How To Ensure Customers Benefit From Their Loyalty Program Points

Most people who join loyalty programs have experienced losing out on rewards at some point. The rewards that go unredeemed. The punch cards that are never finished are eventually thrown out. The forgotten points that expire and disappear from your account.

In fact, one study showed that a mind-boggling amount of loyalty points goes unclaimed by participants — $100 billion, to be precise. That’s a ton of free rewards just left on the table!

If you're running a loyalty program, you should be tracking program utilization and member activity as part of your loyalty program performance metrics. If you're seeing dips in member redemptions, then that could be a warning sign of bigger issues that need to be addressed. 

Why Point Redemption Rates Matter In Loyalty Programs

Why do loyalty points go unused? And if you’re a loyalty program provider, should you care? After all, if no one is redeeming points, then that means there’s no redemption cost to you. Is it better for customers to go on accumulating points and never spend?

Not at all.

Point breakage, the term used to describe the portion of loyalty points that go unredeemed by customers, plays a critical role in the success and perception of customer loyalty programs. While high breakage rates might initially seem beneficial to businesses by reducing the liability associated with outstanding points, they often signal deeper issues that can undermine the effectiveness of these programs.

While your loyalty program will have some level of point breakage, little to no point redemptions among your program members are a bad sign. When members sign up but don't complete the final step of the spend-earn-redeem cycle, it indicates something is keeping them from fully participating in your loyalty program. 

This is an issue because a customer's failure to redeem points can indicate a lack of engagement or dissatisfaction with the loyalty program. This isn't ideal when customer engagement is a critical program goal. Mostly because low loyalty program participation rates eventually lead to loyalty program churn and abandonment.

A loyalty program’s purpose is to support the consumer behaviors that lead to true customer loyalty and revenue growth. If your program data shows that your members have a high number of points with very low redemption, you need to start looking into the reasons.

How To Increase Point Redemptions Among Loyalty Program Members

If you are finding that point redemptions in your loyalty program are a little slow, here are a few strategies  you can use to re-engage your loyalty program members and encourage them to redeem their accumulated points

1. Make Your Point Redemption Process Easy To Understand

If your redemption levels are low, you don’t need to immediately begin a major overhaul and completely revamp your point structure or rewards. 

Start by determining if your point redemption process is easy for customers to understand and complete. Simplicity is key when it comes to loyalty program design, including the processes for earning and redeeming points for rewards. The more barriers to using their loyalty points, the less likely they are to redeem.

Your redemption process should involve minimal steps and be clearly explained on your loyalty program website and in your How-Tos. 

2. Make It Easy For Customers To Find Their Available Point Balance

Customers are busy people with many demands on their time and dozens of other interruptions fighting for their attention. This is why you want to make it as straightforward as possible for members to see their available point balance without having to search for it on a website, app, or email. The easier it is for customers to track their rewards points, the easier it is for them to redeem.

Display Their Points Balance On Their Member Profile Or Dashboard

A good practice for customizing a loyalty program member account dashboard is to display the member's points balance on their profile, along with their current standing in your rewards tier. Not only does this make it easy to find their points balance, but it also makes it easy for them to track their progress. You can personalize this even further by displaying any rewards, badges, or achievements they've earned so far. 

Show Their Available Points In The Rewards Catalog

One way to keep making members' points total available on the main screen is in the top banner or a sidebar as they peruse the rewards catalog. Doing so makes it easy for them to look for available rewards within their points range. They can add up the costs of redeeming multiple reward items or start planning to redeem a higher-priced reward.

Show How Many Points They Can Earn From A Purchase

Here’s a nice tactic beauty retailer Sephora uses on their website as part of their infamous Beauty Insider program. Beauty Insiders can see how many loyalty reward points they’ll potentially earn from each item currently sitting in their shopping cart if they decide to complete the purchase. This allows them to see their new potential point balance, the rewards available, and how close they’ll be to reaching the next membership or rewards tier. This can be a powerful motivator for program members.

3. Send Loyalty Program Members' Point Balance Updates & Reminders

As we said before, customers are busy people. Sometimes they forget they have loyalty program points available to redeem or to check for new rewards in the catalog. You can help them by using loyalty platform communication tools to send regular summaries or account updates that remind members about their progress and activity in your loyalty program.

Provide Regular Account Updates Or Point Balance Reminders

Automated emails informing loyalty program members of their available points balances are good tactics to help keep members active and engaged in the program. The best timing is monthly or quarterly emails with updated balances. This shows members how many points they earned in a given period and helpfully provides the number of points available to spend.

Send Notification Emails When Program Members Are Close To The Next Tier 

If your loyalty program includes member tiers — and it really should — then you should send notifications to customers when they’re close to reaching the next tier or status level. This can help incentivize members who are considering a purchase while also placing your brand at the top of mind for customers who weren't thinking it. When the customer is ready to make a purchase, the instant benefit makes your brand an attractive first option over your competitors.

Announce When New Loyalty Program Rewards Or Perks Are Available

Every successful loyalty program regularly refreshes and updates its rewards catalog to ensure its rewards remain valuable to its members. Consider sending notification emails to loyalty program members whenever new reward items, member perks, or benefits become available. The new rewards may be just what long-time loyalty program participants were saving their points for. 

Should You Let Loyalty Program Points Expire? 

It's a common question brands ask about their loyalty programs: Should loyalty program points expire?

There are pros and cons to both sides of the argument, and it's an ongoing discussion topic within the loyalty program community. For businesses, point expiration can help manage liabilities and encourage ongoing customer engagement by requiring points to be used within a specific period. However, if not handled properly, it can also lead to customer dissatisfaction and the perception of lost value, which can damage customer loyalty and retention.

Whichever route you choose, make sure you have a few strategies in place for incentivizing your customers. 

If You Choose To Let Loyalty Program Points Expire….

• Make sure you provide ample warning to members – Clear communication of point expiration terms and frequent reminders can significantly enhance customer experience. Make sure all relevant details are conveyed clearly to your program members. Provide them with plenty of advanced notice if their points are at risk due to account inactivity. Send members email reminders about upcoming expiration dates and include potential solutions to help them avoid losing their points, such as making another purchase or redeeming for a small reward.

If You Don't Choose To Let Loyalty Program Points Expire….

• Drive member redemptions with special promotions or offers – Encourage members to redeem their points by offering special promotions or offers. For example, you could run a promotion that discounts the point values of certain reward items in your catalog for a limited time. Customers who want to get the most bang for their points will leap at the opportunity to redeem. 

For most loyalty program members, one of the best aspects of participating is the rewards. If your members aren’t redeeming for rewards, you should take the time to evaluate your loyalty program. The solution might be simpler than you think. In the end, helping your customers with their redemptions will lead to happier participants and a more valuable loyalty program experience.

If you’re still searching for ways for your customers to utilize their points or want to learn more about how to drive customer engagement in your loyalty program, contact the customer loyalty and rewards experts at Brandmovers today!