Tiered Loyalty Program: Loyalty Points Accrual and Reversal

In this article, you will understand how points are accrued and reversed in a Tiered Loyalty Program.

Points Accrual

In a Tiered Loyalty Program, loyalty points are accrued based on the following:

  • Points are accrued based on the total amount spent and also for performing specific actions.
  • Points are not added immediately as with the Regular loyalty program.
  • Points are awarded after the close of business irrespective of the invoice being open or closed (unless configured otherwise. For more information, see the Consider only Closed Invoices section of Configuring a Tiered Loyalty Program). This is particularly useful when a guest makes part payments.
    Example: If a guest purchases a package worth $3000 and the package services are spread over 3 months. If the guest pays $1000 to avail services of the first month, points are accrued for the $1000 payment though the invoice is not closed.
    Note: You can choose to restrict awarding of points to closed invoices only. see the Consider only Closed Invoices section of Configuring a Tiered Loyalty Program.
  • Points are accrued only when payment is made using cash, card, check, or custom payment.
  • You can set an expiry for the accrued points.

First Time Enrollment: Accrual Rules

Note: The accrual rules described in this section change if the Tiered Loyalty Program is set to consider only closed invoices. For more information, see the Consider only Closed Invoices section of Configuring a Tiered Loyalty Program.

When a guest is enrolled in the loyalty program for the first time, the following accrual rules are applicable:

  • Points are accrued on the present day invoice that resulted in the guest getting enrolled in the loyalty program.

Examples:

    • If the spend criteria of a lowest tier, for example, Silver tier, is $1000, and the guest spent $900 until the previous visit, and if the guest spends $200 today, the following takes place:
      • The $200 invoice results in the guest getting enrolled in the Silver tier.
      • Points are accrued for the complete $200 invoice payment.
      • Points are not awarded for $900 spent before the present day.
    • If the guest visits the center for the first time, the spend criteria of the Silver tier is $1000, and makes a transaction of $1000, this is what happens:
      • The guest is enrolled into the Silver tier and points are accrued for $1000 spent

Points Reversal

In a Tiered Loyalty Program, loyalty points are reversed based on the following:

  • If a payment is removed from an invoice, the complete accrued points for that invoice are reversed.
    • If 100 points were accrued, 100 points are reversed.
    • It does not matter which tier the guest was in when the points were accrued nor does it matter which tier the guest is in when the points are reversed.
    • If there are no balance points available to reverse (because the guest has already redeemed them), the guest's points balance will turn negative and any points accrual will be used towards the clearing of the negative balance.
  • If an invoice is refunded, the points are reversed based on the tier the guest is currently in.
    • If the tier when the points were accrued and the tier the guest now is in are the same, the same number of points are reversed.
    • If the tier when the points were accrued and the tier the guest now is in are different, then:
      • The ratio in which the points were awarded in the base invoice is calculated. The ratio is then used for points reversal.
      • The tier in which the guest has the highest number of points is determined and points are reversed from that tier.
      • If points in highest tier are exhausted, points are reversed from the next tier that that has the highest points.
      • Deductions from tiers happens until the required points are reversed. If points in all the tiers are exhausted, the guest's points balance will turn negative.

Examples:

Consider the following tier setup of an organization:

TierMinimum Yearly SpendPoints Ratio
Platinum $3000 1
Gold $2000 0.5
Silver $1000 0.2

If the accrued points of a guest in each tier is as follows:

TierAccrued Points
Platinum 300
Gold 1200
Silver 200

Consider the following invoice refund scenario of a guest:

  • Guest is recently upgraded to the Platinum tier.
  • Guest purchased a package worth $1500 and the payment against the invoice was made in 5 equal installments of $300 each.
  • For 4 installments, the points were awarded as per the accrual settings of the Gold tier.
  • The 5th installment points were awarded as per the accrual settings of the Platinum Tier.
  • If the guest is given a refund of $750, let's see how the points are reversed.     

Let us first see the points accrued on the $1500 payment for each installment:

Installment No.AmountTierPoints AccruedPoints Per Dollar
1 300 Gold 150 0.5
2 300 Gold 150 0.5
3 300 Gold 150 0.5
4 300 Gold 150 0.5
5 300 Platinum 300 1.0 
  • A total of 900 points were awarded on $1500 invoice.
  • 600 points were accrued in the Gold tier for $1200 spent.
  • 300 points were accrued in the Platinum tier for $300 spent.

If the guest is given a refund of $750 on the $1500 invoice, let's see how the points are reversed:

  • On the base invoice of $1500 dollars, 900 points were awarded
    • Ratio of points awarded on total invoice is 900/1500 = 0.6
  • For $750 dollars, the number of points to be reversed is
    • 750 x 0.6 = 450 (points to be reduced)
  • The Guest has maximum number of points (1200) in the Gold tier
  • 450 points are reversed from the Gold tier

See Also

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