US20080103909A1

US20080103909A1 - Promoting customer loyalty

Info

Publication number: US20080103909A1
Application number: US11/963,572
Authority: US
Inventors: Yin Huang; Jerzy Prekurat
Original assignee: Canadian Bank Note Co Ltd
Current assignee: Canadian Bank Note Co Ltd
Priority date: 2004-08-11
Filing date: 2007-12-21
Publication date: 2008-05-01
Also published as: NL1029580A1; US20060036482A1; US7962362B2; NL1029580C2

Abstract

A method and system for promoting customer loyalty with respect to any transactional activity is disclosed. In an exemplary embodiment, the method includes an accumulation phase and a disbursement phase. In the accumulation phase, a recency, a frequency, and an intensity of the customer's purchases is monitored and a loyalty score is determined therefrom. In the disbursement phase, the customer is offered a reward based upon the customer's loyalty score, including alternatively a share of a prize pool in a loyalty lottery or a discount on a further purchase by the customer.

Description

RELATED APPLICATIONS

This application is a continuation-in-part of U.S. patent application Ser. No. 10/916,071, filed Aug. 11, 2004.

COPYRIGHT NOTICE

A portion of the disclosure of this patent document contains material which is subject to copyright protection. The copyright owner has no objection to the facsimile reproduction by anyone of the patent document or the patent disclosure, as it appears in the Patent and Trademark Office patent file or records, but otherwise reserves all copyright rights whatsoever

BACKGROUND OF THE INVENTION

1. Field of Invention
The invention relates to customer loyalty systems and more particularly to a customer lottery system applicable to transactional activity generally.
2. Description of the Related Prior Art
Generally speaking, the concept of promoting customer loyalty by issuing rewards or bonuses to particularly loyal customers is known in the art. U.S. Pat. No. 6,578,735 for example, provides a method of promoting customer loyalty by analyzing customer purchases at a point-of-sale (POS) terminal to determine if a customer has purchased products equaling or exceeding a predetermined value and, if this is the case, entitling the customer to participate in a bonus ticket game configured as a game of chance. Similarly, U.S. Pat. No. 6,222,914 teaches a system and method for administering an incentive award program wherein award points are earned in response to customer purchases of goods and services by credit card and then credited to the customer's credit account. The calculation of award points is based at least in part upon the charges to the customer credit card.
The concept of reserving a certain percentage of the revenue generated by the sale of tickets associated with a given lottery for a “loyalty reward pot” is also known in the art. For example, U.S. Pat. No. 5,645,486 teaches a gaming system which includes a master controller operatively connected to a plurality of gaming controllers, the master controller adding a predetermined percentage of the bet coins or tokens reported by each of the gaming controllers to a saved (or progressive) bonus value.
The concept of qualifying for a bonus award at a second level of game play only upon an event (such as winning) occurring at a first level of game play is also discussed in the prior art. For example, U.S. Pat. No. 5,645,486 teaches a gaming system in which to qualify for a bonus award (or second level), a player must first get a predetermined winning combination (at a first level). In this lottery scheme, all players have a chance to receive the progressive bonus upon getting a predetermined winning combination, regardless of the number of coins that player wagers initially. In addition, U.S. Pat. No. 6,210,276 teaches a game with a first level of game play (and corresponding first win opportunity) and a second level of game play with a second win opportunity that provides further incentive to the player to play the game. Contingencies of the first level of game play need to be satisfied in order to enter and play the second level of game play.
Thus, in known customer loyalty systems the customer's eligibility for a reward is based solely upon a sum of the customer's previous purchases. Such systems do not take into account other measurable characteristics of customer loyalty.

SUMMARY OF THE INVENTION

In order to overcome the deficiencies of the prior art there is provided a method of promoting customer loyalty comprising offering a reward to a customer based upon a recency, a frequency, and an intensity of purchases made by the customer.
In one embodiment, the method includes the following steps. The recency, frequency, and intensity of the customer's purchases are monitored. The customer's eligibility for the reward is determined based upon the recency, frequency, and intensity of the customer's purchases. The reward is offered to the customer if the customer is determined to be eligible for the reward.
There is also provided a system for promoting customer loyalty including a central database and a central processor. The central database is for recording a recency, a frequency, and an intensity of purchases of each of a plurality of customers. It is connected to at least one transaction terminal for receiving information of the purchases of the respective customers. The central processor is for determining a reward for an eligible customer based upon the recency, frequency, and intensity of the eligible customer's purchases. It is connected to a display for displaying the reward.
There is also provided a computer program product for promoting customer loyalty. The computer program product includes at least the following. Software instructions are included for enabling a computer to perform predetermined operations. A computer-readable medium bearing the software instructions is included. The predetermined instructions include the following. Instructions are included for receiving information of respective purchases of each of a plurality of customers from at least one transaction terminal. Instructions for recording a recency, a frequency, and an intensity of the respective purchases of each of the plurality of customers are included. The instructions include determining a reward for at least one customer based upon the recency, frequency, and intensity of that customer's purchases. Finally, instructions are included for transmitting information of the reward to a display.

BRIEF DESCRIPTION OF THE DRAWINGS

A better understanding of the invention will be obtained by considering the detailed description below, with reference to the following drawings in which:
FIG. 1 is a network diagram highlighting the lottery system of the present invention;
FIG. 2 is a flow chart depicting the steps performed by the system of the present invention;
FIG. 3 is a network diagram highlighting an exemplary embodiment of the present invention as it is applied to transactional activity generally;
FIG. 4 is a flow chart depicting the steps performed by the exemplary embodiment of FIG. 3 in a lottery embodiment of a disbursement phase; and
FIG. 5 is a flow chart depicting the steps performed by the exemplary embodiment of FIG. 3 in a discount embodiment of a disbursement phase.

DESCRIPTION OF THE PREFERRED EMBODIMENT

Referring to FIG. 1, a network diagram highlighting the lottery system of the present invention is depicted. A plurality of lottery terminals 10 are connected to a network 12 which is in turn connected to a central server 14 comprising a central storage device and a central processor. Lottery terminals 10 are typically deployed at retails outlets throughout a city or larger territory to facilitate the purchase of lottery tickets. A lottery player 16 at a given location has an associated identification (ID). The identification may be stored on a smartcard 18, a barcode 20 or a radio frequency identification (RFID) tag 22 although the invention is not meant to be limited to these devices. Lottery terminal 10 comprises a keyboard 24, a processor 26, and a display 28. In addition, to accommodate to accommodate the above-noted ID storage devices, the lottery terminal may optionally include input means such as a barcode scanner (not shown) to facilitate automated reception of a player's ID.
Referring to FIG. 2, a flow chart depicting the steps performed by the system of the present invention is depicted. The lottery system proposed includes the tracking of customers' playing behaviour for, among other things, determining if a portion of the loyalty prize pot should be awarded. Such tracking is also useful for market research purposes. Tracking is based on player ID data. At step 100, a player identification is assigned and stored in the central storage device of central server 14. At step 110, each time a respective player makes a purchase of a lottery ticket it is recorded in the central storage device e.g. in one embodiment, the customer ID is stored in radio frequency identification tag (RFID) 22 which lottery terminal 10 reads and forwards (during a ticket purchase transaction) to central server 14, storing the player account information in the central storage device. The stored information need not include personal customer information. If the customer ID is stored on a smartcard (protected by a PIN, for example), customer details could be stored entirely locally on the customer's smartcard, thereby allaying any privacy concerns. The customer's identity typically will only be revealed upon winning.
As will be appreciated by those in the art, in a typical lottery, a player either selects or is randomly assigned a number when a ticket is purchased. At least a portion of the revenue generated from the lottery ticket sales forms part of a jackpot. The present invention contemplates reserving a fraction (e.g. approximately 5%) of the available prize money for a player loyalty reward pool. The loyalty reward is paid out on the basis of three criteria: (a) recency of player purchase; (b) frequency of player purchase; and (c) intensity of player purchase. In the event that several players select the winning number, the main prize (or so called Jackpot) would be equally divided amongst them. However, for those particularly loyal customers, additional moneys would be paid out from the player loyalty reward pool also known as a VIP pot. At step 120, the central processor determines if one or more players have won the jackpot by comparing the winning number with the numbers selected by each respective player. If one or more of the selected numbers match the winning numbers then those players are declared winners. At step 130, the central processor determines if there are any players eligible for the loyalty reward pot. As will be discussed in greater detail below, this is accomplished by comparing their loyalty score with an established threshold. If their score exceeds the threshold, they will be deemed eligible for the loyalty reward pot. In this regard, it will be appreciated that the score can be calculated in such a way that it exceeds the threshold either when it is greater than the threshold, or alternatively when it is less than the threshold. Further, the actual value of their loyalty score will determine the portion of the loyalty pot which they are awarded. In the event that any level of loyalty is to be rewarded, the threshold is simply set to zero such that a player having even a very low loyalty score which share in the VIP pot.
At step 140, the central processor determines if any of the players winning the jackpot match those players qualifying for the player loyalty reward pool. If the answers is “yes” then the main event and loyalty winners are displayed. More specifically, if a player requested the results at a selected lottery terminal 10, then the results would be uploaded and shown on display 26. At step 160, both the jackpot winners and loyalty reward players are paid out. At step 140 if the answer is “no” then only the jackpot winners are displayed and at step 180 the jackpot winners are paid out. Finally, at step 190 the loyalty score of respective players is recalculated to reflect the passage of the lottery event.
As discussed above, the three criteria used as a basis for determining: (a) if a customer qualifies for a loyalty reward payout and (b) the value of the loyalty reward payout are: (i) recency of player purchase; (ii) frequency of player purchase; and (iii) intensity of player purchase. Recency is defined as the proximity of a customer's purchase activity to a particular draw. Frequency is defined as how often (i.e. number of instances) a customer purchases a lottery ticket or tickets over a predefined time period prior to a particular draw. Intensity is defined as the number of lottery tickets purchased by the customer over the predefined time period for a particular draw. These variables are contained in a mathematical formula in the form of a decay function which is used to determine if a particular player is above a predefined threshold and, if so, how much of the loyalty reward pot should be awarded. For example, a winning customer who had purchased many tickets over several days in the weeks leading up to the lottery would qualify for a loyalty reward payout whereas a winning customer who had purchased a single ticket on the day of the lottery would not qualify for a loyalty reward payout. Each time a ticket is purchased by a specified player, the central database of central server 14 is updated with the purchasing history ultimately being used to calculate the payer's loyalty score.
As previously described, a player's share of the VIP pot is pro-rated using a function based on (a) recency; (b) frequency; and (e) intensity of play. To calculate the pro-rated winnings, we define a Unit of Participation (UP). A player's winning is the product of the pool and the ratio of their total UP to the total UP from all winners. In any one draw i, the UP may be generally characterized as follows:
UP _i =C(R _i ,F _i I _i) (1)
Where C is a mathematical function for R_ithe recency component, F_ithe frequency component and I_ithe intensity component.
In one embodiment, C is a simple, unweighted product of the 3 components:
C(R _i ,F _i ,I _i)=R _i *F _i *I _i
R, F and I are derived from captured historical play data which describe the player's behaviour prior to the current draw, using a function defined for the purpose. R, F and I are described in more detail below:
1) Recency
Recency refers to any mathematical characterization of how recently the player has participated in the game. There will be some weighting in the function to favour players who participate in recent draws, ultimately giving them greater UP.
R _i =R(N _i) (2)
Where R is a mathematical function for N, the number of draws missed between the last time the player participated in the game and the current draw.
One embodiment for R is:
R _i=(N _i+1)^D (3)
Where D is an arbitrarily assigned coefficient of degradation, based on market research.
2) Frequency
Frequency refers to any mathematical characterization of how frequently the player participates in the game.
F _i =F(N _i ,M) (4)
Where F is a mathematical function for N, the number of draws participated out of a predefined M draws preceding the current draw.
One embodiment for F is:
F _i=(M−N _i+1)^D (5)
Where D is an arbitrarily assigned coefficient of degradation, based on market research.
An alternate embodiment for F is based on a recursive function, not requiring tracking of the last M draws:
F _i=(B+F _i-1)^E (6)
Where B=1 if last draw was played or =0 if last draw was not played; E is an arbitrarily assigned coefficient of degradation, based on market research.
3) Intensity
Intensity refers to any mathematical characterization of how intensely the player participates in the game.
I _i =I($_i ,N _i ,M) (7)
Where I is a mathematical function for $, the value of the bet wagered by the player in the N_idraws he participated during the preceding M draws.
One embodiment for 1 is:
I _i=log_a(Σ$_N /N _i)+K (8)
Where Σ$_Nis a sum of all bets wagered by the player, N is the number of draws he participated out of the predefined M draw window, a is an arbitrarily assigned base and K is an arbitrarily assigned constant.
Yet another possible embodiment for I is:
I _i=1−{1/[(Σ$_N /N _i)−1]} (9)
Where Σ$_Nis a sum of all bets wagered by the player in the last M draws preceding the current draw, N being the number of draws the player participated out of the M draws.
An alternate formula for I, based on a recursive function and not requiring tracking of the player's bet behaviour during the last M draws is:
I _i =CI($,I _i-1) (10)
Where CI is a mathematical function for draw i, $ is the dollar amount wagered this draw and I_i-1is I for the previous draw.
One embodiment for CI is:
CI($,I _i-1)=$+αI _i-1 (11)
Where 0<α<=1
It is possible to calculate meaningful values for (1) recency (2) frequency (3) intensity of play for all special cases:

- (a) considering just the previous draw—in this case (1) and (2) become essentially binary values;
- (b) considering records for any chosen subset of draws (M) preceding the current draw (ie. last 100, last 11 Saturdays etc.);
- (c) considering records from the beginning of the game; or
- (d) it is also possible to assign different weight to different categories of records (ie. older records weigh less, Saturdays weigh more etc.) by modifying the above functions.

It will be understood by those in the art that the above embodiments are for illustration purposes only. There is, in principle, no inherent constraint as to how the mathematical functions C, CI, CR, CF may be constructed. They are simply designed to ensure that the value of the decay function rises proportionally with rising recency, frequency and intensity of play within desired windows of values for recency, frequency and intensity. Further, the value of the decay function is designed not to rise above a predefined threshold, or its growth becomes insignificant above the predefined threshold. In operation, as a player's frequency, intensity and recency decreases over time, their share of the VIP pot is diminished accordingly. Once a player falls below a predefined threshold they are no longer eligible for the VIP pot.
A straight-forward formulation for a lottery which has all 3 elements of the loyalty program and which has the simplicity of explanation to the playing public is:
UP=UP _i-1+$+αL+βF (12)
Where $ is the current wager in cents (Intensity),
L=1 if last draw not played, 0 if played (Recency),
F=1, a constant signifying the current play (Frequency)
α, β are scaling functions, e.g. α=−100, β=5
While the current invention is intended to encourage player loyalty and participation in a game of chance, it is recognized that the scheme could be misused resulting in gaming addiction. Responsible organizers of games of chance could easily mitigate the likelihood of problem gaming by setting a cap in UP such that a player whose UP exceeds a pre-set limit of L will be considered to have UP of L, both for the current draw's calculation and for carrying forward where a recursive function is used. Another valid approach to solve this problem would be to structure the functions for R, F and I in a way that offers steeply diminishing return: UP grows significantly with growing R, F, and I in the range considered acceptable, but offers only minimal increases beyond it. This approach is present in some of the example embodiments presented above.
When the UP for all players has been calculated, the prize will be divided by the sum of all UPs to arrive at a unit prize and each player's winning will be the product of this unit prize and his UP. It is also possible to apply this concept to a prize level other than the Jackpot prize. For example, in a lottery game with 3 prize levels (e.g. Match-6, Match-5 and Match-4), a portion of the prize pool could be set aside for the VIP pot such that players could participate in the loyalty game at one or more of the 3 prize levels. It is particularly useful to have a VIP pot for the lowest prize tier to generate day-to-day interest in the game.
It should also be appreciated by those in the art, that a lottery is not the only game that could incorporate this loyalty feature. A VIP pot could be established for any pari-mutuel or non-pari-mutuel game. If the VIP pot is applied to all players, then the VIP pot becomes a discount that is applied to the ticket price of the player, the rate of discount being determined by “loyalty” only. The discount can thus be applied at purchase rather than after the draw. We thus use last draw's UP to arrive at a discount rate:

- (a) discount calculated for draw N−1 will be applied to ticket for draw N, but only if the player participates in draw N; if player chooses not to participate in draw N, this particular discount is lost to the player;
- (b) any consistent criteria can be used to “time shift” application of discount—for instance: discount calculated on Saturday can be applied only against ticket for the next Saturday draw; discount calculated for “special draw” can only be applied against ticket for another “special draw”; and
- (c) discount totals can be accumulated for the player until it reaches the value of the ticket, at which point free ticket is offered to the player.
  This approach can be also used for promotion of another pari-mutuel or non-pari-mutuel game, in which case the last draws's UP from game A is used to calculate discount rate of ticket for game B—while all options (a, b, c) above remain valid and can be used.
  Application to Transactional Activity Generally

While the systems and methods described hereinabove concern games of chance including lotteries, it will be appreciated by persons skilled in the art that such systems and methods may also be applied to any transactional activity apart from games of chance. They may be applied to transactions between, for example: an airline and a passenger; a retail store and a customer; or a cinema and a patron. They may be applied in any context wherein it is desired by one party to reward the other party so as to encourage a greater frequency, recency, and intensity of a desired activity such as the purchasing of goods or services, or the visiting of an establishment. The systems and methods are particularly advantageous when applied to any repeat financial transaction between two parties. Thus, it will be readily appreciated that the purchase of lottery tickets by a customer is merely one example of a desired activity which may be encouraged by application of the systems and methods of the invention.
In this regard, the systems and methods of the invention may be viewed as concerning two phases: an accumulation phase and a disbursement phase. Such characterization is not intended to thereby limit the scope of the invention; rather, it is merely one convenient way of understanding the various aspects of the invention.
During the accumulation phase, the methods and systems are employed to monitor performance of the desired activity by the other party. Thus, in the lottery embodiments described above, the accumulation phase includes the monitoring of lottery ticket purchases and the calculation of a loyalty score represented by Units of Participation. In some embodiments, the loyalty score, measured by Units of Participation, constitute “loyalty points” which are “collected” by customers who register in a loyalty program. Whether the loyalty score is calculated only at the beginning of the disbursement phase (i.e. to determine eligibility for a reward), or is calculated periodically to monitor the number of loyalty points held by a customer, the loyalty score may be referred to as indicating a number of loyalty points held by a customer at any given time.
It will be appreciated that such systems and methods may equally be applied to the accumulation phase of any other desired transactions wherein such transactions are monitored in the same way and a loyalty score is calculated in the same way (i.e. based upon the recency and frequency of such transactions, and a measure of the intensity of the transactions). For example, where the desired activity is purchases of goods or services, such purchases may be monitored in the same way as lottery ticket purchases are monitored, wherein the recency, frequency, and intensity are determined in the same way, except that the purchase amount takes the place of wager amount in the calculation of the intensity. In embodiments where the desired activity is visits to an establishment, the time spent in the establishment may take the place of the wager amount in calculating the intensity. As will readily be understood by persons skilled in the art, the principles disclosed herein may be applied to any desired activity with the appropriate substitution of metrics for those provided in the specific exemplary embodiment disclosed above.
Accordingly, the frequency measurement, described above, may measure the frequency of purchases by the customer or may alternatively measure the frequency of visits to the store made by the customer. Likewise, the recency measurement may measure the recency of the customer's last purchase or visit, as the case may be. The intensity measurement may measure the number of purchases or visits, or the monetary sum of purchases, or the sum of time spent visiting, within a predetermined period preceding the disbursement phase, described hereinafter. As discussed in respect of games of chance, the principles of the invention may be applied in any suitable manner so as to encourage desirable activity on the part of the other parties, e.g. customers.
Thus, a customer's loyalty score may be calculated in a similar manner as discussed above with respect to purchases of lottery tickets. With reference to Equations 1 to 12, the loyalty score may be equated to or based upon the customer's Unit of Participation. In this regard, the recency component R_imay be a function of the amount of time (e.g. number of days) that have elapsed since the customer's last purchase or visit, as the case may be, represented by N_i. Likewise, the frequency component F_imay be a function of the number of days N_iin the preceding M days in which the customer made a purchase. Furthermore, the intensity component I_imay be a function of $, the total value of purchases made in the preceding N_idays in which the customer made a purchase in the preceding M days. As will be readily appreciated by a person skilled in the art, Equations 1 to 12 may be adapted, and new equations formulated, to provide for the calculation of a loyalty score based on the recency, frequency, and intensity of the customer's purchase on any suitable basis.
It is observed that the accumulation phase of known loyalty reward methods concerns only one measurement of the desired behaviour: namely, the monetary sum of prior purchases. The systems and methods for rewarding customer loyalty disclosed herein are superior to such known systems as they encourage a more complete set of characteristics of desired customer behaviour.
The disbursement phase may be carried out in any suitable manner in accordance with the principles disclosed herein. For example, a retail store employing the systems and methods may periodically seed and hold a lottery wherein winners are drawn from customers with loyalty program membership and prizes are pro-rated by the winning customers' loyalty points. Alternatively, each customer's loyalty points may be equated to a chance of winning the lottery relative to the other customers' chances. In each case, each winner's loyalty points thus expended are deducted from his or her current total.
Accordingly, where the disbursement phase is carried out as a lottery, it may be conducted employing the systems and methods of the first embodiments hereinabove. While all customers may be made eligible for such a lottery, ordinarily only participants of the loyalty program would be eligible. A prize pool would be established by any suitable means (e.g. a fixed amount, or an amount based upon the aggregate participation (UPs) of all loyalty program members), and winners selected from the loyalty program participants as described above.
The disbursement phase may also be arranged as a discount applicable to the customer's subsequent purchases. For example, if the customer presently has more than 100,000 points, they obtain a 2% discount on their next purchase; if they have over 500,000 points, the discount is 3%. The customer's allotment of points may be reduced in a predetermined manner when the discount is utilized. For example, when the discount is used the customer's points may be reduced by 10,000 points for each $10 of discount, up to 2% of the purchase price. There is thus provided a scheme for variable-tier membership in a loyalty program that reflects the customer's current level of participation in the program.
While the accumulation and disbursement phases have, thus far, been treated as distinct, with loyalty being treated as a form of currency, the two phases may also be integrated. For example, a discount may be applied to a current purchase based on loyalty measurements of the present purchase as well as past purchases. Such a discount may provide, e.g. a discount of 2% on present purchases of $100 or more if the last 4 weeks' purchases are $100 or more per week. A similar discount would be up to 5% discount on present purchases of $100 or more, at the rate of 1% for each of the last 5 weeks, if that week's purchases exceeded $100.
Exemplary System
In accordance with the foregoing, there is depicted in FIG. 3 a customer loyalty system 200 according to one aspect of the invention. A plurality of transaction terminals 210 are connected to a network 212 which is in turn connected to a central server 214 comprising a central storage device (i.e. database) and a central processor. Transaction terminals 210 are typically located wherever transactions are to be recorded in the system. e.g., at retail outlets, service locations, or in use by remote operators receiving and entering orders by, e.g. telephone. Alternatively, the transaction terminal 210 may be a server on a network (e.g. the Internet) to which a connection may be made by a customer's own computer. The transaction terminal 210 may be connected to the central server 214 through the network. Alternatively, the functionality of the transaction terminal 210 and central server 214 may be contained in respective modules residing on the same computer system.
Generally, the transaction terminal 210 may be any means at any suitable location for recording information regarding a transaction and transmitting such to the central server 214. Understanding the principles and desired functionality disclosed herein, persons skilled in the art will be able to establish any variant or alternative configuration which embodies such principles and performs such desired functionality without departing from the scope of the invention.
A customer 216 at a given location has an associated identification (ID). The identification may be stored on a smartcard 218, a barcode 220 or a radio frequency identification (RFID) tag 222 although the invention is not meant to be limited to these devices. For example, a customer's ID may alternatively comprise a unique username/password combination for entry into the transaction terminal 210. Any suitable identification means may be employed.
In some embodiments, the transaction terminal 210 comprises a keyboard 224, a processor 226, and a display 228. Where the customer's ID resides on or in any of the above-noted ID storage devices, the transaction terminal may optionally include input means such as a barcode scanner (not shown) to facilitate automated reception of a purchaser's ID.
Exemplary Accumulation Phase
FIGS. 4 & 5 each show a flow chart depicting the steps performed by the system in two respective embodiments. The system tracks the customers' transactional behaviour for, among other things, determining if a reward should be offered. Such tracking is also useful for market research purposes. Tracking is based on customer ID. At step 300 in each embodiment, a customer identification is assigned and stored in the central storage device (i.e. database) of central server 214.
At step 310, each time a respective customer makes a purchase, it is recorded in the central storage device. Any information needed to determine a loyalty score is also recorded (e.g. date and/or time of purchase for calculating recency and frequency of purchases, and additionally an amount for calculating intensity of purchases). For example, in one embodiment, the customer ID is stored in radio frequency identification tag (RFID) 222 which a transaction terminal 210 reads and forwards (during a purchase transaction) to central server 214, storing the customer account information in the central storage device. The stored information need not include personal customer information. If the customer ID is stored on a smartcard (protected by a PIN, for example), customer details could be stored entirely locally on the customer's smartcard, thereby allaying any privacy concerns.
As described above, prior to the offering of any reward, a loyalty score may be calculated periodically and monitored. Accordingly, the loyalty score may be calculated and reported to the customer following each purchase to as to allow the customer to track their own loyalty points. Alternatively, calculation of the loyalty score may be deferred until eligibility for a reward is to be determined in the disbursement phase.
FIGS. 4 & 5 show two different embodiments of the disbursement phase as described above.
Exemplary Disbursement Phase: Lottery
In FIG. 4, a lottery is seeded (e.g. money is allocated for prizes) (step 320) and lottery winners are determined (step 330) in the manner described above. In other words, the systems and methods of the first embodiments described above wherein customers are purchasers of lottery tickets are, in the present embodiment, applied equally wherein the customers make more general purchases or goods or services. Specifically, when a lottery is to be held, each eligible customer either selects or is randomly assigned a number. Customers may be eligible, e.g.: only if they are registered in a loyalty program; only if their loyalty score exceeds a predetermined threshold; or, alternatively, all customers may be eligible. In this regard, it will be appreciated that the score can be calculated in such a way that it exceeds the threshold either when it is greater than the threshold, or alternatively when it is less than the threshold. If all customers are eligible, then a main prize available to all customers and a loyalty prize available only to, e.g. loyalty program members or customers having a minimum qualifying loyalty score may be established.
The loyalty prize is paid out on the basis of the three criteria discussed above: (a) the recency of customer transactions; (b) the frequency of customer transactions; and (c) the intensity of customer transactions. Where there is a main prize for which all customers are eligible, and several customers select or are assigned the winning number, the main prize would be equally divided amongst them. However, for those particularly loyal customers, additional moneys would be paid out from the loyalty prize.
At step 330, the central processor determines if one or more customers have won the main prize by comparing the winning number with the numbers of each respective customer. If one or more of the selected numbers match the winning numbers then those customers are declared winners. The central processor determines if there are any customers eligible for the loyalty prize. As in the embodiments described above, this is accomplished by comparing their loyalty score with an established threshold. If their score exceeds the threshold, they will be deemed eligible for the loyalty prize. In this regard, it will be appreciated that the score can be calculated in such a way that it exceeds the threshold either when it is greater than the threshold, or alternatively when it is less than the threshold. Further, the actual value of their loyalty score will determine the portion of the loyalty pot which they are awarded. In the event that any level of loyalty is to be rewarded, the threshold is simply set to zero such that a player having even a very low loyalty score which share in the loyalty prize.
Once the lottery is conducted, the lottery winners are displayed (step 340), and then the appropriate reward is offered and paid (step 350). After any reward is paid, the system recalculates every rewarded customer's loyalty score to reflect the discount (step 360).
Exemplary Disbursement Phase: Discount
In FIG. 5, an embodiment wherein the disbursement phase comprises a rebate or discount, as described above, is shown. In this embodiment, the system determines a discount (step 370) by any suitable method, including the methods described above, and applies the discount to a present purchase (step 380). Specifically, the loyalty points, or UPs, of eligible customers are determined according to the mathematical equations defined above, wherein the recency, frequency, and intensity components measure each customer's respective purchases. The discounts or rebates available for present purchases are determined as described above based upon such loyalty points. For example, if the customer presently has more than 100,000 points, they obtain a 2% discount on their next purchase; if they have over 500,000 points, the discount is 3%.
After any discount is applied, the system recalculates the rewarded customer's loyalty score to reflect the discount (step 360). In the example described immediately above, the customer's allotment of points may be reduced in a predetermined manner when the discount is utilized. For example, when the discount is used the customer's points may be reduced by 10,000 points for each $10 of discount, up to 2% of the purchase price.
The method of the present invention may be implemented in any conventional computer programming language for use with many computer architectures or operating systems. For example, preferred embodiments may be implemented in a procedural programming language (e.g. “C”) or an object oriented language (e.g. “C++”) for use with a Unix operating system in an optical network. Further, the method of the present invention can be implemented as a computer program product for use with central server 14. Such implementation may include a series of computer instructions fixed either on a tangible medium, such as a computer readable medium (e.g., a diskette, CD-ROM, ROM, or fixed disk) or transmittable to the central server 14, via a modem or other interface device, such as a communications adapter connected to network 12 over a medium. The medium may be either a tangible medium (e.g., optical or electrical communications lines) or a medium implemented with wireless techniques (e.g., microwave, infrared or other transmission techniques). The series of computer instructions embodies all or part of the functionality previously described herein. Furthermore, such instructions are stored in the central storage device which may be a semiconductor, magnetic, optical or other memory device, and may be transmitted using any communications technology, such as optical, infrared, microwave, or other transmission technologies. It is expected that such a computer program product may be distributed as a removable medium with accompanying printed or electronic documentation (e.g., shrink wrapped software), preloaded with onto the central server 14 (e.g., on system ROM or fixed disk), or distributed from a server (not shown) over the network 12. Of course, some embodiments of the invention may be implemented as a combination of both software (e.g., a computer program product) and hardware. Still other embodiments of the invention may be implemented as entirely hardware, or entirely software.
Although various exemplary embodiments of the invention have been disclosed, it should be apparent to those skilled in the art that various changes and modifications can be made which will achieve some of the advantages of the invention without departing from the true scope of the invention.
A person understanding this invention may now conceive of alternative structures and embodiments or variations of the above all of which are intended to fall within the scope of the invention as defined in the claims that follow.

Claims

1. A method of promoting customer loyalty comprising offering a reward to a customer based upon a recency, a frequency, and an intensity of purchases made by the customer.

2. The method of claim 1 further comprising:

monitoring the recency, frequency, and intensity of the customer's purchases; and

determining the customer's eligibility for the reward based upon the recency, frequency, and intensity of the customer's purchases

wherein the reward is offered to the customer if the customer is determined to be eligible for the reward.

3. The method according to claim 2 wherein the determination of the customer's eligibility for the reward is based upon a loyalty score of the customer according to a pre-determined mathematical formula incorporating the recency, frequency and intensity of the customer's purchases.

4. The method according to claim 3 wherein the predetermined mathematical formula is a decay function having the following characteristics:

(a) a calculated value associated with said decay function rises proportionally if the recency, frequency or intensity rises within a desired window of values for each of the recency, frequency or intensity; and

(b) the calculated value associated with the decay function becomes insignificant above a predefined threshold

wherein the customer's loyalty score is based upon the calculated value.

5. The method according to claim 3 wherein the customer's eligibility for the reward is determined by operating a lottery wherein the customer is a player, and the reward is a share of a prize pool of the lottery, whereby the customer is determined to be eligible for the reward if the customer is determined to be a winner of the lottery.

6. The method according to claim 5 wherein, if the customer is determined to be a winner of the lottery, the customer's share of the prize pool is based upon the customer's loyalty score.

7. The method according to claim 6 wherein the prize pool is divided between the customer and other winning customers on a prorated basis in accordance with the customer's loyalty score and respective loyalty scores of the other winning customers.

8. The method according to claim 5 wherein the customer's chance of being determined to be a winner of the lottery is based upon the customer's loyalty score.

9. The method according to claim 3 wherein the customer is determined to be eligible for the reward if the customer's loyalty score exceeds a predetermined threshold.

10. The method according to claim 9 further comprising reducing the customer's loyalty score by an amount based upon the reward if the customer accepts the reward.

11. The method according to claim 9 wherein the reward is a discount on a further purchase by the customer.

12. The method according to claim 11 wherein an amount of the discount is based upon the customer's loyalty score.

13. The method according to claim 12 wherein the amount of the discount is further based upon an amount of the further purchase.

14. A system for promoting customer loyalty comprising:

a central database for recording a recency, a frequency, and an intensity of purchases of each of a plurality of customers, the central database being connected to at least one transaction terminal for receiving information of the purchases of the respective customers; and

a central processor for determining a reward for an eligible customer based upon the recency, frequency, and intensity of the eligible customer's purchases, the central processor being connected to a display for displaying the reward.

15. The system according to claim 14 wherein the determination of the reward is based upon a loyalty score of the eligible customer according to a pre-determined mathematical formula incorporating the recency, frequency and intensity of the eligible customer's purchases.

16. The system according to claim 15 wherein the pre-determined mathematical formula is a decay function having the following characteristics:

(b) growth of the calculated value associated with the decay function becomes insignificant above a predefined threshold

wherein the eligible customer's loyalty score is based upon the calculated value.

17. The system according to claim 15 wherein the reward is determined by operating a lottery wherein the eligible customer is a player, and the reward is a share of a prize pool of the lottery if the eligible customer is determined to be a winner of the lottery.

18. The system according to claim 17 wherein the eligible customer's share of the prize pool is based upon the eligible customer's loyalty score, wherein the prize pool is divided between the eligible customer and other winning customers on a prorated basis in accordance with the eligible customer's loyalty score and respective loyalty scores of the other winning customers.

19. The system according to claim 15 wherein the reward is a discount on a further purchase by the eligible customer, wherein an amount of the discount is based upon the eligible customer's loyalty score.

20. A computer program product for promoting customer loyalty, the computer program product comprising:

software instructions for enabling a computer to perform predetermined operations; and

a computer-readable medium bearing the software instructions;

the predetermined instructions including:

receiving information of respective purchases of each of a plurality of customers from at least one transaction terminal;

recording a recency, a frequency, and an intensity of the respective purchases of each of the plurality of customers;

determining a reward for at least one customer based upon the recency, frequency, and intensity of that customer's purchases; and

transmitting information of the reward to a display.