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About Promotion Calculation Rules for Loyalty Programs

When loyalty administrators create loyalty programs, they must define a promotion bonus calculation rule for each program. This rule decides how the point bonus is calculated if several promotions are in effect at the same time.

If several promotions apply to one transaction, loyalty programs can give the member the points for all the promotions, or they can reduce the number of points they give away by giving the member points for one or some of the promotions.

NOTE:  When loyalty administrators create promotions, they can select an Always Apply check box. If it is selected, the member will receive that promotion even if it would not be included according to the promotion calculation rule.

To define the promotion calculation rule, you select one of four options:

• Maximize by Promotion. Only one promotion applies, which is the promotion that is most beneficial for the member. If all promotions generate the same type of points, the one with the largest number of points applies. If the promotions generate different types of points, some qualifying and some nonqualifying, the program decides which is most beneficial to the member by calculating a weighted average of the points awarded by different promotions; loyalty administrators determine the weighting when they define the point types.
• Maximize by Point Type. Only one promotion applies per point type awarded. Multiple promotions can apply, if they generate points of different types. The program decides which promotion is used to generate points for each point type using the qualifying and nonqualifying weight rules by calculating which promotion is most beneficial to the member for each point type.
• Maximize by Point Type - Qual/Non-Qual. Only one promotion applies to generate qualifying or non-qualifying points of each type. The calculation is similar to Maximize by Point Type, except that qualifying and non-qualifying points for each type are calculated and awarded separately.
• All Promotions Apply. The member receives the combined total of all points from all applicable promotions. All promotions are calculated on the base points, not compounded. For example, if one promotion gives 50 percent bonus points, and another promotion gives 100 percent bonus points, the customer gets a total of 150 percent bonus points.

Example of Promotion Calculation Rules

As an example of how these different rules affect promotion calculations, consider a case where a transaction qualifies for four promotions.

In this example, Promotion 1 is of the type Always Apply, so accruals generated by this promotion apply regardless of which rule is followed.

The promotion calculation rules determine how the other promotions apply. The weighting used by these rules is shown in Table 12.

The last three columns of Table 13 show which points the member receives if you use different promotion calculation rules. In addition to Promotion 1, which always applies, the following promotions apply:

• Maximize by Promotion. Promotion 4 applies, because it has the maximum weighted average for Base points and Bonus points.
• Maximize by Point Type. Promotion 4 applies for Base points, because it has the maximum weighted value for that type, and Promotion 4 applies for Bonus points, because it has the maximum weighted value for that type. The weighted value is applied separately for the two different point types. Even though Promotion 2 generated 700 NQ Bonus points, these points were not applied, because the 550 Q Bonus points generated by Promotion 4 have a higher weighted value due to the difference in the qualifying and non-qualifying weights.
• Maximize by Point Type Q/NQ. Promotion 2 and Promotion 4 apply for both Base points and Bonus points. For each point type and qualifying/non-qualifying combination, the one with the maximum weighted value is applied. That is four combinations in this example.