Plan Loyalty Program Exit Strategy at Launch

The exit strategies for rewards or loyalty program aren’t often talked about, but having a clear plan up front can be the difference between maintaining profitable customers or defending multiple lawsuits. No one likes to think that their brand new program might fail, but it is critical to consider how you might terminate the program up front when you launch it.

?

?Leave yourself multiple outs

• Define program end dates or points expiration dates up front
• Either say the program ends on a certain date or that points expire after a set time period
• You could also state that points are forfeited after a time period for inactive accounts
• Preserve the right to devalue either the earn rate or the redemption rate

?

Communicate clearly and frequently

• Be explicit in the Terms and Conditions on how customers will be notified of any changes and how much notification will be given.
• First and foremost thank your customers for their loyalty if you must modify or terminate the program
• Give context on why the program is ending and what next steps are
• Communicate through multiple channels and plan for more than one communication

Accounting

• How will you account for redemption liability both while the program is running and once you have announced its closure
• Do you need to create short term incentives to encourage immediate redemptions and reduce points liability?

?

Convert to a new program

• If the program is being replaced, clearly communicate if there are any carry-overs from the old program
• Will premium members maintain their status or do they start from scratch?

?

Segment your customers

• Identify your most loyal and most profitable customers (you should be doing this already anyway)
• Do you need to have separate retention efforts for them?
• Are there additional rewards you can offer them or other perks outside of the loyalty program?

?

Terminating a loyalty program doesn’t have to mean lost or disengaged customers. The more you plan for a program’s potential end up front, the greater chance you will have of retaining your most profitable customers

?

#loyalty #rewards #exitstrategy #retention