Incremental Discount Loyalty Engine for Off-Peak Visit Incentives
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Solution Overview
Problem
Existing loyalty schemes fail to effectively encourage customers to visit businesses during non-holiday or off-peak times, resulting in unsatisfactory customer participation and purchase increases, as they often rely on specific time-based incentives that do not promote frequent visits throughout the year.
Innovation Solution
A method executed by a loyalty engine on a computing device that calculates incremental discounts for users based on the quantity of visits to service businesses, such as hair salons or barber shops, during a predetermined time period, considering factors like service popularity, business profitability, and customer frequency, to incentivize repeat visits regardless of the time of year.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If traditional time-based incentive programs are used to increase customer purchases during holiday seasons, then customer purchases increase during those specific periods, but customer participation and purchase increases are less than satisfactory during non-holiday or off-peak times
Solution Approach 1:
The loyalty program dynamically adjusts discount rates based on the customer's visit frequency within a rolling time window. As customers accumulate more visits within the predetermined time period, their discount rate incrementally increases. This dynamic structure allows the program to remain effective throughout the entire year rather than being confined to specific holiday periods, thereby resolving the contradiction between maintaining high purchase volume and achieving temporal versatility.
Solution Approach 2:
The system changes the discount parameter (discount rate) based on the quantity of visits parameter. By linking discount rates to visit frequency rather than fixed time periods, the program adapts to customer behavior patterns continuously throughout the year. This parameter transformation enables the incentive program to drive purchases during both peak and off-peak times, addressing the limitation of traditional time-based programs.
2Adaptability or versatility
If discounts are provided based on quantity of visits during a predetermined time period, then customer behavior is modified to encourage multiple visits throughout the year, but the system complexity increases to track and calculate incremental discounts
Solution Approach 1:
The loyalty program operates as a self-service system where discounts are automatically calculated and applied based on the customer's own visit history. The predetermined time period and visit quantity thresholds are pre-configured, allowing the system to autonomously determine appropriate discount rates without requiring complex manual intervention or sophisticated algorithms. This self-service approach minimizes system complexity while achieving year-round incentive effectiveness.
Solution Approach 2:
The loyalty program segments the discount structure into discrete levels based on visit quantities within the predetermined time period. Rather than using a continuous complex formula, the system divides customer behavior into segments (e.g., 1-3 visits, 4-6 visits, 7+ visits) with corresponding discount rates. This segmentation simplifies the calculation logic while maintaining the ability to incentivize multiple visits throughout the year.
Data Source
AI summary
A method to calculate discounts based on a quantity of visits to a business during a time period is described. A request is received from a first user identified as a customer for a service to be performed at the business during a first time period. If the first time period is within a predetermined time period, a quantity of visits of the customer to the business during the predetermined time period is identified, a first discount is generated based on a first quantity of visits of the customer to the business during the predetermined time period, and a second discount is generated based on a second quantity of visits of the customer to the business during the predetermined time period. The first quantity of visits is greater than the second quantity of visits and the first discount is greater than the second discount.