5 Reasons Your Loyalty Programs Points Should Expire

You probably already know that having a great loyalty program is essential to customer retention and optimizing your customer service potential. The goal in offering incentives for ongoing loyalty is to reward your best customers, but your loyalty rewards system must also be beneficial to your business. Although some consumers may find more of an appeal in loyalty programs that offer points without an expiration date, that model isn’t always the best option for your company.

Here are the 5 biggest reasons why your loyalty program points should have an expiration date:

1. To Stimulate Sales with a Sense of Urgency

One major impact of a loyalty program with points that expire is the temporal boundary established by a looming expiration date. When consumers are not given any restrictions on the when they may redeem their loyalty points, they have no reason to accumulate a certain amount within a given time frame—meaning they are not particularly motivated to make additional purchases in the near future. Depending on the product and industry, there may be no obvious benefit to buying more now versus buying more two years from now. However, placing an expiration date on points earned through your loyalty program encourages consumers to spend more at once and to make larger purchases.

2. To Motivate Repeat Customers

An approaching expiration date not only motivates customers to buy more of your product in the hopes of earning a bigger loyalty reward, it motivates them to spend again soon. Of course, your loyalty program must be appealing enough to entice repeat customers, but as long as you are offering real value, consumers are more likely to become regular shoppers if the benefits are made clear to them.

On the other hand, if your loyalty rewards program points don’t expire, consumers have no extrinsic motivation to shop with you again soon and they may or may not become repeat customers. The time constraints create a subtle pressure to spend more and to make multiple purchases in order to gain more rewards before they points expire.

3. To Reward Brand Loyalty

There are a number of ways to foster brand loyalty in your consumers, and offering a truly valuable rewards program is one method of doing so. Designing a loyalty program with points that expire does not detract from brand loyalty so much as it explicitly rewards those consumers who demonstrate such loyalty. Frequent shoppers and repeat consumers will benefit most directly from a loyalty program with points that expire. This model emphasizes that frequent consumers are rewarded and can even strengthen brand loyalty among those who shop with you on a regular basis.

4. To Create New Marketing Opportunities

Another advantage of loyalty programs with points that expire is that they create excellent marketing opportunities. For instance, you can send out email reminders about an upcoming expiration date to serve the dual purpose of informing your consumer and advertising your current offerings. Contacting consumers about an upcoming redemption deadline keeps them informed, which is good customer service, and increases communication with your consumers.

One of the worst mistakes a business can make is failing to be transparent with their valued customers—a fact which is pertinent to companies offerings loyalty programs with points that expire. You don’t want your customers to feel tricked or uninformed, so email marketing can function as a practical reminder that they have a certain time period to capitalize on your loyalty program and also helps to establish your company as an open, honest, and attentive participant in consumer engagement.

5. To Keep Your Brand Top-Of-Mind

Time constraints can make people more conscious of their choices, meaning expiring loyalty points can help keep your brand in the forefront of the consumer’s mind. When a consumer knows a deadline is approaching, they become more aware of whatever it is that the deadline signifies. In this case, the upcoming expiration of their loyalty rewards points may trigger more frequent thoughts about your brand and products, leading to a greater likelihood of that consumer making a purchase or redeeming their points before the set deadline.

In short, loyalty programs with points that expire encourage top-of-mind awareness for your brand. Even consumers who don’t manage to redeem their points before an expiration date recognize the value in doing so and may feel motivated to shop with your company in the future in order to capitalize on that lost value.

The Flip Side of The Coin

However, a loyalty program with points that expire is not the right solution for every company looking to create an effective rewards system. The most important factor in designing a loyalty program is that it aligns with specific long-term company goals. Now that we’ve seen 5 positive reasons to offer points that do expire, let’s balance out the discussion with a quick look at 5 advantages of loyalty programs with points that don’t expire.

1. Reduces pressure to purchase, which can lead to happier customers.
2. Complements companies and products that have longer sales cycles.
3. Plays into a long-term marketing strategy by developing a benevolent brand identity.
4. May provide a competitive advantage over brands with more constricted loyalty programs.
5. Can lead to greater satisfaction levels and consumer brand advocacy.

 

Tagged expire, Loyalty, motivation, points, Rewards