Instant-redemption opportunities, such as receiving cash back at the register, are causing more consumers to choose one card-based loyalty program over another, while airline mileage-earning programs are less alluring, according to new research from Chicago-based Mintel Comperemedia.
Mintel surveyed 2,000 adults online in May 2010 and found that nearly half, 47%, cited instant redemption as a loyalty feature likely to entice them to use one loyalty card program, including those from credit card issuers, over another.
Consumers also cited “generous” cash-back opportunities as a top loyalty-program lure, as 36% of respondents said this option would be a deciding factor in using a particular loyalty program.
Meanwhile, consumers, particularly in higher-income groups, are becoming disenchanted with airline miles, the survey found. Only 7% of those surveyed said a program that offers airline miles would be an effective incentive to choose one program over another.
In the survey, 24% of respondents said they actively examine credit card offers in order to compare rewards programs, while 10% said they have switched to a different primary credit card in the past because of a better rewards program.
Once consumers have chosen a loyalty program, 61% of respondents said lower overall costs for merchandise they would have purchased anyway is an important attribute of a loyalty or rewards program.
Susan Menke, Mintel’s vice president and behavioral economist, tells PaymentsSource this is a change from previous years. “Loyalty programs in general are reflecting where the consumer mindset is, which is value,” says Menke. “They’ve redefined that mindset: They want cash back and discounts on what they would normally buy, whereas a few years ago it used to be [deals on] luxury goods.” Only 25% of respondents in the latest survey cited receiving luxury merchandise or travel rewards as being important factors in choosing a loyalty program, according to Mintel.
Menke says credit card companies need to become more strategic and compete with other loyalty programs instead thinking it’s good enough to just have a program. “Now is really the time to draw customers in if you can offer something in the way consumers are thinking now,” she says.
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