Not too long ago one of the people I follow on twitter posed the rhetorical question; ‘when is the last time your loyalty programs showed it was loyal to you? ‘ Mmmm go me thinking.

Loyalty program operators, once the program is up and running, tend to focus on the ‘earn’ since this is the customer behaviour the program is meant to encourage. We like to keep track of how many points are being earned and how this translates into longer term customer value and short term profits. The CFO, who has to make balance sheet provisions for the points being accumulated by these valuable members/customers is generally single-minded in her focus on this key driver of program expense. And I am sure she often secretly hopes the points will ‘break’ before they are converted to rewards.

But this view is self serving surely. It is us watching customers behave the way we want them to behave (if we have designed the program well).

What about the ‘burn’?

(Please excuse the loyalty program jargon, ‘burn’ is shorthand for the exchange of points for rewards, also known as a ‘redemption’ i.e. when you redeem points for rewards).

We do loyalty program ‘audits’ and one of the common, generally surprising to them insights we show clients is the impact of redemptions on their program members. By looking at data from literally dozens of programs, we can safely predict what impact the redemption event has on the behaviour of your program members.

‘Redeemers’, (those members who remember receiving a reward in the last 6 months or so) versus ‘non-Redeemers’ of the same value to you;

• stay with you longer, 30% longer in credit card programs in Asia Pacific for example
• like the program more, we have seen 20% point Net Promoter Score increases, comparing cohorts before and after redemption for example
• talk about your brand positively, Colloquy found that 68% of brand champions are so because of the reward program they are engaged with
• in retail programs that issue vouchers as rewards, redeemers measurably increase their response to your point promotions, to accumulate bonus points
• in voucher programs, redeemers spend their voucher then keep spending, making redemption baskets significantly richer. The smaller the reward voucher the larger the sales lift is proportionately (within limits)

Sounds obvious I know, but I see a lot of programs where the redemption part of the process is given insufficient attention, where there is no careful (data driven) matching of the rewards available to the needs/preferences of the redeemers, where there is no use of recognition as a supplementary reward that requires no points but engages customers impressively if genuine…

And where there is no invitation to a conversation just after the redemption when customers are most likely to be open to a relationship offer from you. I am still surprised when I see consumer loyalty programs that are not tightly coupled with a branded community where customers can converse with the program and each other.

Redemption is how your program shows it is loyal to your customers, it deserves more attention than it often receives.