Impending accounting changes may mean more businesses decide to reconsider their customer loyalty programs. Initiatives that provide incentives to returning customers already require a careful balancing act between risk and reward. Though they allow companies to track client purchasing activity, customer loyalty programs can also trigger unclaimed property exposure, cybersecurity liabilities and other risks. The new revenue recognition guidelines, which begin to roll out in 2018, may tip the scale in the other direction and have more businesses deciding their customer loyalty programs are not worth the risk.
Businesses with customer loyalty programs or that are considering incentives for customers should review the current environment for loyalty programs and how that environment may change under Accounting Standards Update 2014-09 Revenue from Contracts with Customers (Topic 606) before they decide the fate of their program.