Dynamic Loyalty Point Conversion Rate Locking
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Solution Overview
Problem
Loyalty programs face challenges in retaining customers due to easy price comparisons across merchants, as general coupons and discounts lack personalization and fail to prevent customer attrition.
Innovation Solution
A dynamic loyalty program that allows customers to lock a conversion rate for loyalty points, enabling them to apply a higher value rate during purchases, even if the rate changes over time, and permits sharing of locked conversion rates among members, making price comparisons more complex and encouraging repeat business.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If a dynamic conversion rate is used in the loyalty program, then the merchant can adapt to market conditions and competitor pricing, but customers face uncertainty in the value of their loyalty points
Solution Approach 1:
The patent implements a dynamic conversion rate system that automatically adjusts the monetary value of loyalty points based on real-time merchant pricing data and competitor pricing information. The conversion rate fluctuates within a defined range (e.g., 0.5% to 5% of purchase amount) rather than remaining fixed, allowing the system to adapt to changing market conditions while maintaining customer engagement through transparent rate displays and lock capabilities.
2Reliability
If the conversion rate is locked for a period of time, then customers can plan their purchases with certainty, but the merchant loses flexibility to respond to price changes
Solution Approach 1:
The patent allows customers to lock in a favorable conversion rate for a specified future period (e.g., 30 days) in advance, based on current market conditions. This preliminary locking action provides customers with purchase planning certainty while the merchant retains flexibility to adjust rates for subsequent periods. The system automatically updates locked rates when market conditions change significantly, balancing both needs through a hybrid approach.
3Ease of operation
If general coupons and discounts are offered, then customers receive immediate benefits, but the lack of personalization fails to prevent customer attrition
Solution Approach 1:
The patent transitions from uniform general discounts to personalized loyalty point conversion rates tailored to individual customers based on their purchase history, preferences, and value to the merchant. Each customer receives a customized conversion rate that reflects their specific relationship with the merchant, making the incentive program both operationally simple (automatic application) and highly effective at retention through personalization.
4Productivity
If price comparisons across merchants are easy, then customers can find the best deals, but loyalty programs fail to retain customers
Solution Approach 1:
The patent changes the fundamental parameter of loyalty reward valuation from fixed to dynamic, tying the conversion rate to real-time market pricing conditions. This makes direct price comparisons across merchants less straightforward because the value of loyalty points fluctuates with market conditions rather than remaining constant, thereby reducing the effectiveness of simple cross-merchant price comparison while maintaining customer value.
Data Source
AI summary
A system is configured to determine a conversion rate associated with a loyalty program offered by a merchant. The conversion rate may specify a monetary value allotted to a loyalty point in the loyalty program. The conversion rate, associated with the loyalty program, may change over time. The conversion rate may be determined without user input specifying the conversion rate. The system is configured to receive an instruction to lock the conversion rate for a period of time; lock the conversion rate as a locked conversion rate for the period of time based on the instruction; and permit the locked conversion rate to be used to apply a discount to a purchase during the period of time. The locked conversion rate at a time of the purchase may be different from the conversion rate offered by the loyalty program at the time of the purchase.