A multi-point bucket in a loyalty program refers to the ability for members to earn and potentially redeem different types of points or currencies within the same program, often for different actions or rewards. Instead of having a single pool of points, the program utilizes separate “buckets” to track and manage these distinct point types.
How it Works
Multiple Point Types: The loyalty program defines several distinct types of points or currencies. These could be differentiated by:
- Earning Mechanism: Points earned through purchases might be different from points earned through referrals or engagement activities (like social media interaction or completing surveys).2
- Redemption Options: Certain point types might be redeemable for specific categories of rewards, while others can be used more broadly.
- Tier Qualification: Some points might contribute to a member’s tier status (qualifying points), while others are purely for redemption (non-qualifying points).
- Partnerships: Points earned through specific partner interactions might be tracked separately.
Separate Tracking: The system maintains separate balances for each point type for each member, essentially creating individual “buckets” for each currency.
Defined Rules: The program establishes clear rules for how each point type is earned, what it can be redeemed for, its value, and whether it contributes to tier progression or has an expiration date.
Examples of Multi-Point Buckets
- Airline Loyalty Programs:
- Miles (or base points): Earned primarily through flying and determine elite status.
- Redeemable points: Earned through flying, credit card spending, and partners, used for free flights, upgrades, or merchandise.
- Partner points: Earned through specific hotel stays or car rentals and might have different redemption values.
- Hotel Loyalty Programs:
- Base points: Earned per dollar spent on room rates.
- Bonus points: Earned through promotions, elite status, or specific booking methods.
- Free night awards: Earned after a certain number of stays or points, specifically for hotel stays.
- Partner points: Earned through dining or other hotel services and might have limited redemption options.
- Retail Loyalty Programs:
- Purchase points: Earned based on the amount spent.
- Referral points: Earned for successfully referring new customers.
- Engagement points: Earned for activities like writing reviews, completing profiles, or engaging on social media. These might be redeemable for different types of rewards (e.g., purchase discounts vs. exclusive experiences).
- Multi-Partner Loyalty Programs: Programs involving multiple brands might have points that are earned and redeemed differently at each partner.
Benefits of Using Multi-Point Buckets
- Increased Flexibility: Allows for more diverse earning opportunities and reward options tailored to different member actions.
- Targeted Incentives: Enables the program to incentivize specific behaviors (e.g., referrals) with specific types of rewards.
- Enhanced Perceived Value: Offering different “currencies” for different purposes can make the program seem more comprehensive and valuable.
- Better Control: Provides the program administrator with more granular control over the cost and value of different rewards and the drivers of tier progression.
- Improved Segmentation: Different point earning and redemption patterns can provide richer data for member segmentation.
- Reduced Point Liability: By restricting the redemption options for certain point types, the program can better manage its overall point liability.
Considerations
- Complexity: Managing multiple point types can make the program more complex for members to understand. Clear communication is crucial.
- Valuation: Members need to understand the relative value of each point type.
- User Experience: The system needs to clearly display the different point balances and redemption options in a user-friendly way.
In summary, a multi-point bucket system in a loyalty program is a sophisticated approach to managing rewards by utilizing distinct types of points or currencies for different earning activities and redemption possibilities, offering greater flexibility and control for both the program and its members.