Points programs were developed as promotional support to encourage loyalty to various products and increase purchase frequency.  And they do.  Up to a point.

As we have pointed out in previous posts, Carnie games have you think you are winning but your prize isn’t much. You spend $5 and win a prize worth 75¢.

Air Miles recently announced it was terminating points that had not be redeemed that were over 5 years old.  I have not been the most avid Air Miles collector, but I have been collecting them for about 20 years.

So far I have redeemed Air Miles points for a blender.  And with the points I have left, I cannot redeem them for anything that I want.  And anything that I might want will cost me about when I would pay retail for the item.

We wrote previously about Aeroplan.  Now Air Miles has let its customers down.

The strategy for all the points systems, from S&H Green stamps to date, has been to get folks excited about the act of collecting with the promised of prizes and awards later.

As soon as a large number of people accumulate points/stamps, the managers of the system work to devalue the points: making gifts harder to get, slightly lowering the value of the points, reducing the redemption options and finally, clawing back the points that are not redeemed.

The liability becomes large and all the actions taken to devalue the points add to the value of the management company, even though all the points have been paid for.

Collectors, however, are now vested in the system so the system hopes that collectors keep participating even though the benefit has been reduced.  Eventually, if the benefit has been devalued enough, the system will collapse, like a pyramid or a house of cards.  As soon as consumer confidence in the value of the points falls enough, the motivation to collect disappears.

Air Miles is trying, as hard as it can, to move people from merchandise and travel to cash.  But unfortunately for them, “Air Miles” is their name.  Plus, there are now abundant cards out there that offer cash rebates.

With the highly public clawing back of points by Air Miles as of the end of this year, they are on the cusp of collapsing as an added value motivator for retailers.  Why would a consumer collect these Miles if they simply get clawed back?  Has a proven promotional tactic come to the end of its useful life?

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