Loyalty Point Programs

ABC's Board voted unanimously to adopt the "Loyalty Point Program Policy" which has been under a test period. Members wishing to develop programs under these guidelines will be required to make periodic reporting to ABC as to the program's execution for future review of this source of business.

Definition/Purpose:
The general purpose of loyalty programs is to build brand loyalty and increase sales volume of discretionary goods and services. Loyalty programs are structured so that a specific volume of transactions is required in order for a customer or a program member to earn sufficient award credits to redeem an award. Each time a customer or program member purchases a product or service, or performs a specific action as a requirement of the loyalty program, he or she earns award credits that, subject to specified thresholds, may be redeemed in the future for awards such as free or deeply discounted products or services.

Qualification Standards:
1. Enrollment
All programs must include an enrollment process that makes a clear link to the "host" organization; e.g., the organization attempting to build brand loyalty and/or increase sales volumes.

2. Point Activity Requirements
The program participant should be knowledgeable of the specific activity required to earn points – and the volume of points that can be earned with each specific activity. Merely holding the credit card for any length of time ("tenure") does not count as activity and is insufficient for point accrual; rather, points are to be awarded as a result of incremental activity or the value of each transaction.

3. Point Accrual
Participants must be able to accrue points to be used toward future redemption opportunities. In addition, participants should have access to account status on a regular basis.

4. Initial Award of Points
If points are given for enrollment, participants may not initially receive more than 35 percent of the points needed to obtain the least expensive product/service offered in the program.

5. Point Values
Per-point value must be established as follows:

(a) All items offered for redemption of points must include a stated value for all items being offered.

(b) All award point programs must include the option for redemption of points for items other than magazines. The mixture of magazines and non-magazine items should be one in which at least 20 percent of all products offered for redemption be non-magazine items. In addition, at least 50 percent of those non-magazine items must be commercially available (i.e., available in the public domain) for consumer purchase.

(c) The value of each commercially available product included in the program must be equal to or greater than the average value of all magazines included in the offer.

(d) The assigned point value for each program should be based upon the number of points required to redeem the lowest valued commercially available product (product value divided by assigned points equals per-point value).

(e)The number of points required for redemption of all products and services offered (magazine and non-magazine) should be an extension of the per-point value calculation, in section (d) above, times the stated value. This must be applied consistently across all award items (magazine and non-magazine).

6. Average Price Impact
The amount to be allocated to the average price calculation formula will be equal to the per-point value times the number of points required to purchase the subscription.

7. Point Expiration
If an expiration date is established, the date must allow for sufficient accumulation of points necessary to redeem the highest value item prior to points expiring.

8. Disclosure
Explanatory Paragraphs of all ABC Publisher's Statements and Audit Reports must include details of the loyalty point program, particularly the average number of copies included in paid circulation generated from such programs. Disclosure must be made in Paragraph 4B of reports reflecting the average circulation served in the period from Loyalty Point programs with a full explanation in the Explanatory Paragraph providing program details.