Half Baked Idea: Long Term Rewards Accumulation

This idea may already be implemented by some groups, and I missed it, but I’ve noticed an issue with many rewards programs:

There is near zero incentive to continue spending once nearing the end of an accumulation period, while far from the next reward level.

Take Westjet, for example. If you spend the $3000 to reach silver tier, but have no hope of spending enough to reach the $5000 gold tier, any trip near the end of the current period would contribute only to the companion voucher accumulation. If you delay until the next year, you get to fly with the silver benefits earned from the previous year, while also contributing to your silver status for the following year. This should be considered a significant risk as,

  1. Delays in purchases could stack to the point of cancelling
  2. Without contributing to rewards status, some consumers will lack incentive to purchase upgrades
  3. Prematurely ending rewards perks leaves an opportunity for competitors to steal customers

This conflict of interest could be fixed with one simple change:

Let any overspending carry forward into the next period.

In other words, spending used to reach tiers stays within the same time limits, but the excess would be recognized for the next term. Any top tier customers would be incentivised to accumulate far into the future. It wouldn’t be surprising to see a cohort aim to ensure they keep their status into retirement. For example, someone spending $12,000 every year is only being recognized for ~66%:

Rather than $4,000/year going unrecognized, this customer would get a whole extra year of platinum rewards.

Even those with more reasonable spending would see benefits. Someone comfortably stuck in silver would instead be able to experience gold in the second year:

Some might enjoy the next tier so much that they spend more to achieve it more than every two years. Worst case, customers always appreciate when arbitrary cutoffs are removed from their loyalty rewards.


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