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loyalty programs

The reversal by Air Miles of its points expiry policy is a bogus victory for all involved.

From start to finish in this story, Air Miles has demonstrated some of clumsiest brand management ever seen in this country. Even reversing its despised plan to have points older than five years start expiring at the end of 2016 is a mess. Customers will keep their points, but Air Miles parent LoyaltyOne has already signalled that it will be less generous with rewards in the future.

Air Miles announced the points expiry back in December, 2011 – at the bottom of a news release about a new option for redeeming points called Air Miles cash. The announcement about the points expiry got some attention, and then everyone promptly forgot until the expiry got renewed attention earlier this year.

Related: Rewards programs: Will they go the Air Miles expiry route?

Carrick on money: Will Air Miles step up and do the right thing?

A smart approach for Air Miles would have been to constantly remind people about the expiry and encourage them redeem their points for something they really wanted. Instead, by staying silent and allowing people to procrastinate, it created conditions for a backlash of shocked and appalled customers facing the loss of their points. The uproar even prompted an Ontario MPP's private member's bill that proposed a ban on having customer loyalty points expire.

Let's be clear about something: Air Miles has every right to have its points expire. Air Miles is not a public utility – it's a business with both the right and responsibility to reshape and reprice its product as needed to run a profitable operation. The trick is in the execution, and here Air Miles failed epically.

The reversal of the points expiry sounds like a win for the little guy, but it's actually not. In a financial disclosure document filed Thursday, LoyaltyOne said it "will adjust the value proposition to collectors to offset the lost economics … and to maintain, as closely as possible, the economics of the Air Miles reward program prior to cancellation of the expiry policy."

You'll keep your points if you still have them, but expect to need more of them to book rewards. Expect to see lots of stopovers in the flights you book, and more merchandise you never wanted.

The biggest losers in the Air Miles reversal are the people who rushed in recent months to burn off points that were going to expire. What did these people settle for in order to save their points from becoming worthless? Even if points get devalued somewhat in the future, would they have been better off to do nothing instead of rushing to redeem in 2016?

Air Miles may retain the loyalty of the customers who still haven't used their points, but there's a whole other bunch of people who feel hard done by. Expect to see other loyalty programs go after disgruntled Air Miles customers with strong offers of bonus introductory points and waived annual fees for new clients. The next few months may turn out to be a great time to switch cards.

As for that Ontario private member's bill proposing to ban the expiry of loyalty points, please spare us. Government intervention like this is like squeezing a balloon – the problem just redistributes itself. We may get to keep our points in perpetuity, but their value would plunge.

Check out the "skinny basic" cable TV packages and pick and pay channels availability mandated by the Canadian Radio-television and Telecommunications Commission (CRTC). People are deciding these packages aren't worth it after looking at all the fees, terms and conditions.

The public backlash against Air Miles was entirely deserved, but let's not let members of this loyalty program entirely off the hook. Air Miles played these people by setting an expiry date and then doing little or nothing to remind them. But don't we all have some responsibility for managing our financial affairs ourselves?

Air Miles reversing its expiry sends a message that if people get mad enough, politicians will take notice and companies will back off an unpopular move. Having the expiry go through as planned would have sent an equally useful message. If you don't look after your financial assets, you might lose them.

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