Dynamic Middle Out Loyalty System for Card Wallet Share
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Solution Overview
Problem
Conventional loyalty programs with static value propositions, such as the 3-2-1 structure, fail to retain customer engagement as new cards with better offers are introduced, leading to wallet share loss, especially when middle category rewards are not relevant to the customer's spending habits.
Innovation Solution
Implementing a dynamic middle out loyalty system that adjusts the middle category rewards daily/weekly/monthly, allowing customers to choose categories and earn incentives for both in-brand and out-of-brand purchases, using a mobile device and cloud-based system to provide personalized offers and tasks that increase rewards based on usage and preferences.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of manufacture
If a static value proposition structure (3-2-1) is used in loyalty programs, then the program structure is simple and easy to implement, but customer engagement is lost when new cards with better offers are introduced
Solution Approach 1:
The patent applies dynamics by transforming the static 3-2-1 value proposition structure into a dynamic system where the middle category (2%) changes periodically (daily/weekly/monthly). This allows the loyalty program to adapt to changing customer preferences and spending patterns while maintaining the simple tiered structure. The system automatically updates categories based on predefined schedules or customer behavior data, resolving the contradiction between structural simplicity and adaptability.
Solution Approach 2:
The patent changes the parameter of category assignment in the middle tier from fixed to variable. Instead of permanently assigning 2% to a specific category (e.g., gas), the system periodically reassigns categories to the middle tier, creating a rotating value proposition. This parameter change enables the program to remain competitive against new card offers while maintaining implementation simplicity through automated category rotation mechanisms.
2Ease of operation
If the middle category is fixed in loyalty programs, then the program is easy to operate, but wallet share is lost when new cards with better value propositions are introduced
Solution Approach 1:
The system implements dynamics by making the middle category assignment periodic rather than permanent. The loyalty program automatically rotates categories in the middle tier (2%) based on predefined schedules, ensuring that the value proposition remains competitive and relevant to customer needs. This dynamic adjustment prevents wallet share loss without requiring complex manual intervention, maintaining ease of operation while improving wallet share retention.
Solution Approach 2:
The patent incorporates feedback mechanisms where customer spending data and category preferences are monitored to inform future category assignments. This feedback loop allows the system to automatically adjust the middle category assignments based on actual customer behavior, optimizing wallet share capture while maintaining simple automated operation. The feedback-driven optimization ensures the program adapts to changing customer preferences without complex manual reconfiguration.
3Ease of manufacture
If rewards are tied to specific categories in loyalty programs, then the program is straightforward to implement, but relevance to customer spending habits decreases over time
Solution Approach 1:
The patent applies dynamics by implementing periodic category rotation in the middle tier, allowing rewards to adapt to changing customer spending habits. The system automatically updates category assignments based on predefined schedules or customer behavior patterns, maintaining relevance without requiring complex custom programming. This dynamic approach resolves the contradiction by enabling straightforward implementation through standardized rotation rules while improving adaptability to evolving customer preferences.
Solution Approach 2:
The system changes the parameter of category assignment from static to dynamic, allowing the middle tier rewards to periodically reassess and reassign categories based on current spending patterns. This parameter change enables the program to maintain simplicity through automated rotation mechanisms while improving relevance to customer spending habits through data-driven category selection and periodic updates.
Data Source
AI summary
A system and method for dynamically assigning a middle out loyalty is disclosed. The method and system obtains a number of customer specific characteristics for a co-brand account holder. In addition, one or more brand partners for a brand providing a co-brand account of the co-brand account holder is also obtained. The customer specific characteristics of the co-brand account holder are used in conjunction with the brand requirements to generate a dynamic middle out loyalty offer customized for the co-brand account holder. Automatically, and after a time period expires, using the customer specific characteristics of the co-brand account holder in conjunction with the brand requirements to dynamically generate a new middle out loyalty offer customized for the co-brand account holder.