Guide 61 · Strategy
How to end a loyalty program well
End a program when it no longer changes member behavior enough to cover its rewards and running costs, and a fix would not change that. Close it in stages: stop earning on a set date, give members a fair window to redeem, extend it for large balances, then close redemptions. Check your terms and local law first, agree the accounting with finance, and tell members early and plainly.
Knowing how to end a loyalty program well matters as much as knowing how to launch one. Programs end for good reasons: the economics no longer work, the business has changed, or a new approach would serve customers better. Ending one badly, though, can damage trust far beyond the program itself. Members who lose points without warning remember it, and so do the people they tell. This guide covers when closing is the right call, what it costs, and how to run the wind-down so members and the finance team are both treated fairly.
When to end it
When should you end a loyalty program?
When it no longer changes member behavior enough to pay for itself, and changing the rules would not fix that. A practical test: compare the extra gross margin you can attribute to the program, measured against similar customers who did not join, with the growth in the points liability plus the full cost of running the program (platform, staff, service, fraud and communication). If the margin falls short for two years in a row, and a fix would not close the gap, closing deserves serious consideration.
Be strict about attribution. Purchases members would have made anyway do not count. Before deciding, check whether a smaller change would solve the problem: lower reward costs, simpler rules or a narrower program. The guide on whether to fix or relaunch a loyalty program covers those options. Closing is the right answer when none of them would make the program change behavior.
Count the cost
What does closing a program cost?
More than the remaining rewards. Points that have been issued are a promise; many companies carry them as a liability, as Starbucks does for the Stars its members earn. Closing means honoring a fair share of that promise and paying to wind down the operation.
| Cost | What drives it |
|---|---|
| Redemptions during the wind-down | Members rushing to use their points, often at a higher rate than usual |
| Technology | Switching off earning and redemption across tills, apps, websites and partners |
| Customer service | A surge in questions and complaints during the window |
| Communication | Emails, in-store notices, website updates and staff briefings |
| Partners | Contract exits and final settlements with earn or redemption partners |
| Goodwill | Members who feel let down and shop elsewhere |
In a hypothetical program with 150 million points outstanding at 1 cent each, the liability is $1.5 million. If 35% of points are redeemed during the window, the program delivers about $525,000 in rewards. Engineering, service overtime and communication add their own costs. The remaining points are released from the liability, but plan for a higher redemption rate than usual: members who know a program is ending are far more likely to use their points.
Set the timeline
How should the wind-down timeline work?
Run it in stages, and set the dates before you announce anything.
| Stage | What happens | Practical notes |
|---|---|---|
| Decision and preparation | Dates agreed, legal review, finance plan, staff briefed | Keep the decision confidential until the plan is ready |
| Announcement | Members told the dates and their options | Give the earning stop date and the final redemption date together |
| Earning stops | No new points from this date | Usually at or soon after the announcement |
| Redemption window | Members use their balance | A few months is common; longer for large balances |
| Closing | Redemptions end, remaining points cancelled or converted | Confirm the final balance to finance |
Give members with large balances more time or an extra option, such as converting points into a voucher or store credit. They are often your most valuable customers, and a rushed deadline hurts them most. Make sure the reward catalog can handle the surge: running out of popular rewards in the final weeks turns a fair process into a bad one.
Tell members
How do you tell members?
Early, plainly and more than once. The first message should state what is changing, the key dates, what members can do with their points and where to get help. Send reminders before the earning stop, partway through the window and shortly before closing. Show each member their own balance and what it can buy.
A clear announcement email covers, in this order:
- The news in one line. “Our rewards program is ending on [date].”
- The two dates. When earning stops and the last day to redeem.
- The member’s own balance and two or three things it can buy today.
- What happens to points left at the end: cancelled, converted to a voucher, or moved to a replacement.
- The reason, in a sentence, and what comes next.
- Where to get help, with a link to a page of answers.
Keep the subject line plain, such as “Changes to [program name]: your points and key dates”, so members do not mistake it for a promotion and ignore it.
Explain the reason honestly and say what comes next, if anything: a replacement program, member prices or simply better everyday service. Brief store and service staff before the announcement, with a short script and answers to the obvious questions. Members who hear the news from a confused cashier lose trust fast.
Tell partners before members, and agree what they will say. If members can still earn or redeem with a partner after your own channels close, or the reverse, they will be confused. Update the website, app and help pages on the day of the announcement, and keep a simple page with the dates and answers online until well after closing, since some members will only notice later.
Legal and accounting
What legal and accounting issues come up?
Start with your program terms and conditions. Most reserve the right to change or end the program, often with notice. Consumer protection rules in some places may still limit how quickly or on what terms you can cancel points, and in some cases unclaimed property rules may apply to unredeemed value. Get legal advice for each region where members live before setting the dates.
On the accounting side, the liability falls as members redeem, and the points left at closing are generally released. The timing and presentation of that liability release are for your finance team and auditors to decide, so involve them from the start. They will also need a final reconciliation of balances and partner settlements.
Data and next steps
What should you do with the data and the members afterward?
Member data does not end with the program. Keep only what you have a legal basis and a real need to keep, such as records for disputes, tax or accounting, and delete the rest in line with your privacy notice and retention policy. If you want to keep emailing former members, check that their consent covers marketing once the program has ended.
If a replacement is coming, give former members an easy path into it, with their history recognized where you can. If nothing replaces the program, keep serving these customers well. Many of them were your most frequent buyers before the program existed, and a fair ending gives them good reason to stay.
More answers
Frequently asked questions
Can a company cancel its loyalty program?
Usually, if its terms allow it, but how it does so matters. Terms often reserve the right to end the program with notice. Consumer protection and unclaimed property rules may still apply, depending on where members live. Review the terms and the applicable law with counsel before announcing anything.
What happens to points when a loyalty program ends?
Typically, members stop earning on a set date and can redeem their points until a later closing date. After that, remaining points are cancelled. Some programs convert points into vouchers, store credit or points in a partner or replacement program instead.
How long should members have to redeem points?
Long enough to use their balance without rushing, and long enough to meet any notice period in your terms or local law. A few months is common in practice. Members with large balances may need longer, or an option to convert their points into a voucher.
What happens to the points liability when a program closes?
Redemptions during the wind-down reduce it as rewards are delivered. Points left at closing are generally released from the liability, but the exact accounting treatment and timing are decisions for your finance team and auditors. Unclaimed property rules may also matter in some cases.
What should the email announcing the end of a loyalty program say?
Lead with the news and the two key dates: when earning stops and the last day to redeem. Then show the member's own balance and what it can buy, explain what happens to points left at the end, give the reason in a sentence, and link to a help page.
What should you do with member data after closing?
Keep only what you have a legal basis and a real need to keep, and delete the rest in line with your privacy notice and data retention policy. If you want to keep marketing to former members, check that their consent covers it once the program has ended.