Is There Life After Death for Loyalty Points?

Death isn't necessarily something that's top of mind for most consumers when they rack up airline miles or credit card rewards points. Nonetheless, customers cashing in on their heavenly rewards before redeeming their loyalty rewards could present a wealth of opportunities—and problems—later on for the companies that run loyalty programs.

"Ensuring that a loyal customer's heirs will benefit fosters the kind of trust that must be at the core of an intimate relationship between brand and customer," wrote Jeff Berry, research director at Colloquy, a loyalty program publishing, education, and research practice, in the company's "Inherit the Windfall: Passing on Loyalty Points" report.

In the report, Berry notes that the after-death transfer of rewards earned in customer loyalty programs to loved ones or friends might not always go as smoothly as expected or desired. Across the board, there is wide inconsistency, complexity, and a lack of clarity in after-death points transfer policies. "There are inconsistencies in whether such policies exist and how those policies are being communicated to customers," Berry tells CRM magazine.

These dissonant characteristics contribute to confusion among program participants and their heirs. Of 1,200 consumers surveyed by Colloquy, only 12 percent stated they were aware of their favorite loyalty program's policies regarding a deceased member's points.

"Companies need to have a policy and then communicate it to customers," Berry states. "Even if the points expire [when the person dies], people would like to know that."

In fact, 48 percent of participants in the Colloquy research maintained that it's important for a program to have a transparent transfer policy in place.

That's not to say that such policies don't exist. According to Berry, about half of the major points program providers have policies in place. This is especially true in the airline, hotel, and credit card industries, where point values can be significant.

For example, US Airways provides clear online policies governing the transfer of miles to proven beneficiaries. Southwest Airlines and Delta Air Lines, on the other hand, have written policies prohibiting such transfers. Marriott Rewards points can be bequeathed in a will, but Hilton HHonors points expire when the customer dies. Starwood Hotels & Resorts clearly states that unredeemed Starpoints can be transferred to family members or friends, as long as the beneficiaries are also Starwood Preferred Guest members. United MileagePlus imposes a transfer fee, while other programs offer free transfers. Some programs require point redemption within a certain period of time after the person's death. Some transfer polices are published online, some aren't.

Berry says many retailers, especially those whose loyalty programs don't yield high-value rewards, don't have policies regarding transfers after death, and probably never thought about it—nor do they need them.

According to Berry, the total number of loyalty programs in the United States is around 2.6 billion, up from just slightly more than 2 billion a year ago. The average U.S. household reportedly participates in a total of 22 programs. Forrester Research reported a few months ago that, on average, only 45 percent of customers enroll in loyalty programs, and of those, 35 percent actually redeem the rewards they earn.

Though he couldn't provide an exact dollar amount, Berry says a lot of rewards and points go unused because people die and their beneficiaries don't know about their memberships. For that reason, he suggests that people clearly identify in their wills the programs to which they belong and how to access those accounts.

Where transfers are allowed, it is often left to the executor of the will to decide how points and miles get divided among the heirs, and often all that is needed to transfer rewards is proof of death, such as a copy of a death certificate.

Or, better yet, to avoid all the confusion and headache, Berry suggests using points and rewards while you're alive. "Don't wait and store your points forever," he says.

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