This blog was written in response to the article "Aeroplan, it’s time to stop grabbing back the miles of your inactive customers" by Rob Carrick, that was published on January 14, 2020 on https://www.theglobeandmail.com/
Points expiry and breakage have been among the most discussed and hotly debated topics plaguing traditional loyalty. This most recent headline, “Aeroplan, it’s time to stop grabbing back the miles of your inactive customers” highlights the continued relevance, and frustration, of this familiar topic to consumers.
Similar points expiry missteps were made by the AIR MILES reward program—missteps that brought significant attention to points expiry rules in Canada, and that some say tested the trust consumers had for this ailing loyalty veteran. In fact, the attention prompted the Canadian government to intervene with legislation to protect consumer rights. For instance, on January 1, 2018 in Ontario, new rules came into effect that stopped the expiration of reward points based only on the amount of time that has passed since they were earned. However, it’s interesting to note that this legislation also outlined that, in some cases, reward points may still expire—for example, if the reward program closes accounts when a member is inactive, if the program issues a voucher as a reward that then expires (for example, a discount on a purchase), or if the reward points can’t be redeemed for any single item over $50.
Inside many organizations operating traditional programs with redeemable currencies, the topic of breakage has been a source of CFO–CMO tension related to managing loyalty’s cost budget. On one side of the debate, the CFO counts on breakage as a mechanism to mitigate the cost of loyalty within the business. On the other side of the debate, the CMO looks at breakage as a measure of the relevance of the loyalty value proposition to its Members, and believes that high breakage indicates a gap between the program promise and the relevance of the program benefits to its Members.
Meanwhile, it’s important for organizations to understand the intentions of its Members, and not misinterpret points accumulation without a redemption event as a signal of disengagement. In mid-frequency sectors, in particular, where reward values are high (e.g., air travel with high-cost airfare), and in which it may take time to accumulate sufficient “funds”, expiry rules can trigger Member defection, rather than renewed engagement.
Modern loyalty frees itself from the challenges of redeemable currencies and focuses instead on Member benefits and rewards that put the customer at the centre of the thinking. The new currencies of loyalty don’t just revolve around the moments of earning and redemption, instead they are designed to enable experiences for Members that solve for real pain points across the whole customer journey; experiences that authentically fulfill on Members’ real-world needs as human beings, and that also support the organization in effectively delivering on the promise its brand is making to customers.
The market is watching with great anticipation the new program Air Canada will launch in June 2020, and there are many who are cheering this beloved Canadian airline on to succeed in bringing new experiences, new appeal and renewed enthusiasm to the Aeroplan program that they acquired in early 2019. It follows that many Members—including some who are currently inactive—may need a little grace during this period of anticipation leading into June to re-engage and keep their points balances in good standing.