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As we’ve highlighted in Part 1 and Part 2 of this 3 part Mind the GAAP series, beginning in 2018, changes in accounting for structured loyalty programs (i.e. points, miles, stars, etc.) may have significant potential impacts on your company’s financial performance. If you missed those earlier installments, we encourage you to take a few minutes to skim through them. For those who want the quick summary, new accounting rules went into effect in 2018, requiring all US companies to change their accounting for structured loyalty programs to defer a portion of current sales to the loyalty currency and recognize revenue only upon points/currency redemption (for rewards) or expiration (breakage). With many programs, this resulted in a short-term reduction in revenue recognition and increase in program liability (deferred revenue). In this final installment, we’ll share some best-in-class strategies and tactics to maximize loyalty program results in this new era, based on Brierley+Partners overall design philosophy and approach
Strong Programs Follow Core Principles
Regardless of the accounting rules in place, successful loyalty offerings deliver in 3 critical ways:
Six Strategies to Maximize Loyalty Program Performance
Leveraging our 3 core principles of successful loyalty programs, Brierley highlights 6 strategies to maximize customer engagement and your program’s bottom line contribution:
1. Auto-Issued Rewards to drive engagement and leverage digital technology: Rewards are automatically issues at pre-determined threshold levels to minimize banking of points and spoilage. Some examples:
GameStop’s PowerUp Rewards limits point banking to Elite customers