Hold points in a loyalty program refer to points or rewards that a member has earned but cannot yet access or redeem due to certain conditions or restrictions set by the program. These points are essentially “on hold” until those conditions are met. Think of it like a pending transaction. The points are credited to the member’s account but are not immediately available for use.
Common Reasons for Hold Points
- Purchase Verification/Return Period: This is a very common reason. Points earned from a purchase might be held until the return or exchange period for the purchased items has expired. This prevents members from earning and redeeming points on items they might later return.
- Minimum Activity Requirements: Some programs might require a certain level of activity (e.g., a specific number of stays, flights, or purchases) before newly earned points become fully accessible.
- Tier Qualification Period: Points earned within a specific period might contribute to tier qualification but aren’t fully redeemable until the qualification period ends and the new tier is confirmed.
- Promotional Offer Conditions: Bonus points earned through a specific promotion might be held until the promotion’s terms and conditions are fully met (e.g., completing multiple purchases, staying a certain number of nights).
- Fraud Prevention: In cases of suspected fraudulent activity, points might be temporarily held for investigation.
- Processing Delays: Occasionally, there might be a short delay in processing and fully crediting points to a member’s account.
- New Member Waiting Period: Some programs might have a short waiting period for new members before their initial points become redeemable.
Why Loyalty Programs Use Hold Points
- Preventing Abuse: The most significant reason is to prevent members from exploiting the system, such as earning and redeeming points on returned items.
- Ensuring Genuine Engagement: Hold periods can encourage sustained engagement rather than one-off actions solely for immediate rewards.
- Managing Liability: By delaying redemption, programs can better manage their point liability and forecast redemption patterns.
- Aligning Rewards with Actual Value: Holding points until a transaction is finalized ensures that rewards are tied to actual completed business.
- Operational Efficiency: In some cases, hold periods might align with internal processing timelines.
How Hold Points are Typically Communicated
Transparency is crucial when using hold points. Loyalty programs should clearly communicate the following to their members:
- The existence of hold points
- The reasons why points might be held
- The duration of the hold period or the conditions required for release
- Where members can view their available and hold point balances
This information is usually found in the program’s terms and conditions, FAQs, and within the member’s account dashboard.
Potential Downsides of Hold Points
- Member Frustration: If not clearly communicated, hold points can lead to member frustration and a feeling of being unfairly restricted.
- Reduced Perceived Value: Members might perceive the program as less rewarding if they cannot immediately access their earned points.
In conclusion, hold points are a mechanism used in loyalty programs to temporarily restrict access to earned points or rewards until certain conditions are met. While they serve important purposes like fraud prevention and liability management, clear communication is essential to avoid member dissatisfaction.