Points expiration policies are trying to nickel and dime customers out of their hard earned points.
Loyalty Strategy

Nickels and Dimes: The Case for Customer Leniency in Points Expiration

Photo by Josh Appel on Unsplash

If you have thousands (or even millions) of customers, there’s an easy way to boost your bottom line.

Consider this: if even just a small proportion of these customers are approaching their points expiration deadline, you can erase a lot of point debt from your balance sheet by seeking out the most expedient ways to eliminate them. There are lots of ways to get creative and ensure these customers don’t get a chance to redeem their stash — for example, by analyzing email metrics to determine the worst performing days for open rates and sending expiration reminder emails on those days.

So, be honest, did you read the preceding paragraph with shock and alarm? If so, good.

Hopefully, no one in the industry carries these attitudes into the strategic implementation of their programs. But how customers feel is a different matter. There is a growing sentiment that loyalty programs are trying to nickel and dime customers out of their hard earned points, which of course undermines the hard work loyalty vendors conduct to build brand sentiment and encourage participation. According to Liz Crawford, CEO of Crawford Consulting:

“Consumers are hip to the fact that loyalty programs benefit the retailer. Some are wary of feeling ‘used’ to fuel the profitability of the business.”

Occasionally, horror stories about points expiration policies make headline news. These spurious practices have the power to do the most harm. If even a glimmer of doubt is cast upon the value of these programs, the brand damage done can easily overshadow the cost of the points in question.

Such was the case recently, when a story in Canada made national news: Aeroplan canceled the entire point balance of a longstanding member, costing her nearly half a million miles, in the midst of a global pandemic, due to account inactivity.

Because of the government’s national recommendation against non-essential travel outside the country, the customer didn’t check her balance or make updates in her account. She’s an “old school” member who uses points strictly for travel flights, even though there are many additional purchases and activations which could be made with Air Miles.

It’s a messy story that should make loyalty marketers pause and think. How did this person slip through cracks? By Air Canada’s own policy, points expiration terms have been paused twice before a permanent cancellation of the tactic this summer. And there have been many more external initiatives to try and hinder the practice of points expiration. Ontario, for example, introduced consumer protections in 2018 that banned the cancellation of expired points for many reasons — although, notably, this policy does not enforce “expiry due to inactivity”, the circumstance which surrounds the latest Air Miles debacle.

As of reporting, Air Canada reviewed the case and decided not to re-establish the points balance of this customer. Naturally the customer said she’d now take her personal and business travel bookings elsewhere — along with potentially countless others who read this story and the ripples it created in the news cycle.

Doing some quick math, it’s easy to determine that Air Canada saved about $60,000 by cancelling this member’s points. Over the course of many customers, this appears to add up to material cost reductions if brands strictly enforced these policies. But is this worth the cost of the frustration and disillusionment that saturates the attitudes of disenfranchised customers? When put into perspective, even the biggest values can start to feel like nickels and dimes.

Nickels and Dimes: The Case for Customer Leniency in Points Expiration
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