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What a lower-cost redemption mix could be worth

This models the potential upside if you found a redemption solution that could fulfill a share of your points balance more cheaply than your standard channel. Adjust the assumptions to match your own program — it's not tied to any specific vendor's numbers.

Your program inputs

Liability inputs
Total value of unredeemed points/rewards currently on the books
$100M
$10M$1B
Value of new rewards issued to members per year
$100M
$10M$1B
Share of the outstanding balance redeemed each year
70%
30%90%
Share of the outstanding balance that expires unredeemed each year
5%
0%15%
Fulfillment cost
Cost of goods sold to fulfill a redemption through your standard channel, as a % of redeemed value
22%
10%35%
If a lower-cost redemption solution fulfilled the same reward, what would it cost as a % of redeemed value?
4%
1%20%
What portion of redemptions could realistically move to a lower-cost option?
50%
0%100%
Commercial & horizon
If working with a partner to access the lower-cost channel, what share of the savings goes to them?
15%
0%30%
How many years forward to model
5 yrs
1 yr10 yrs

Net benefit of acting now

$0
Fulfillment cost savings, net of any partner fee, over the selected horizon
COGS — status quo
$0
COGS — with alternative
$0
Outstanding liability balance
Identical trajectory either way — the redemption channel doesn't change the balance, only the fulfillment cost
Cumulative fulfillment cost — the gap is the cost of waiting
Same revenue is recognized in both scenarios. This is fulfillment cost only.
Status quo
With alternative channel
By yearBalanceRedeemedCOGS (std)COGS (alt)Net benefit

Methodology note

Deciding whether a lower-cost redemption partner is worth pursuing — and structuring the deal so it actually pays off — is exactly the kind of decision nventiv's n-gagement Schema is built for.

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