A Guangdong chain beverage brand has reluctantly ended its five-year paperclip loyalty program after discovering that people were using custom paperclips of the same design bought online to redeem drinks in stores. What was meant as a physical giveaway to reward loyal customers was exploited through a loophole in the rules, leaving the merchant exclaiming, "We really didn't see that coming." Why did this loyalty program come to an end? And how have consumers reacted? This article will walk you through the whole story and explore the pros and cons of physical-giveaway loyalty programs as well as ways to improve them. [more…]