Managing points expiration in your Rewards Program

IN THIS ARTICLE:

Benefits of points expiration

When loyalty point redemption is not limited in time, customers lack the motivation to make additional purchases within a specific timeframe. By implementing points expiration, you create a sense of urgency, encouraging customers to return and make purchases before their points expire.

This feature helps drive repeat business and keeps customers engaged with your store. If points don’t expire, there’s no external incentive for customers to shop again, reducing the effectiveness of your Loyalty program.

How to set a points expiration date in Growave

In the Growave admin panel, navigate to Rewards → Settings and scroll to the Points expiry section.

Enable the function and choose the expiration time in days. Here you can also set the reminder emails and a notification period before points expiration:

NOTE:

  • If you set 100 days as the expiration period and change it to 50 after 10 days without disabling this feature, the countdown continues from the initial activation date. Disabling and reactivating the setting restarts the countdown.
  • The expiration date applies to the total points accumulated (even those earned before this setting was first activated) and updates with each new activity.

EXAMPLE:

  1. Customer John earns 1000 points on January 1, 2024.
  2. Points expiration is set for 365 days.
  3. John's 1000 points will expire on January 1, 2025.
  4. If John earns 100 points on December 31, 2024, his new total balance (1100 points) will expire on December 31, 2025.

Pros and cons of enabling points expiration

Pros:

  1. Encourages repeat purchases: Expiring points motivate customers to earn and redeem points, driving more sales.
  2. Keeps your brand top-of-mind: Customers will likely remember your brand and their loyalty balance to avoid losing points.
  3. Simplifies program management: Points expiration limits the potential for customers to redeem large quantities of rewards at once and helps distinguish active users from dormant ones.

Cons:

  1. Potential negative customer experience: Poorly implemented expiration policies can make customers feel cheated, leading to dissatisfaction and frustration.

Loyalty programs should be built with both parties' interests in mind. Imagine getting an email saying if you don’t spend your points the next week, they will disappear. This would likely cause frustration and a sense of unfairness.

How points expiration works in Growave

In Growave, we offer dynamic expiration for the total points balance. Points expire after a certain period if they aren’t used or if the customer doesn't earn more points.

Dynamic expiration is effective for increasing purchase frequency, as it allows customers to save points for bigger rewards without feeling immediate pressure to redeem them.

Choosing the right points expiration period

Each company has unique customer behavior, which is important to consider when setting the points expiration period.

  1. Calculate Purchase Frequency:
    • Number of orders (within 365 days) / Number of unique customers who made an order (also within 365 days) = Average purchase frequency
  2. Determine Points expiration period:
    • 365 days / Average Purchase Frequency (during 365 days) = Time between purchases

EXAMPLE:

  • Number of orders in 365 days: 1000
  • Unique customers who made an order: 250
  • Average purchase frequency: 1000 / 250 = 4
  • Points expiration period: 365 days / 4 = 91 days

This approach ensures the expiration period aligns with your sales cycle, making it more effective for your specific business model.

How to ensure customers are aware of points' expiration date

  1. Mention the points expiration logic in FAQ: Clearly outline the expiration rules in the frequently asked questions section to keep customers informed.
  2. Enable notification about points expiration: Set up automatic notifications to alert customers about their points' expiration date.
  3. Utilize Klaviyo integration for reminders: Configure multiple reminder notifications before the points expire using Klaviyo integration.
  4. Include points expiration rules in the Terms & Conditions: Clearly state the points expiration rules in your Terms & Conditions document.

Conclusion

Deciding whether points should expire depends on your company’s goals and marketing strategy. Expiration can help manage liability and control the program but might affect customer experience. Evaluate your competitors' strategies and test different approaches to find the best solution for your loyalty program.

If you have any questions or need further assistance, please reach out to us at support@growave.io or use the chat icon in the bottom-right corner. We’re here to help! 🤗

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