Ask The Experts: Points-Based Loyalty Program Pros and Cons

BY Lucy Fang
Jun 21, 2019
Ask The Experts: Points-Based Loyalty Program Pros and Cons

Loyalty programs are fantastic for increasing engagement, building brand loyalty, and turning your customers into brand advocates. Loyalty programs aid in both acquisition and retention. People want to be engaged and companies that put in the effort a rewarded with loyalty. The question becomes, how do you reward loyalty? One of the most effective ways is through a points-based loyalty program.   

For over a decade, the loyalty experts at All Digital Rewards have worked with companies in a variety of industries to create the most effective loyalty rewards program, custom-tailored to fit each client’s needs. Our team, with help from our state-of-the-art technology, has been able to review and access loyalty program data to learn what works, what doesn’t, and why. Time and again, we find that points-based loyalty programs increase engagement, acquisition, and retention.

Like any good company, you’re being vigilant about researching loyalty solutions, so you can direct your resources towards a program that will maximize your ROI. You want to know what the upsides and downsides are so you can be confident in your decision to implement a points-based loyalty program. You need a pro/con lists so you can weigh the program’s risks against its strengths.

To help you decide if a points-based loyalty program will guarantee you the results and savings your company is looking for, our experts have put together a list of some of the top pros and cons of implementing a points-based rewards program. We know you want more than just a simple list of positive and negative traits, so we’ve gone above and beyond with our list. We’ll review not only the pros and cons but also why the pros strengthen your program and how the cons can be overcome.

Points-Based Loyalty Program Pros and Cons

Pro: User-Friendly

Have you ever been on a website, or participated in a program where the instructions were unclear, or everything felt over-complicated? It was a miserable experience, wasn’t it? With a points-based program, you can avoid making your customers learn a complicated system to redeem rewards. Points-based programs are so popular that almost everyone has engaged with one at some point, and the mechanics feel familiar and easy to use. With a points-based program, your users will slip into your program as easily and comfortably as putting on a favorite pair of shoes.

Con: Program Management

The time and resources for ongoing program management can be daunting. To reduce program fatigue, a points-based program will require regular management and updates. This can make some companies reluctant to implement a points-based program if they’re going to have to manage it alone. However, with rock-solid loyalty program management technology and a team of experienced professionals to help, you’ll be amazed by how effortless managing your loyalty program can be.

Pro: Competitive & Versatile

Because you can easily adjust earnings and reward thresholds, your points-based program gives you a strong competitive advantage. Points-based programs can also be used to reward both customers and employees. Additionally, with the right technology, you can use your points-based program to gain incredible insights about your customers, which can be used for targeted promotions and cross-selling.

Con: Complicated To Put Together

Trying to find suppliers for rewards, setting up a points-based marketplace, and finding the time to get everything up and running can be a headache. Fortunately, the cure is readily available. Working with a loyalty program solution provider allows you to outsource the process of putting together your program and, by utilizing your provider’s background and expertise, you can be confident that you will have an effective program completed quickly and customized to fit your needs.


Pro: Lasting Relationships

A points-based program allows you to create lasting, personal relationships with your participants. A points-based program will encourage your participants to come back over and over to keep earning points. They’ll be excited to tell their friends about their experiences and will promote your brand in their circle of influence.

Con: Outstanding Points

With a points-based program, you will need to put a contingency on the balance sheet for any outstanding points your participants may have. There is an easy solution to mitigate this issue. By adding sweepstakes and/or instant win games into your points-based program, you can allow users to spend some of their points for the chance to win higher-value prizes. Besides decreasing your liability, sweepstakes and instant win games are exciting for participants and are another way to increase engagement.

Points-based loyalty programs will always be a favorite among providers and participants. With the right support, technology, and implementation, a points-based loyalty program is a proven engagement solution. Research your options and choose the best loyalty program for your company’s needs.

If you would like to learn more about the pros and cons of points-based loyalty programs, our experts here at All Digital Rewards are standing by to help you. All Digital Rewards (ADR) is a world-class loyalty program provider, specializing in loyalty promotions, program development, design, and implementation. Offering incentives & prepaid products, services, and transactional technologies, we have the solutions to put your points-based loyalty program on the path to success. When working with the All Digital Rewards team, you have a partner from beginning to end. For more information on our Loyalty Program solutions, call us now at 866-415-7703 or click the button below to schedule a demo.

POINTS-BASED LOYALTY PROGRAMS Pros and Cons - All Digital Rewards