COLLOQUY Examines Key Changes in Loyalty Liability Accounting Standards Headed for the U.S.
06/12/2011

New Accounting Standards Expected in U.S. As Soon As July 2011

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Online PR News – 12-June-2011 – – CINCINNATI (June 1, 2011) – In its most recent issue, COLLOQUY magazine, the voice of loyalty marketing since 1990, explores the next update to the U.S. Generally Accepted Accounting Principles (GAAP) and what it means for companies accounting for their issued loyalty rewards that go unredeemed.

In July 2008, companies outside the U.S. and Canada adopted a new accounting standard that defined a consistent accounting treatment for loyalty program liability accrual and the redemption of award credits and other incentives for companies following International Financial Reporting Standards (IFRS). On January 1, 2011, Canada adopted the same policy.

As soon as July, the U.S. is expected to adopt the policy as well. With COLLOQUY research showing 2 billion loyalty program memberships in the U.S. and $48 billion in fair market value being issued in the form of points and miles each year in the U.S. – and one-third never being cashed in - how will this affect loyalty programs?

Three changes that will apply:

1. Companies must account for the issuance of points as a separate component of the sale.

2. As points are redeemed over time, the deferred revenue will be recognized as “performance of a service” that will have been completed.

3. Deferred revenue will be calculated based upon the fair market value of the rewards (in retail – the face value of the retail gift certificate reward) less the expected breakage.

“The loyalty industry is now enormous,” said COLLOQUY Managing Partner Kelly Hlavinka. “Consistent standards, more transparency and more uniformity in reporting are part of the maturation process.”
COLLOQUY magazine, published by LoyaltyOne, explores critical best practices, innovations, trends, opinion and strategies in relationship, dialogue and database marketing. Coverage in the latest edition also includes:

Cover Story: The Device Race – What’s Next for Loyalty Program Devices
Magnetic stripe cards, contactless chips, mobile apps and even biometric identification are among the devices competing to become the perfect loyalty program device. Which should loyalty practitioners bet on? Which has the best potential to integrate with existing operations? Which will consumers and retailers cheer for?

Analytics Report: Fast and Furious – The Rising Role of Consumer “Madvocates”
Welcome to the new underworld of the socially connected, ever-demanding customer who has just suffered a negative service experience with an unresponsive brand. Learn how to tame the Madvocate fire by building a community “speaker’s corner,” knowing what you’re going to do when things go wrong and speaking to WOM Champions and Madvocates within their preferred channels.

Services Report: The Total Package – How FedEx Connects Small Business with More Than On-Time Delivery
FedEx prides itself on serving customers with not only on-time delivery of packages but equally important, a seamless customer experience across all engagement points. Small businesses especially need that reliability when navigating their businesses in a fast-paced environment. Learn how FedEx delivers on three key elements of successful customer experience management: relevancy, consistency and timing.

The COLLOQUY Interview: The Sinek Solution
Simon Sinek—teacher, speaker, and author of Start With Why—explains why repeat business and loyalty are two different concepts, and why confusing the two can cripple your customer-engagement initiatives.

About COLLOQUY:
COLLOQUY® comprises a collection of publishing, education and research resources devoted to the global loyalty-marketing industry. Owned by LoyaltyOne, COLLOQUY has served the loyalty-marketing industry since 1990 with over 40,000 global subscribers to its magazine and www.colloquy.com the most comprehensive loyalty web site in the world. COLLOQUY’s research division develops research studies and white papers including industry-specific reports, sizing studies and insights into the drivers of consumer behavior. COLLOQUY also provides educational services through workshops, webinars and speeches at events throughout the world and is a loyalty-marketing partner of both the Direct Marketing Association and the Canadian Marketing Association and a content provider to the American Marketing Association. COLLOQUY also operates the COLLOQUY Network, a global consortium of practitioners certified in COLLOQUY’s proprietary methodology. COLLOQUY magazine subscriptions are available at no cost to qualified persons at www.colloquy.com or by calling 513.248.9184.