS in Africa.

Doing Social Good the Right Way

Done in the right way, charitable behavior from businesses can increase customer loyalty and lead to goodwill among consumers, investors and the general public. But corporate philanthropy does not always touch people in the right way. Sometimes it becomes an ostensible tool that some corporations use to cover up their bad behavior or manipulate public opinion. As a consumer and a member of the general public, I asked myself what corporations do that truly touches me as being kind and generous and what appears suspicious and fake to me. Here are a few things that came back to my mind: Continue reading “Do Social Good and Earn Customer Respect”