Siebel Loyalty Administration Guide > Setting Up Siebel Loyalty Redemptions >

Redemption Loans

Members select redemption products on a Web catalog and redeem their points to obtain the product. In some cases, the members might not have a sufficient point balance and would have to forgo the redemption.

To increase member satisfaction, the loyalty program allows a member to take out a loan to provide the extra points required for the redemption. This facility is similar to a bank providing an overdraft facility to a customer on the customer's bank account. The loan facility is extended only to members who have moved up to higher tiers of the program. The next accrual activity pays back the loan.

The loyalty administrator specifies the maximum loan that members can receive. The actual loan that a member receives is the difference between the redemption price and the member's point balance, if it is less than equal to the maximum loan limit.

The following topics discuss redemption loans:

• Setting Loan Limits for Tiers
• Sequence for Loyalty Credit Check

Setting Loan Limits for Tiers

When you set loan limits based on tier, the limit is based on the member's primary tier.

You set the limit in two ways:

• Absolute value. Specify the maximum number of points that members in this tier can borrow.
• Percent of point balance. Specify the number of points that members in this tier can borrow the percentage of the member's outstanding point balance.

You use the Basis field to specify whether the loan allowed is the maximum or the minimum of these two limits. You can select the maximum so members with a very low point balance or no point balance can still borrow the amount specified as the absolute value. Or you can select the minimum so members with a high point balance cannot borrow too large a number of points.

For example, you specify the absolute value of the loan limit for the gold tier at 3,000 points. You also set the loan limit for the gold tier at 20% of the point balance, so a member who has accumulated 10,000 points can borrow 2,000 points. If you choose Maximum in the Basis field, then the member with 10,000 points can borrow up to 3,000 points, and if you choose Minimum in the Basis field, then the member with 10,000 points can borrow up to 2,000 points.

To set loan limits for tiers

1. Navigate to the Loyalty Program Administration screen.
2. Click the Program ID field of the loyalty program that you want.
3. Click the Loans view tab.
4. In the Loans list, add a new record for each combination of point type and tier where you want to allow loans, and complete the necessary fields, described in the following table.

   Field	Description
   Tier Class	Select the tier class of the tier whose members may borrow.
   Tier	Select the tier whose members may borrow.
   Point Type	Select the point type that members may borrow.
   % Point Balance	Enter the percent of point balance that is the limit for the loan of this point type to members in this tier.
   Absolute Loan Value	Enter the absolute value that is the limit for the loan of this point type to members in this tier.
   Basis	This field determines whether the member can borrow the greater or lesser of the values specified in the % Point Balance and Absolute Loan Value fields. Select Maximum to allow members to borrow the greater of the two values, or select Minimum to allow the lesser of the two values.

Sequence for Loyalty Credit Check

The credit check sequence validates whether the member has a sufficient point balance to complete the redemption. If a member gets a loan because the member is in a tier, then the credit check process checks the extent of the maximum loan, and compares it with the redemption price to validate the member has a sufficient point balance. That is, the difference between the redemption price and the member's existing point balance must be less than or equal to the maximum loan possible for the member's tier and point type in which the selected redemption price option is quoted.

When calculating the eligible loan, the credit check sequence takes into account the member's total outstanding loans. For example, consider the following:

• A member's point balance for a particular point type is 1000.
• The price in points to be paid for redemption is 1200.
• The loan limit for the member is 500, with the status of Approved.
• The member's outstanding loan is 300.

The member is eligible to take a loan of 200 points (400 - 300). Because the points shortfall is 200 points (1200 - 1000), the member can proceed with the redemption.

The input parameters to the Credit Check business service are:

• Membership ID
• Redemption Price
• Point Type

The Credit Check sequence performs the following tasks:

1. Compares the point balance with the redemption price.

   Based on the membership ID and point type, the process retrieves the member's point balance in the specified point type. It compare the Point Balance with the redemption price in the option selected by the member, to check whether member has sufficient point balance.

   For example:

   Point Type: FFP (Frequent Flyer Points)
   Point Balance: 1,000
   Redemption price: 1,200
   Output: Insufficient balance.

   If the balance is sufficient, then the business service calls Siebel Order Management to create a quote with the price option selected.

2. Checks whether a loan is applicable to the member's tier.

   If the balance is insufficient, then the process retrieves the member's tier and tier class, and refers to the Loyalty Program Administration screen, Loan setup to check whether a loan is applicable for the member's tier in the given tier class, and the point type considered for redemption pricing.

   If the loan is applicable, then the process proceeds. If the loan is not applicable, then the process provides a message that the loan is not successful.

3. After verifying that the loan is applicable, the process derives the shortfall by calculating the difference between the redemption price in points and the member's current point balance.

   For example:

   Redemption Price: 1,200 points
   Point Balance: 1,000 points
   Shortfall: 200 points

4. Assesses the extent of the loan.

   For example, the loan of Frequent Flyer Points is by tier and by percent of balance. The calculation is as follows:

   Members FFP balance: 1,000 points
   Member's primary tier: Gold
   Percentage of Point Balance in Point Type Miles: 40%
   The loyalty program can provide a maximum loan of 400 points to the member.

5. Derives the value to be compared with the shortfall by comparing the value derived based on percentage of point balance with an absolute value.

   For example:
   Basis: maximum.
   Extent of Loan based on Percentage of Point Balance: 400 points
   Extent of Loan based on Absolute Value: 500 points
   Maximum of the two: 500 points.

6. Checks whether the loan is sufficient.

   The process compares the maximum applicable loan derived in Step 5 with the points shortfall stored in Step 3. The shortfall must to be less than or equal to the maximum loan limit for the credit check to be successful.

   For example:
   Shortfall: 200
   Maximum loan limit: 500

   As the shortfall is less than the maximum loan limit, the Credit Check output is: Successful.

7. Creates a loan accrual.
8. Because the credit check is successful, Loyalty business service automatically creates a loan transaction. That is, it accrues the shortfall in points to the member's account, and successfully creates the redemption transaction. The business service calls Siebel Order Management to create a quotation.