U.S. patent application number 11/963572 was filed with the patent office on 2008-05-01 for promoting customer loyalty.
This patent application is currently assigned to CANADIAN BANK NOTE COMPANY, LIMITED. Invention is credited to Yin Lerh Huang, Jerzy Prekurat.
Application Number | 20080103909 11/963572 |
Document ID | / |
Family ID | 35801116 |
Filed Date | 2008-05-01 |
United States Patent
Application |
20080103909 |
Kind Code |
A1 |
Huang; Yin Lerh ; et
al. |
May 1, 2008 |
PROMOTING CUSTOMER LOYALTY
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.
Inventors: |
Huang; Yin Lerh; (Ottawa,
CA) ; Prekurat; Jerzy; (Ottawa, CA) |
Correspondence
Address: |
CROMPTON, SEAGER & TUFTE, LLC
1221 NICOLLET AVENUE
SUITE 800
MINNEAPOLIS
MN
55403-2420
US
|
Assignee: |
CANADIAN BANK NOTE COMPANY,
LIMITED
145 Richmond Road
Ottawa
CA
K1Z 1A1
|
Family ID: |
35801116 |
Appl. No.: |
11/963572 |
Filed: |
December 21, 2007 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
|
|
10916071 |
Aug 11, 2004 |
|
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|
11963572 |
Dec 21, 2007 |
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Current U.S.
Class: |
705/14.14 ;
705/14.27; 705/14.39 |
Current CPC
Class: |
G06Q 30/0239 20130101;
G06Q 30/0231 20130101; G06Q 30/0226 20130101; G06Q 30/02 20130101;
G06Q 30/0212 20130101 |
Class at
Publication: |
705/014 |
International
Class: |
G06Q 30/00 20060101
G06Q030/00 |
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: (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) 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.
Description
RELATED APPLICATIONS
[0001] This application is a continuation-in-part of U.S. patent
application Ser. No. 10/916,071, filed Aug. 11, 2004.
COPYRIGHT NOTICE
[0002] 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
[0003] 1. Field of Invention
[0004] The invention relates to customer loyalty systems and more
particularly to a customer lottery system applicable to
transactional activity generally.
[0005] 2. Description of the Related Prior Art
[0006] 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.
[0007] 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.
[0008] 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.
[0009] 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
[0010] 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.
[0011] 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.
[0012] 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.
[0013] 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
[0014] A better understanding of the invention will be obtained by
considering the detailed description below, with reference to the
following drawings in which:
[0015] FIG. 1 is a network diagram highlighting the lottery system
of the present invention;
[0016] FIG. 2 is a flow chart depicting the steps performed by the
system of the present invention;
[0017] FIG. 3 is a network diagram highlighting an exemplary
embodiment of the present invention as it is applied to
transactional activity generally;
[0018] 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
[0019] 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
[0020] 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.
[0021] 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.
[0022] 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.
[0023] 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.
[0024] 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.
[0025] 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.sub.i=C(R.sub.i,F.sub.iI.sub.i)
(1)
[0026] Where C is a mathematical function for R.sub.i the recency
component, F.sub.i the frequency component and I.sub.i the
intensity component.
[0027] In one embodiment, C is a simple, unweighted product of the
3 components: C(R.sub.i,F.sub.i,I.sub.i)=R.sub.i*F.sub.i*I.sub.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
[0028] 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.sub.i=R(N.sub.i)
(2)
[0029] 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.
[0030] One embodiment for R is: R.sub.i=(N.sub.i+1).sup.D (3) Where
D is an arbitrarily assigned coefficient of degradation, based on
market research. 2) Frequency
[0031] Frequency refers to any mathematical characterization of how
frequently the player participates in the game.
F.sub.i=F(N.sub.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.
[0032] One embodiment for F is: F.sub.i=(M-N.sub.i+1).sup.D (5)
Where D is an arbitrarily assigned coefficient of degradation,
based on market research.
[0033] An alternate embodiment for F is based on a recursive
function, not requiring tracking of the last M draws:
F.sub.i=(B+F.sub.i-1).sup.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
[0034] Intensity refers to any mathematical characterization of how
intensely the player participates in the game.
I.sub.i=I($.sub.i,N.sub.i,M) (7) Where I is a mathematical function
for $, the value of the bet wagered by the player in the N.sub.i
draws he participated during the preceding M draws.
[0035] One embodiment for 1 is:
I.sub.i=log.sub.a(.SIGMA.$.sub.N/N.sub.i)+K (8) Where
.SIGMA.$.sub.N is a sum of all bets wagered by the player, N is the
number of draws he participated out of the predefined M draw
window, a is an arbitrarily assigned base and K is an arbitrarily
assigned constant.
[0036] Yet another possible embodiment for I is:
I.sub.i=1-{1/[(.SIGMA.$.sub.N/N.sub.i)-1]} (9) Where .SIGMA.$.sub.N
is a sum of all bets wagered by the player in the last M draws
preceding the current draw, N being the number of draws the player
participated out of the M draws.
[0037] An alternate formula for I, based on a recursive function
and not requiring tracking of the player's bet behaviour during the
last M draws is: I.sub.i=CI($,I.sub.i-1) (10) Where CI is a
mathematical function for draw i, $ is the dollar amount wagered
this draw and I.sub.i-1 is I for the previous draw.
[0038] One embodiment for CI is: CI($,I.sub.i-1)=$+.alpha.I.sub.i-1
(11) Where 0<.alpha.<=1
[0039] It is possible to calculate meaningful values for (1)
recency (2) frequency (3) intensity of play for all special cases:
[0040] (a) considering just the previous draw--in this case (1) and
(2) become essentially binary values; [0041] (b) considering
records for any chosen subset of draws (M) preceding the current
draw (ie. last 100, last 11 Saturdays etc.); [0042] (c) considering
records from the beginning of the game; or [0043] (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.
[0044] 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.
[0045] 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.sub.i-1+$+.alpha.L+.beta.F (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)
.alpha., .beta. are scaling functions, e.g. .alpha.=-100,
.beta.=5
[0046] 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.
[0047] 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.
[0048] 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: [0049] (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; [0050] (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 [0051] (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
[0052] 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.
[0053] 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.
[0054] 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.
[0055] 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.
[0056] 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.
[0057] 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.sub.i may 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.sub.i. Likewise, the frequency component
F.sub.i may be a function of the number of days N.sub.i in the
preceding M days in which the customer made a purchase.
Furthermore, the intensity component I.sub.i may be a function of
$, the total value of purchases made in the preceding N.sub.i days
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.
[0058] 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.
[0059] 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.
[0060] 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.
[0061] 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.
[0062] 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
[0063] 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.
[0064] 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.
[0065] 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.
[0066] 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
[0067] 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.
[0068] 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.
[0069] 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.
[0070] FIGS. 4 & 5 show two different embodiments of the
disbursement phase as described above.
Exemplary Disbursement Phase: Lottery
[0071] 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.
[0072] 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.
[0073] 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.
[0074] 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
[0075] 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%.
[0076] 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.
[0077] 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.
[0078] 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.
[0079] 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.
* * * * *