back icon Back Insights 09/06/2023

What is an Earn and Burn Loyalty Program?

An earn-and-burn loyalty program is a dynamic approach to loyalty rewards that encourage customers to rake in program currency and redeem it as quickly as possible. In this transactional approach to loyalty, the motivation to maximize benefits powers ongoing customer participation and faster reward redemption that can enhance brand loyalty and elevate your bottom line. 

At a time when loyalty programs remain the primary driver of brand choice, earn and burn programs engage customers in a more immediate and gratifying way—something 76% of loyalty members claim is a major part of their relationship with a brand. Discover how your organization can turn loyal customers into brand advocates with a trusted earn-and-burn loyalty program. 

Understanding the Earn and Burn Model

On the surface level, earn and burn programs operate much like traditional loyalty programs. Customers earn points or rewards through various brand interactions—such as purchases, referrals, social media interactions, or loyalty app activity—and must redeem those points with the same brand. However, instead of allowing points to accumulate, members are encouraged to “burn” or redeem their rewards as quickly as possible to earn additional benefits and loyalty perks. 

The earn-and-burn-based loyalty model aims to eliminate the nearly $48 trillion worth of unspent points that have accumulated globally. By motivating members to redeem their rewards as fast as they collect them, unspent points can quickly translate into higher business profits and increased customer engagement. The structure of an earn-and-burn loyalty program typically includes the following:

  • Frequency-based rewards. Loyalty members unlock rewards by completing a series of transactions or reaching a specific milestone, such as ten purchases, in a certain timeframe.
  • Points-based rewards. Loyalty members earn points through purchases and time-based challenges, such as social media contests, that can be redeemed for rewards or discounts. 

Benefits of the Earn and Burn Approach for Loyalty Programs

It’s no secret that brands have continued to invest more in loyalty programs, with consumer enrollment steadily growing by 31% over the past four years. However, customer satisfaction with loyalty programs is not on the same trajectory—it’s quite the opposite. More consumers are seeking additional loyalty programs, but more than half remain inactive due to dissatisfaction. 

Here’s a look at how an earn-and-burn loyalty program approach can help turn unsatisfied customers around. 

Increased Customer Engagement

An earn-and-burn-based model motivates customers to actively engage with a brand to earn rewards, leading to higher levels of customer interaction and participation. Enhancing engagement is a key benefit for loyalty programs, especially since 45% of loyalty accounts today are inactive, with members not tracking nor redeeming points. The way purchases are rewarded instantly in an earn-and-burn loyalty program helps foster immediate engagement among members.

Faster Redemption Rates

By encouraging customers to redeem program rewards quickly, an earn-and-burn loyalty program creates a sense of urgency and excitement, driving faster redemption rates and increased customer satisfaction. Research has proven that the redemption experience—including the ease and rate of reward redemption—is more important to loyalty members than the actual reward. The redeemers in a loyalty program are also twice as satisfied with the program as non-redeemers. 

Enhanced Brand Loyalty

Speaking of redemption rates, the immediate gratification of redeeming rewards in an earn and burn-based program fosters a stronger emotional connection between rewards customers and the brand, leading to increased brand loyalty and advocacy. Because of the high perceived value of instant rewards, earn-and-burn loyalty programs power stronger customer relationships both online and in-store. These relationships also support ongoing word-of-mouth recommendations. 

A man with a laptop on the beach by the ocean booked with points by an earn and burn loyalty program.

Implementing an Effective Earn and Burn Program

Implementing an effective earn-and-burn loyalty program begins by designing a compelling rewards structure. Craft an attractive structure, including accumulation and redemption ratios that determine how many members are rewarded for each transaction. Satisfaction peaks when members become eligible for rewards, so aim to minimize the timeline until redemption. 

Next, be sure to promote redemption opportunities. Shockingly, 57% of members in point-based loyalty programs do not know their current points balance, and another 38% are unaware of their points value. By effectively communicating the availability of rewards and redemption options to members, you encourage customers to utilize their earned rewards promptly (and profitably). 

As your earn-and-burn loyalty program gains traction, monitor program performance. Track and analyze the number of new members, rate of reward redemption, and types of redeemed rewards continuously to make data-driven decisions that optimize the program’s effectiveness. For instance, you may decide to set up automated promotions to re-incentivize inactive members. 

Arrivia: Your Partner in Creating an Engaging Earn and Burn Program

Customer enrollment in loyalty programs may be on the rise, but general satisfaction has remained stagnant. If your goal is to motivate and maximize customer engagement with your loyalty program, upgrade to an earn-and-burn model as soon as possible. Not only can you encourage loyal customers to continue spending with your business, but you can escalate your rate of rewards redemption to enhance member satisfaction with your loyalty program. 

As you explore upgraded program options, turn to the experts at arrivia.

With more than 25 years of loyalty experience, arrivia powers a range of customizable solutions for earn and burn models. Request a demo today to explore arrivia’s expansive suite of loyalty program solutions, including data analytics and strategic consulting, designed to enhance earn and burn loyalty programs.