Loyalty programs encourage repeat trade and help to build strong customer relationships, often leading to beneficial word-of-mouth marketing benefits. Yet setting up a rewards program is not without challenges, as any issues with your program could cause the opposite desired effect.
I.e. If a customer is promised a reward yet is unable to gain it, then they are likely to feel frustrated and have a negative brand experience. Poorly structured loyalty programs can cause brand disloyalty, so it's important to invest time in planning—and setting up—your program efficiently.
One key area to consider, are the terms and conditions.
Your product or service may already have extensive privacy policies and terms and conditions already crafted. Yet, a new loyalty program has key considerations that will need to be documented. Businesses may choose to include their loyalty system within their preexisting terms and conditions, but for the purpose of clarity we recommend having a separate set of T&Cs rather than a simple section.
The reason for creating an independent T&Cs is that you can manage your loyalty program as a stand-alone campaign, making it easier to adjust your policies and communicate clearly to customers.
Whilst every set of T&Cs will differ, there are generally reoccurring points that most will cover.
Firstly, it should be clearly stated that users must accept the T&Cs if they wish to proceed. You can include a disclaimer that subsequent amendments must be accepted as well—generally after any update, the business should notify users of the changes and once again ask for confirmation that they agree.
The terms should include the following points:
Different businesses will require key considerations for their terms and conditions. For example, businesses selling products or services through websites must comply with consumer contract and distance selling regulations; These require businesses to give consumers certain information before they enter into a contract.
In regards to loyalty programs, there are some key considerations:
The above is not an exhaustive list. Some or all may apply to your business. If you are in any doubt it is best to seek relevant legal advice.
Modern business practices focus on transparency and trust. Whilst terms and conditions often need to have a balance of legal phrasing, there's an increasing argument for simplifying language to allow consumers to know exactly where they stand. Careful drafting of your T&Cs will ensure they're both easy to read, and simple to understand.
When possible use clear and concise language. This means replacing the long, legal or perhaps technical words with terms that will reduce confusion. Try to keep your sentences and paragraphs short when possible, perhaps by having only one main point per paragraph. Many users will be reading your terms and conditions via mobile devices, so you may wish to optimise the text for small screens.
Your terms and conditions are not purely to protect your business, but they should also be made to strengthen and protect your relationship with the consumer. Therefore, try to use positive and friendly language, explaining the rational for each segment as you go. The aim here is to show that you're trustworthy and open, and that the T&Cs are made with customers in mind—not to purely for personal gain.
Formatting matters. Structure your information in a way that flows, with points naturally leading on to each other yet clearly organised. Using numbered lists allows you to refer quickly to sections when needed, such as 'article 9.1' or '3.2'. This can help your customer service further down the line as information will be easily retrievable.
Whilst T&Cs may be necessary, you do need to consider your brand personality. Friendly, youthful brands, shouldn't be communicating in archaic jargon with clear disconnect to their business— it's ok to be more relaxed and casual as long as you cover the important points.
As your customers will be bound by these terms, they need to be easily accessible for them. If it's on an app, take the time to ensure the UI can guide them to the T&Cs intuitively.
If you are updating your terms, then you need to let your customers know. By using push notifications or automated emails you can ensure consent is given for any changes—you can state that for continued usage of your loyalty program, that the updated terms must be accepted and freeze access to the account until consent has been given.
Not all businesses operate the same, so you may be best suited to seek advise about your unique circumstances and regulations you may need to be aware of. Most people won't take the time to read your T&Cs, but when a dispute happens you need to be confident that your terms are robust and clear—and importantly that you notified the user of these terms from the offset.
To help you draft your Terms and Conditions for a loyalty program, we have laid out an example that can be copied and adjusted to suit your brand tone and operations.
We shall act both fairly and reasonably towards you, taking into account your—and our—respective interests. This will include whenever we are:
1. Considering any requests made by yourself;
2. Deciding whether to give our consent, or to excercise a right, discretion or remedy; or,
3. Setting any conditions for doing any of these things.
Please note that we withhold the right to make or change a decision at any point, including where delays, temporary waivers, or deferences may occur.
2. Points will be awarded for each eligible transaction made in our application for loyalty program members. Users must be signed up to our program to begin earning points.
3. Points cannot be backdated nor transferred from other user accounts—even that of the same user name.
4. Points are earned for each whole $1.00 spent of the value of each eligible transaction. Simply put, for every dollar spent on eligible purposes, you will gain one loyalty point.
5. Under no circumstances can points be sold.
6. We withhold the point to limit point earning eligibility on discounted or promotional purchases.
Your point balance will be displayed within your loyalty account. This balance will include:
There may be some transactions which can be made that will not earn points for your account. These may include:
Your loyalty points balance will be reduced when:
When points decrease, this will be displayed by your updated points value in your loyalty account. The points value will be calculated using the rate at which the points were originally allocated.
To keep track of points you have a range of options:
To thank users for their loyalty to our brand, we will have rewards available to be redeemed using your points.
Except with our clear consent, after you have placed your request for a reward you cannot:
Physical rewards will only be delivered to addresses within our service area zones and will not be delivered to a PO Box address.
Note that if someone other than yourself claims a reward on your behalf then these terms and conditions will apply as if you had claimed the reward. If we have been negligent or fraudulent then contact us immediately and we will assist with rectifying the situation.
We give no verbal, written or implied warranty about any Rewards provided under our loyalty scheme. In particular, we do not represent that any particular reward is suitable for a particular purpose for which you intend to use it.
A reward may come with a warranty from the supplier or manufacturer of the reward, therefore any claim in respect of that reward should be made directly to the supplier or manufacturer.
Note that this does not prevent you from claiming against us whereby we supply services in connection with this loyalty program. If you are a consumer, consumer protection laws include non-excludable warranties which may entitle you to compensation and we can only limit our liability in the way and to the extent it's permitted by those laws.
If we are liable for the breach of any term implied by law, our liability for loss or damage from the breach is limited to:
Except to the extent provided by law we do not accept any liability for:
We make every reasonable effort to ensure the description of offers in connection with bonus points, rewards and rewards provider terms are correct. However, we are necessarily reliant on the information provided by bonus points providers and rewards providers being accurate and for this reason we are not responsible for any inaccuracy in the description of a bonus points promotion or of a reward or any terms applicable to the reward.
Should have have a complaint in relation to our loyalty program, please contact our help team directly through our application.
We aim to resolve problems promptly. If we cannot find an instant solution we will let you know how long we expect it to take. Once we have completed our investigations we will let you know our decision, and the reasoning behind it.
If you are not satisfied with the way your complaint has been resolved, or indeed the steps we have taken, you may wish to contact a third party dispute resolution scheme. We also welcome feedback directly as we strive to act in your interest and provide great customer service through fair decision making.
As noted in section 12, you can contact us directly through our application.
If we need to contact you, we will send emails to the address you provided for your account. In case we need to update you urgently, our help team may phone the number attached to your account.
You are responsible for notifying us for any changes to your contact details.
By signing up to our loyalty program, we will need to collect, hold, use, disclose information about you in connection with your account, points and rewards. Information will include certain personal information and transaction information relating to points earned and requests for rewards.
We will use this information for purposes of our loyalty program to provide and market rewards and services to you, including the products and services of our service providers and other third parties.
We may disclose this information to others in connection to our loyalty program including to:
We treat all personal information with care and in accordance with our privacy policies.
We may also use or disclose your personal information to let you know about offers and news relating to our loyalty program electronically—e.g. email, SMS, and social media. We will act with your best interests in mind to communicate news to you, and you can let us know at any time if you no longer wish to receive our marketing. We will process this request as soon as practicable.
We may terminate our loyalty program at any time acting reasonably. Where possible, we will give you at least 90 days’ notice of the termination and cancellation of your loyalty account (if applicable). Circumstances where prior notice may not be possible include where we are affected by events outside our control (for example, one of our key Rewards partners terminates their arrangement with us or can no longer perform their obligations).
If we give you notice after termination, Points will only continue to be credited to your Points Balance in relation to transactions that occurred prior to the date of termination.
Any notice we give will include the general reasons for termination (if possible), and the time period available to you to use points in your points balance to claim rewards. We will define the time limit remaining before final expiration of all points.
Examples of when we may terminate include, but are not limited to:
These examples are for guidance only and do not limit our ability to cancel the account.
We reserve the right to change and update our terms and conditions when required. Whilst these changes may come without prior notice, we will notify users of any major updates to ensure full transparency.
Transparency is key, and thoughtfulness matters.
Ensure you have truthfully communicated all the terms and conditions associated with your loyalty program, and you can confidently market a program truly designed to benefit your consumers and strengthen your brand positioning.
T&Cs don't need to be looked at purely as a legal safety, they can provide consumers with reassurance and clarity as they interact with your brand.