Monthly Archives: May 2010

Automatic Point Expiry Is Now Available

One of the biggest requests we have is for the ability to expire points automatically. The reasons why points might need to expire vary from business to business: some offer tiered discounts based on the number of points earned in a given year and need the accounts reset on January 1, some simply don’t want to be exposed to large outstanding balances and want the points to expire a set period of time after they are issued, and most simply want to encourage people to return regularly to earn new points to reach a target before the existing points expire. In all these cases the business does not want to have to go through each account manually to calculate when and how many points to expire.
We’ve been working on the best way to automate the process and have tried a number of options. The technical aspect proved difficult but it also proved more difficult than expected to get the whole system working as a whole as it affected a number of different areas. However these have now been resolved and, after some significant testing I’m happy to announce we have an elegant and simple function that lets you specify the expiry criteria for your points.

The Process

The new process works on a monthly basis. You can specify either the month every year when points will expire or  the number of full months for which points remain active after they are awarded. At the end of every month the system will look at each card and calculate how many points to expire at that time. It will then redeem that number of points from the account. At the same time it will calculate the number of points due to expire at the end of the following month. This number is then updated at every transaction throughout the month. At the end of the following month the process will repeat.

The Mechanics

The setting for the Automatic Point Expiry can be found under Operations/point actions.

Setting Point Expiry Criteria

Here you have 3 options:

  • Points never expire.
  • Points expire on a specific date. You will be presented with the ability to select on which month they expire. Remember that points expire at the end of a month so if you want all accounts to go into a new year with a reset balance you select December as the expiry option for Set Date.
  • Points expire a set time after being awarded. The number of months you set are full months and so do not count  the month in which the points are awarded. So if you want points issued in January to expire at the end of March you choose 2 as the period (February and March being the 2 in question).

You simply set the selection that meets your needs and you can forget about it after that. The system will do the rest.

There are 2 points to take note of;

  • You can change the criteria and timing of point expiry at any time. However you cannot do so in a way that will immediately cause points to expire. Instead we will recalculate the number of points to expire at the end of the month and this will include any points which under your new rules would already have expired.
  • All points are taken into account in the calculation. This includes any default points you may have put on cards when you received them. If you have not issued the cards within the set time those points will no longer be on the card when the customer receives them.

Tracking Expirations

Business

The Statistics Dashboard has been updated to include the expiring points in the graphs and you can also search for them in the Transaction Filter and download them in the Excel export.

Statistics Graph with Point Expiration

Graphs now show point expirations

Selecting point expiration for review

Selecting point expirations for review

Cardholder

It’s not a lot of use having expiring points if the customer is unaware of when they expire so we have integrated this information into their data. The cardholder will now see the number of points due to expire along side their balance for each card. This will update throughout the month as required. For instance if all points reset at the end of the month then every transaction will be reflected and the expiring points will equal the balance for the full month. However if points expire after specified period of time then only redemptions during the month will be reflected and the number of expiring points will reduce accordingly.

Showing Points Due To Expire

Why this process?

We decided on a monthly process because it is the one most liked by customers and so benefits business more than any other option…

  • Customers are happier if they know points expire at the end of the month rather than having a   balance that can change every day
  • Cardholders can plan in advance to visit the business to use expiring points, something that would not be possible if the expiration balance changed every day.
  • Points awarded early in a month will be live for longer than those awarded at the end. This gives customers a feeling that they are gaining something extra by shopping early in the month.

Automatic Point Expiration is a major function that will be of use to almost all businesses. It’s one of a number of major functional upgrades coming in the following weeks. Let me know what you think and if there are any functions you particularly want added.

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When Points Expire

We are currently in the final stages of testing the automatic expiry of points and, in advance of releasing it next week, I wanted to take a quick look at why and under what criteria you might want points to expire.

Preventing Large Balances

Some businesses don’t wish their customers to build up extremely large balances over a long period of time. Often this can be managed by setting a maximum limit on the number of points which can be redeemed at one time or within a specific period. The first does not prevent the cardholder creating multiple transactions while the second is complicated to manage and explain to customers. In these conditions it can be easier for customers to understand the expiration model.

Encouraging Customers to Visit

The key reasons for any reward program are to keep customers returning. Having the pointswhich will never expire does nothing to encourage the lapsed customer to return. But if the points are due to expire it provides the extra incentive a person might need to make a return.

Allow A Specific Business Model

Many reward programs operate on the basis of a cumulative balance over a year. We highlighted one model recently – a business might offer a 5% discount on all purchases once 500 points have been earned, 10% once 1,000 have been earned etc. Typically in such a model the points earned within a year are the only ones counted and the balance resets to zero on January 1.

Accounting Requirements

Depending on the accounting model undertaken outstanding points might represent a liability. In these cases the expiration is necessary to ensure the liability does not become too large.

Whether points expire and under what conditions will depend on the unique elements of every business. If you decide to expire points it is important to make sure of two things;

  • make the conditions and frequency as clear to the cardholder as possible. The last thing you want is for your customer to feel they have been fooled by small print.
  • make sure the cardholder can easily see what points are expiring and when both to avoid them feeling fooled and to give them an incentive to plan a return to you.

The update we will be introducing next week provides a simple model for points which expire either on a date or after a period of time. It will also show the customer the expiring points next to their balance as well as letting you see patterns of expiration.
Testing so far has been going well and I hope to release this update on Monday.

Planning A Points System (part 2)

The last time I looked a the general principles of any good Reward Program. This time I wanted to take a look at specifics of implementing those criteria. In particular I want to look at two types of Rewards you can offer and then at how you can implement them.

Reward Types

There are two main types of Rewards you can give to customers: a discount (or cash) or a free product.

  • Discounts: Discounts can be redeemed for points or can be flat after a certain number of points have been reached. The discount can also be percentage based (10%) or cash based (€5).

Examples of the first are when a person is entitled to a 10% discount from their next purchase when they reach 100 points. The points are then deducted and they start earning to gain the next discount.
The alternative to this is to award people a constant discount once they have reached a point level. For instance a person earning 1,000 points is entitled to a 2% discount on every purchase for the rest of the year. Once they reach 5,000 points they are entitled to a 5% discount on every purchase and so on.
The main difference between these two models is in the expiry of the points. In the first points are deducted after every use while in the latter the points are cumulative and reset every period (usually a year). This in turn dictates the level at which the discounts are earned.

  • Free Products: The other most common method of providing rewards is to provide the customer with a specific product when making a purchase. For instance a restaurant providing a free bottle of wine with dinner for 2. This invariably involves the deduction of those points from the customers account.

Reward Methods

A business typically chooses one of two methods for redeeming points.

  • On Purchase: The most common method involves the customer presenting their card at the time of purchase and the points being deducted at that stage. This is the most efficient method and involves the least amount of administrative work.
  • Voucher: It is possible to issue vouchers to customers at intervals based upon their points balance. This is administratively cumbersome and is only suitable for the discount method of reward. The advantage is in the marketing result – the arrival of the voucher creates a renewed awareness of the business and the vouchers themselves seem more real and valuable to the customer than points.

Innovation

These are the most common methods used and are a good starting point to designing the Reward program. Once they have the basics up and running a business can slowly refine and customise it (while bearing in mind the rules such as keeping it simple, discussed previously).

Even within these four methods however it is possible to be innovative. For instance two or more business can agree to provide discounts to each others businesses instead of or in addition to their own. Both businesses gain from the marketing benefit and the possibility of new customers. Of course they have to agree in advance the redemption level in order not to be caught giving away too many discounts.

Examples

We have put together some examples of Reward Programs based on these types and implemented by clients. The first two charts show a general implementation of the two program types shown above and then there are some examples for specific business categories.

Business Type General Retail (option 1)
Type Example
Award Points per band (excluding delivery) 5 points for every 5 Euro spent
Redeem Defined Discount based upon points gathered in 1 year.

Points accumulate throughout the year and reset on January 1st.

The more a person spends in a year the larger the discount they get for the rest of the year.

100 points gives 1% discount on all purchases for rest of year

500 points gives 2.5% discount on all purchases for rest of year

1500 points gives 5% discount

2500 points gives 8% discount on all purchases for the rest of the year

5000 points gives 10% discount on all purchases for rest of the year

Promotions Extra points on high margin products

Extra points for higher value purchases

Business Type General Retail (option 2)
Type Example
Award Points per band (excluding delivery) 5 points for every 5 Euro spent
Redeem Defined value discount.

Points reset on use.

Percentage higher discount the more points accumulate means people may aim for the next level.

100 points = €5 discount

250 points = €15 discount

500 points = €40 discount

Promotions Extra points on high margin products or clearing stock

Business Type Restaurant
Type Example
Award Points per band 10 points for every 10 Euro spent
Redeem Tiered with sales
  1. Free Coffee after dinner
  2. Free Desert
  3. Free Starter
  4. Free house wine with dinner
  5. Second Dinner is free
Promotions Extra points on quiet nights, high margin products 50% extra points on Wednesdays before 9pm

Business Type Takeaway
Type Example
Award Points per band (excluding delivery) 5 points for every 5 Euro spent
Redeem Tiered with sales
Promotions Extra points on high margin products or large orders Extra point for orders containing starter plus main meal

Business Type Taxi
Type Example
Award Points per completed telephone booking 5 points for every completed booking
Redeem Tiered Discount based on booking made. Discount can be limited. 50 points: 2% discount

180 points: 5%

300 points: 10%

All up to limit of €10

Promotions Extra points on bookings made the day before or regular booking
Business Type Video Shop
Type Example
Award Points per rental 5 points for every rental
Redeem Tiered with sales 50 points: 1 free rental

75 points: 2 free rentals

100 points: 3 free rentals

Promotions Extra points on high margin products 2 points for popcorn
Business Type Hairdresser
Type Example
Award Points per band 5 points for every €20 spent
Redeem Tiered with sales 5% discount for every visit after 1000 points

10% discount for every visit after 5000 points

Promotions Extra points on high margin services or on products.
Business Type Bar
Type Example
Award Points per pint 1 point per drink
Redeem Tiered with sales Every 10th drink free (with a price limit)
Promotions Extra points on high margin products
Note: This model allows quick transactions but limits the application for meals etc.
Business Type Off Licence
Type Example
Award Points per band 5 points for every €10 spent
Redeem Tiered with sales 500 points gets 5% discount

750 points gets 8% discount

Promotions Extra points on high margin products
Business Type Cafe
Type Example
Award Points per band 5 points for every €5 spent
Redeem Tiered with sales 100 points: free muffin with coffee

150 points free coffee and muffin

Promotions Extra points on high margin/promotional products
Note This allows more flexibility than the standard “every 10th coffee free” option and also encourages purchase of additional items but is slightly more time-consuming to enter points.

Planning a Points System

One of the most daunting actions for people when deciding whether to implement a Reward Program or not is defining the points system. And the most common mistake made is to define a complex model. I’ll take a bit of time in further posts to outline systems that work for existing clients of ours but first there are a few basic rules that help define the end system.

Keep It Simple
Simplicity works for you and easy for your customers. The more complicated the program the less likely either is to be confused about what to award and what is due. It is also much easier to add rules at a later date as you see what works and what doesn’t.

Give More Points
It is easy to award 1 point per Euro spent but it is just as easy to award 5. All you need to do is increase the number of points required for each Reward accordingly . This also has the advantage of giving you the freedom to adjust numbers at a later date or to run bonus point promotions.

Use Points to Encourage Greater Sales
While it is easy top give 1 point per euro spent it can be more advantageous to award 10 points for every 10 Euro spent. In this way you might tip people about to spend €9 into finding something to purchase to reach the points band.

Get Something Back Yourself
Give Rewards as part of a spend where possible: If a person has to spend money to get something back it reduces the cost to you since it generates revenue. For instance a restaurant could offer a free bottle of wine with the next meal as the reward, ensuring the customer has to return and spend money to get the reward.

Tier Rewards
It is simple to offer a single Reward when a customer reaches a specific number of points. However if you can offer tiered Reward system that remains simple you make the program appealing to more people and also increases sales. People are different and some will want to start spending their points immediately while other will aim to collect points towards a more valuable reward – even if that reward requires them to spend proportionally more.

Example: A restaurant can offer the following reward tier;
100 points: Free coffee for 2 after dinner
250 points: A free bottle of wine with dinner
600 points: Cheapest dinner is free between 5-7pm.

Consider Margins
You need to balance the points awarded more to the margin than the resale value. If your margins are all approximately the same then points can be awarded evenly however if you have some high-value but low-margin goods you don’t want the points awarded on those sales to mean that the customer is entitled to lots of free high-margin goods.

Run Specials
While the everyday points are the main draw you can run simple specials to drive extra business in either a general or controlled manner. These should be simple to understand as well. For instance a “Double Points” promotion can be timed for quiet mornings or a “Double Points on Item x” will prompt sales of higher margin items or expiring stock.

FastSwitching and some minor improvements

I want to highlight a new feature and some minor changes to the functionality of myrewardcard.ie which are designed to make it easier to operate on a daily basis.

FastSwitching

FastSwitching is new functionality that allows day-to-day use to operate faster. For people using scanners or keyboards the previous method forced them to change to a mouse and select a new function when required. So if they were awarding points and the next customer needed to redeem them the user had to put down the scanner or keyboard, pick the mouse, click on the Redeem Points link,  Redeem the points and then use the mouse to return to the Award Points screen.

FastSwitching removes this need by allowing 1-3 letter codes to be typed or scanned in order to switch screen.

Each of the 5 Card Action Screens has its own code

PAGE CODE
Authorise Card au
Register Card reg
Award Points a
Redeem Points r
Search s

Simply type the code into the card serial number box on any of the above pages and hit return. The codes can be entered in any combination of uppercase and lowercase. We have also prepared some barcodes which can be scanned and these are available for download in the new Resources section outlined below.

Default Pages Improvement

Not so long ago we introduced the ability to set the default page that would be selected when you complete an action such as awarding points. It was possible to select from any of the 5 Card Action pages: Authorise Card, Register Card, Award Points, Redeem Points, Search. One option we did not include was Return To The Same Page. This oversight has now been corrected and it is possible to have the system return to the same action page. So if you want to redeem points for a few customers followed by awarding some for a number of others you won’t have to continually switch around.

This option is available under Operations/misc defaults.

Resources Area

Prior to today the only resource available was the User Manual and this was listed separately on the main menu. We have now replaced this link with a Resources one which will bring you to a new section intended for future additions. It currently contains the user manual and some other general information designed to help you make the best use of your Reward Program. I intend adding additional items here, including widgets and code snippets you can incorporate in your own website.

New Chart

We have added a new chart to the Statistics Dashboard. This shows the total points issued and redeemed in the premises. It lets you see the points outstanding at a glance.

I hope you find these additions to be of use. Apart from FastSwitching they are minor improvements rather than major changes. But I have been working towards introducing some major functionality and hope to have some announcements soon.