Loyalty Program Mode Switching for Disaster Donation Redirection
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Solution Overview
Problem
Existing loyalty programs lack flexibility in how transactions trigger benefits accrual, and merchants struggle to tailor benefits to changing objectives and customer demographics, leading to inefficiencies and increased risk for financial institutions.
Innovation Solution
A system and method that allows a loyalty program to change operation modes based on disaster information, transaction data, and location, redirecting a portion of transaction amounts to a redirection account or defined donation accounts using charity catchment area parameters.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If loyalty programs use fixed transaction-triggered benefit accrual, then program simplicity is maintained, but flexibility and adaptability to changing conditions deteriorate
Solution Approach 1:
The patent implements dynamic operation modes that allow the loyalty program to switch between different benefit allocation strategies based on changing conditions. The system transitions from static, fixed benefit accrual to dynamic modes where benefits can be redirected to charitable causes or adjusted based on merchant objectives, customer demographics, and external events, thereby resolving the contradiction between flexibility and complexity.
Solution Approach 2:
The system changes operational parameters by introducing mode-switching capabilities that alter how benefits are accrued and allocated. By changing the operational mode based on triggers such as disaster information or merchant objectives, the system achieves flexibility in benefit allocation without requiring complete system redesign, thus managing complexity while improving adaptability.
2Productivity
If merchants provide significant benefits to acquire new customers, then customer acquisition effectiveness improves, but cost of acquisition increases
Solution Approach 1:
The patent introduces charitable causes as intermediaries in the customer acquisition process. Instead of merchants directly providing all benefits to customers, a portion of transaction amounts can be redirected to charitable causes, which serves as a mediator that enhances customer engagement and acquisition effectiveness while distributing the cost burden, thereby reducing the direct cost of acquisition for merchants.
Solution Approach 2:
The system converts the potential harm of high acquisition costs into a benefit by redirecting portions of transaction amounts to charitable causes. This approach transforms what would be a cost burden into a value-added feature that enhances customer attraction and retention while reducing the net cost of acquisition through shared benefit structures.
3Reliability
If financial institutions share profit and risk with other parties, then risk distribution improves, but control over customer base access deteriorates
Solution Approach 1:
The patent segments the benefit allocation process into distinct controllable components. Financial institutions can choose to participate in redirection modes selectively, segmenting their risk exposure while maintaining control over which portions of their customer base are accessed for charitable redirection. This segmentation allows risk distribution without complete loss of control.
Solution Approach 2:
The system implements dynamic control mechanisms that allow financial institutions to adjust their level of participation in redirection modes based on their risk tolerance and strategic objectives. This dynamic control enables flexible risk distribution while preserving the ability to maintain control over customer base access when needed.
4Ease of operation
If loyalty programs use traditional fixed benefit structures, then program stability is maintained, but customer engagement and merchant control deteriorate
Solution Approach 1:
The patent implements preliminary configuration options that allow merchants and financial institutions to pre-set their preferences for benefit allocation and mode switching. By establishing these parameters in advance, the system reduces operational complexity during execution while maintaining enhanced merchant control and customer engagement capabilities through the available redirection modes.
Data Source
AI summary
A method for changing operation modes includes receiving disaster information from trending data, a newsfeed, or an alert message; upon detecting at least one redirection trigger from the disaster information, configuring a loyalty system to operate in a redirection mode; receiving or accessing data associated with a transaction between a customer and a merchant; determining, from at least one of customer information and merchant information in the data associated with the transaction, a donation amount and a location associated with the transaction; when the loyalty system is configured to operate in a redirection mode, generating signals to cause accrual of at least a portion of the donation amount to a redirection account based on the location associated with the transaction; and generating signals to cause accrual of any remaining portion of the donation amount to one or more defined donation accounts based on charity catchment area parameters.