Points expiration is a great tool for motivating customers to actively participate in your Rewards program, spend points, and make purchases. However, if you set a points expiration date without studying the behavior of your customers specifically, it can affect your Brand image.
Before enabling this setting, let's delve deeper into this topic and review a few key points.
Pros and Cons of enabling points expiration
Encourages customers to come back to your store
Without points expiration, customers have no pressing need to earn and redeem points, which might limit the number of repeat purchases and sales overall.
Keeps the brand on top of your customer's mind
Nobody likes losing, and this is exactly how expired points feel. To avoid this, customers will be more likely to remember your brand and their unused loyalty balance to keep participating in your membership program.
Easier program management
With an expiration policy, you can limit situations where customers with indecently high loyalty scores come into your store to claim dozens of free rewards in one go. Moreover, stagnant high balances make it difficult to differentiate active from dormant users.
Worsens customers’ experience
If your expiration policy is not well implemented, it might lead to your customers feeling cheated. Loyalty programs should be built with both parties’ interests in mind. Put yourself in their shoes for a moment. Imagine getting an email saying that if you don’t spend points in the next month your points will disappear. I bet that would piss you off a bit.
How the ‘Points Expiration’ works in Growave?
In Growave, we offer you to set up dynamic expiration for the whole points balance where points expire after a certain amount of time if they aren’t used or the customer didn’t earn more points.
A dynamic expiration is one of the best ways to increase your purchase frequency with a loyalty program. This type of expiration allows you to motivate customers much more effectively. This is because they don’t view expiration as happening in the immediate future, they can continue to save points for bigger rewards (if they choose).
You can find more details in the following article.
Which period I should set up for points expiration?
Each company has a unique customer behavior which is important to consider in the points expiration period.
1) First, you should find out your Purchase frequency:
Number of orders (365 days) / number of unique customers who made order (365 days) = AVERAGE PURCHASE FREQUENCY
2) Now we can find out your Points' Expiration period. Here we can use ‘Time between purchases’. We want to set up point expiration so that customers who are considered dormant (haven’t purchased from you in while) can be emailed telling them their points will expire.
365 days/Average Purchase frequency (during 365 days) = Time Between purchases
This method takes your company sale cycles into account rather than just setting it. Maybe you sell furniture or household appliance which someone buys every 3-5 years. Having a point expiration of 6 months is not going to do you much good.
What you can do in Growave to ensure that your customers are aware of points' expiration date?
- Mention the ‘Points expiration’ period and logic in FAQ
- Enable notification about the points expiration date
- You can make double/triple notifications before points expiration using our integration with Klaviyo
- Mention points expiration logic and rules in the Terms& Conditions doc
In conclusion, should points expire or not? There are pros and cons to both sides of this question. Ultimately, it comes down to what your company wants to achieve with the loyalty program and your overall marketing strategy. If you're looking for better liability management and more control over your program, then expiration may be a good option for you. However, if you're concerned about breaking customer experience and putting people off from joining your rewards program, then maybe expiration isn't the best decision. The next step is to analyze what your competitors are doing and test different approaches.