Why Is Loyalty Redemption So Hard?

Customer Engagement
Customer Experience
I recently read that companies want customers to spend the loyalty points they earn. Really? I'm not so sure about that.

I recently read that companies want customers to spend the loyalty points they earn. Really? I'm not so sure about that.

There are nearly as many ways to earn and spend loyalty points as there are companies that offer them. But some businesses definitely make redemption easier than others do. Many airlines, for example, have a terrible reputation for an overabundance of blackout dates when customers can't use their frequent flyer points to purchase tickets. Conversely, there are companies like DSW that give customers reward dollars and then give those customers lots of time to spend them. But even the fairly easy redemption options like DSW could be improved by a touch of being proactive or adding mobile--and could cause behavioral loyalty to increase in the process.
Here are a few examples from my personal experience:

Situation: CVS gives loyalty program members a coupon for X dollars off based on points earned and is great about emailing opt-in customers to remind them to use the coupons. But the window for using a coupon is small--and, of course, always seems to come right after I just bought all the shampoo, soap, and moisturizer I need for the next month. And if I do get the timing right, there's an 80 percent chance I'm going to remember that the coupon is in my purse right after I pay.
My wishful solution: Granted, not using the coupons is sometimes due to my forgetfulness. But hey, a bit of proactiveness on the part of CVS could solve that. Tie both earning and using points to my ExtraCare card. So when I swipe my card it adds new points and deducts any savings. The card already does that with in-store promotions, so deducting the X dollars I earned shouldn't be too hard. Making it that easy will help keep more of my shampoo spending at CVS instead of going to, say, Target.

Situation: Macy's gives coupons for X dollar amount after you've spent a certain amount, and gives lots of time to use them. But Macy's also sends so many percentage off coupons it's overwhelming.
My wishful solution: Macy's would save customers' sanity--and would cut its marketing costs--if it would stop mailing so many print coupons with overlapping expiration dates and roll some of the promotions into the loyalty program, similar to how White House/Black Market gives loyalty card holders a percentage off every purchase and mails just one coupon per catalog every couple of months. Send coupons, just send fewer. Or let customers opt in for mobile coupons.

Situation: Whiskers Holistic Pet Care is a pet food and accessories retailer in New York City. Signing up for the loyalty program involves giving your name, phone number, and email. When customers pay for a purchase, the associate asks for their phone number so they can accrue points. At the same time, once customers accrue a certain dollar amount, the associate will ask if they want to apply the saving for that purchase or keep the tally going. No coupons, no expiration dates, no restrictions on what customers can use the point to pay for and when.
My wishful solution: Every points program should be that easy.

UPDATE (Aug 18, 2011)
So it seems that CVS read my mind (or was way ahead of me...). I received an email from the retailer today with an offer of 25 percent off my next purchase. For an in-store purchase I could opt to print the coupon or "send" it to my ExtraCare card with one click. Not surprisingly, I opted for the latter--and look forward to using it later today when I head to CVS to restock my shampoo and other sundries. Thanks CVS.