Properly managed loyalty programs are becoming increasingly common in today's retail landscape. Most Australians are members of a loyalty program, and usage is going up.

Understanding Point Expiry Mechanics

Point Expiry in Loyalty Programs: A Smart Strategy for Your Retail Business

You're likely familiar with loyalty programs, you cannot get away from them today. You may have seen their power to keep customers coming back. Today, let's dive into a crucial aspect many small business owners overlook: point expiry.

Why Point Expiry Matters

Point expiry isn't just about managing your books, although it helps there as large numbers of unused points can be financially troubling, as some of my clients have found out.  It is a powerful tool for driving customer engagement. Customers are much more motivated by the possibility of losing their rewards than they are by the possibility of gaining new ones. This psychological trigger can significantly boost your program's effectiveness.

Setting Up Your Expiry System

Choose the Right Timeframe The sweet spot for most Australian retailers is 12 to 24 months. This gives your customers ample time to earn and redeem points while keeping your program manageable. We tend to recommend 12 months. 

Clear Communication: Your POS system should automatically track point balances and send timely reminders about expiring points. Your POS System makes this process seamless, as it handles everything from:

• Point balance tracking
• Automated expiry notifications
• Redemption monitoring

Making It Work for Your Business

Clever Program Design: Your loyalty program should offer multiple redemption options to prevent point hoarding. Consider including:

• Essential rewards that are easily attainable
• Premium rewards for higher spenders
• People love charitable donation options for unused points; remember to select a few non-partisan charities they can pick from. 

Managing Customer Expectations

The key to success is transparency. Your POS system should provide clear visibility of:

• Current point balances
• Upcoming expiry dates
• Available redemption options

Measuring Success

Your POS analytics should track crucial metrics like:

• Redemption rates
• Customer engagement levels
• Revenue impact

Remember, a well-managed point expiry system isn't about taking away value from your customers - it's about creating a dynamic program that keeps them engaged and returning to your store.

Want to learn how a modern POS system can help you manage your loyalty program more effectively? Let's chat about finding the right solution for your business.

Traditional loyalty programs based solely on points have hit a plateau. This has been the subject of a webinar I attended, and I have read several articles about it. The problem is that almost every business now in Australia is doing it, so the problem is that a business program is now competing with so many companies that it is struggling to make its program noticed. 

For some businesses, points work brilliantly, and we have no reason to believe that a traditional program of buying eleven cards/coffee and the 12th is free would not work well in the future. 

However, many businesses need differentiation, which is why many loyalty programs are moving into personalisation! Its called CRM.

"Mass marketing is dead. Personalization is the new frontier for loyalty programs." 

Now, I am worried about this in my client base:

The Challenges of Personalization for Smaller Retailers

Many of my clients are not huge and will face the following problems.

• Limited Data: Unlike large corporations, they might not have vast troves of customer behaviour data.
• Experts: Access to sophisticated consultants is lacking; they are often too busy to attend the many conferences that discuss this to get ideas.
• Scale: It's tough to match the "wow" factor of rewards programs offered by big brands with extensive resources.
• Time: Large brands are willing to run at a loss for ages to establish their program.

Overcoming the Obstacles: Practical Solutions

We have what we have; we can only play the hand we have, so we need actionable strategies for small retailers to personalise their loyalty programs:

• Focus on Key Data: Your POS System collects the most valuable data points, e.g. purchase frequency and spending habits.
• Simple Personalization: Often simple ideas work well, e.g. birthday discounts and email alerts for new products based on previous purchases; if a parent buys back-to-school products from you, what is wrong next year sending the parent an email that you have back-to-school products?
• Local: Emphasize the genuine connection you have with the local community.
• Local SEO: Make sure you appear in the local Google search high up.
• The Human Touch: Enhance personalisation with handwritten thank you notes on your packing.

Affordable Tech to Boost Your Program

• Your POS as a CRM: Your Point-of-Sale systems include built-in customer relationship management tools that allow you to track data, send targeted promotions, and build customer profiles.
• Social Media Power: Please interact directly with your customers on social platforms such as Facebook (consider it free advertising).
• Email Marketing: Use email newsletters to tell people you exist. Let me know if you do not know how to do this, and I will point you through it.

Additional Tips:

• Be Adaptable: Don't be afraid to experiment and refine your rewards program based on what works for you.
• Are you an expert in something you sell?: If so why not run a short course? 

Conclusion

"Personalization is the heart of every successful business. Treat every customer as a unique individual, not a number."

Personalisation doesn't require breaking the bank or having massive amounts of data. You can start with meaningful steps and gradually build on them. Remember, genuine connection is the ultimate competitive edge! Take the first step, experiment with personalisation, and watch your loyal customer base grow.

Thinking about it here are some reasons why someone would pick not to have a loyalty program.

Much of these difficulties are particularly true in the set-up phase of the program

Costs

Our point of sale software gives you the tools you need to run such a program, but you will need to provide your customers' benefits to make it work. 

Work and skills

It is work.

You do not feel your organisation has the social media skills now days required to make it work plus the management expertise to make it work. It needs constant thought and fine-tuning to find out what is working and what is not working.

Customers' information

You do not feel that you can get enough peoples information to make it work for example you think you cannot get enough peoples email addresses. You need about 500 to 1000 people to gain critical mass.

Lack of time

Busy enough AS IS and they do take time to set up, and they will take time to manage. Based on our clients' comments, an hour a week. 

Commitment 

Once you have a loyalty program in place, they can be difficult to stop if they do not work out. Customers can get upset if they feel that you are cheating on them. Always remember if starting one that you do need an exit clause. 

The other problem can be if you feel that your organisation objectives may change shortly and you cannot make the commitment.

You have infrequent customers

We have a client in a holiday area, and they tell me that the people are always changing and that they see most of their customers for about a week or two and then they are gone. The locals are only a tiny part of their business. 

Offers cost you

The expected cost of the proposal is higher than the expected return. The overwhelming number of customers will buy anyway from you at your prices, so there is no point in offering any benefit as such as all it is doing is giving away value to my existing clients who is willing to pay full price.
 

So What Alternatives are there

Here are some ideas.

Nothing

Often nothing is the correct response. Why interfere with something that is working,

"If it is not broken do not fix it".

Discount vouchers

This is where you offer every customer a discount when they buy products in your shop at the next sale. Here is how to set it up in our system, which would give you an incredibly powerful discount voucher system.

Be warned that these discount sales programs are much more expensive then loyalty programs, but they do produce results. See here for numbers.

Guerrilla Marketing

If you are near a major operator that brings in traffic consider how to be able to piggyback on their operation. Let them do the work in getting customers coming to what you are doing here is trying to divert some of their traffic to you eg near a supermarket, a coffee shop might do well.