When loyalty rewards expire, so does customer loyalty.

When loyalty rewards expire, so does customer loyalty.
(AP Photo/David Zalubowski)

Reward programs can be lucrative for loyal customers, but when companies add many rules and restrictions to a loyalty program, it can actually have the opposite effect.
Customers are very insightful and understand when something is valuable and something is not. An example of this is when the rewards expire. From the customer’s point of view, that makes no sense. Have they won the rewards and now society takes them? This is not the basis of a positive customer experience.
In fact, it is the Department of Finance that sets these rules. When a customer earns rewards, this appears as a liability in the company’s balance sheet. You may or may not have to pay these rewards, so the money must be reserved when the customer decides to redeem them.
When the rewards expire, match the balance and eliminate the responsibility. But it’s not a good customer experience.
Sometimes a customer simply takes a break in a brand for one reason or another. They may be starting to take a route that your favorite airline does not do. Does this mean they should lose the rewards earned on their favorite airline? Does this mean they are no longer loyal to this business? And yet, most airline programs have an expiration clause stipulating that if you do not earn or redeem miles within a certain time, you lose them.
Fortunately, the wind is changing in the airline industry. Last month, United Airlines announced that its frequent flyer miles would no longer expire, joining Delta and JetBlue. (The American, Southwest, and Alaska Airlines airline miles still expire with 18 to 24 months of inactivity.) This is a much more customer-friendly policy.