Points expiry - short, long or evergreen?

One of the key questions we're asked when designing loyalty programs is - what should the life of the points be (or how quickly should they expire)? Our analysis frequently shows that performing programs with a three year points life generally perform as well as programs in which points are evergreen or never expire.

Research into a retail loyalty program by Yuping Liu, Ph.D presented at June's INFORMS Marketing Science Conference in Michigan USA ( http://www.yupingliu.com/wordpress/2009/06/15/loyalty-programs-and-crm-insights-from-marketing-science-2009-conference/) may have found a different trend. In a piece of research that looked at a single convenience store moving from no points expiry to monthly expiry and found that participation in the program as well as sales increased.

Consumers told - don't let your shopping rewards program change your behaviour

A news item on Australia's 9 Network titled "Free Shopping Rewards Programs in Australia" (http://www.youtube.com/watch?v=bcXux06jNBQ) carried some comment from industry watcher Cannex.

The item reviewed Myer 1, Woolworths Everyday Rewards (and their Qantas partnership) and the Fly Buys programs. Cannex was interviewed and advised viewers not to let the various programs they participate in change their shopping habits. Specifically Cannex was talking about not shopping for more than you needed or paying more than you should. Sound advice.

But the fact that these programs do indeed change shopper's habits, albeit it in slightly subtler ways. Clearly none of these program providers would want their customers to buy more than they need or pay over the odds.

They do though want customers buy what they need from their own stores (rather than a competitor's) and also they'd appreciate customers paying full price on as many items in the basket as possible. The more successful the program - the more frequently these two things will be happening.