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Brands take big leaps to revamp their loyalty programme offering.

Customers demand choice & brands are giving it to them. In the last 18 months we’ve witnessed brands changing their programme propositions to meet the demands from consumers to allow more flexibility when it comes to rewards earning and redemption.

Whilst a great deal of consumers choose to redeem points frequently, there are many who practice patience with regards to points accumulation. In addition, as reward programmes expand, so do consumer preferences in terms of the types of rewards they actually want. With this in mind, it is important that brands allow for consumers to have the freedom of choice in terms of points saving, frequent spending and rewards options.

Starbucks has recently announced that it will be changing its programme (USA & Canada) to allow members to start earning rewards faster and have more options to choose from when redeeming.  It is also never expiring points.

“There are people who like to spend at very low levels and there are people who like to hoard a lot of points.”
Matthew Ryan, CMO of Starbucks

Starbucks will now offer members the chance to redeem their points for different rewards (offering more choice) for different amounts of points (offering more flexibility). This means, members can redeem points (as little as 25) against smaller purchases such as an extra shot of espresso.

Like, Starbucks, brands need to ensure their loyalty offering caters to both the point spenders and savers. Point-saving consumers need the capacity to save without impending expiration of their points, whilst point spenders need quick and seamless redemption options.

This is also why some brands have chosen to no longer expire points which is a big mind shift change from traditional loyalty strategies relying on high breakage volumes due to points expiry. Driving increased redemption can also be a costly exercise for companies as it requires increasing customer awareness (through increased communication) and potentially increasing the richness of rewards/benefits on offer. However, this cost can be offset by the benefit of increasing customer retention. In our experience, we have witnessed a clear interplay between redemption and attrition.

In conclusion, increased redemption rates benefit not only the customer in his / her experience but also the brand which will benefit from more engaged customers, richer data as a result and a clear decrease in attrition.