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Active Loyalty

  • Serious Question to Loyalty Program Sponsors – Why Allow Exchanges?

    Posted April 24, 2012 By in Active Loyalty, Loyalty Behavior, News, Point Value, Redemption With | 3 Comments

    I recently read an interview on the One-on-One blog from ExpertFlyer with the President of Points.com.  The interview walked through how customers were using the Points.com service.

    To recap the service description from the post:

    Points.com’s solutions enable the management and monetization of loyalty currencies, including frequent flyer miles, hotel points, retailer rewards and credit card points, as well as enhancing loyalty program consumer offerings and back-end operations for more than 50 partners worldwide. Points.com’s software-as-a-service (SaaS) products allow eCommerce merchants to add loyalty solutions to their online stores and reward customers for purchases.

    That’s the company description.  The layman’s definition (read mine) is that Points.com allows consumers to swap awards from one program to another and to buy/swap points from one member to another.

    What It Means To Me

    At its core the service is about redemption without effort.

    I can get the miles from a few airlines that I’m not really loyal to and combine/trade those miles with another program that I’m not really that engaged with in order to get a free ticket on possibly another airline I wasn’t loyal enough to, to get their free travel in the first place.

    Sounds a bit convoluted to me.

    Before I ask my question understand I get the value to the consumer.  I know they are looking for ways to monetize their points/miles.  I know they are looking for the best deal.  I know they want that ticket and this is one way they can get there faster.

    I know that this type of service is for the benefit of the consumer.

    I don’t begrudge anyone from having a good idea and finding a hole in the market and filling it.  Obviously, based on the growth they talk about in the article there are plenty of people who want and like to be able to redeem for miles/points even when they haven’t really exhibited the loyalty needed in a specific program.

    Serious Question

    But… Is it just me or from a program sponsor point of view this is the last thing I would want?

    Why would a loyalty sponsor spend all the time, energy and money to create a loyalty program that ostensibly drives me to interact with their brand only to allow me to NOT interact and redeem for rewards I didn’t really earn with them.

    Don’t tell me about the fact they are selling these miles and/or the exchanges are skewed in favor of reducing liability quicker. I get that part of the financial equation.

    What I don’t get is how it makes sense from a loyalty perspective.

    Who can explain it to me, from Rio Linda, how this drives increased loyalty to an individual brand.

Comments (3)

Wandering Aramean » 24. Apr, 2012

It isn’t always about loyalty. Sometimes it is about revenue. In this sort of situation the program is writing off future loyalty for the sake of short-term revenue. Not necessarily always the smartest move, but by the time a customer gets to the point that using a service like points.com makes sense they’ve probably already given up anyways.

Paul Hebert » 24. Apr, 2012

Great point. Hadn’t thought about it as a loyalty program exit strategy. Wonder if there is an opportunity for companies to use the data to “save” a few customers? Can a sponsor stop it from happening? Can they interrupt the defection? Should they?

Mihir Rana » 26. May, 2012

In my opinion, I see it positively as a coalition program where points accumulation is happening from different brands. In the strict sense of your question, the essence of a multi brand program dies out.