Dynamic Loyalty Program Mode Switching for Disaster Response
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Solution Overview
Problem
Existing loyalty programs lack flexibility in rewarding customers based on changing merchant objectives and demographic attributes, making it difficult for merchants to tailor benefits effectively, and for financial institutions to measure and monitor the commercial benefits derived from loyalty programs.
Innovation Solution
A system and method that allows for dynamic operation mode changes in loyalty programs, using processors to receive disaster information or alerts, and configure the system to redirect a portion of transaction-based donations to specific accounts based on location and charity catchment area parameters, enabling merchants to tailor rewards and financial institutions to monitor and verify commercial benefits.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If loyalty programs use fixed reward structures, then program simplicity is maintained, but flexibility to adapt to changing merchant objectives and customer demographics is reduced
Solution Approach 1:
The loyalty program system implements dynamic operation modes that can switch between different reward structures (e.g., points-based, cashback, charitable donations) based on changing merchant objectives and customer demographics. This allows the program to adapt flexibly to different scenarios without requiring complete program redesign, resolving the contradiction between flexibility and complexity by making the system dynamically configurable rather than statically fixed.
Solution Approach 2:
The system changes operational parameters (reward types, accrual rates, redemption options) based on merchant selection and customer characteristics. By allowing parameter changes within a unified program framework, the system achieves adaptability to different merchant objectives and demographic segments while maintaining overall program structure, thus balancing flexibility with manageable complexity.
2Productivity
If merchants provide significant benefits to acquire new customers, then customer acquisition effectiveness improves, but acquisition costs increase
Solution Approach 1:
The loyalty program applies different benefit structures to different customer segments and merchant categories. By tailoring reward types and amounts to specific local contexts (merchant type, customer demographic, transaction value), the system optimizes acquisition effectiveness for each segment without uniformly increasing costs across all transactions, thus resolving the contradiction between acquisition effectiveness and cost.
3Adaptability or versatility
If financial institutions share profit and risk with other parties, then collaborative benefits increase, but control over customer base access is reduced
Solution Approach 1:
The loyalty program platform serves multiple functions: it enables profit-sharing arrangements with merchants, provides risk management through configurable reward structures, maintains financial institution control through centralized program management, and facilitates access to customer bases for multiple parties. By making the system multi-functional, it achieves collaborative benefits while preserving institutional control, resolving the contradiction between collaboration and control.
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.