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Reward Points and Paying Difference

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  • Reward Points and Paying Difference

    When a customer earns reward points the redeeming process seems a little confusing. They have to visit their point then click redeem, then all the products are shown to them, yes they can click into them and see the amount of points needed to redeem. But what if they want something and are willing to pay the difference why can't they or can they. Maybe we don't have it set up right.

    But it seems if some has 1000 points and the item they want is 1200 points why can't they just pay the difference to get it?

    Unless we have something set up wrong if so please tell us.

    Thanks

    TheCandyCity.com

  • #2
    No you can't pay the difference. The point of rewards is to make them buy more to get to the threshold or better yet, overshoot, so when they redeem, they would still have points left over which gives them an incentive to come back and place another order. If they can redeem their rewards to the last point, they have no incentive to come back.

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    • #3
      Originally posted by elightbox View Post
      No you can't pay the difference. The point of rewards is to make them buy more to get to the threshold or better yet, overshoot, so when they redeem, they would still have points left over which gives them an incentive to come back and place another order. If they can redeem their rewards to the last point, they have no incentive to come back.
      It would take a very long post to point out the ways this statement about incentives is flawed. Instead, consider that there are reward programs that allow customers to buy points and/or pay the difference. For example, this option is available with some of the airline and hotel credit card reward programs as well as American Express.

      Many people leave balances in these accounts and never spend them. The fact that so many people leave points implies the customer effectively values the overage points at zero because they are difficult to spend. Depending on the circumstances, the more effective strategy is to allow the customer to pay the difference. If you are trying to capture the next purchase, letting the customer use the points give you an advantage over the competitor who charges the same as you do because the customer gets a discount. The real value is in the customer knowing they can always get a discount because their points are easy to spend. Another way of saying this is that points that are not available to spend are worth zero at the time of the transaction. But if the points are always spendable, your competitive position is improved. The customer is now incentivized have a relationship with your business and continue buying from you over a long period time, as long as your pricing and service is competitive. However, this does not cost you any more than the value you were already willing to give away. You are just allowing it to be used in smaller amounts...time to stop because, as mentioned, this discussion can become quite long.

      Does anyone know if gift certificates can be combined with rewards points in transaction? If so, this would be a way around it.
      Last edited by Luxlife; 11-17-2017, 10:43 PM.
      Luxlife

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      • #4
        Have to disagree with the last post and agree wholeheartedly with elightbox on this issue. As a marketing tool, using the Rewards Points to incentivize customers to purchase items they would otherwise not purchase is in fact what we all pay a great deal to do, is it not? If you simply want to offer a discount to customers, then just do so and you will probably gain much more loyalty -- if that is your goal - by then just reducing the cost of your products by the amount you are giving in points. Why make them wait to use them? Why use them at all? Store credit works like that -- just convert your customers' points to store credit.

        Secondly, it does cost - -at least in my case -- more to allow partial payment with points -- one more step to take on phone orders, looking up and then applying rewards points to an order by phone. I make it clear to customers that points can only be used online and only to purchase products. This reduces my on-phone time with orders.
        Joe Arbogast
        http://www.birdsafestore.com

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