Good things come in threes. Financial services firm Mastercard recently released its 2018 Rewards Panel Consumer Survey and unveiled data that points to a trifecta of “contextual loyalty:” personalization, digital experience and instant gratification.
The survey culled consumer data from 5,000 rewards credit card holders across a range of networks and issuers in the U.S., with respondents identified via three distinct categories: Redeemers, those who redeem points from their loyalty programs; Non-redeemers, consumers that are not aware of or taking advantage of credit card loyalty programs; and Under-redeemers, those that are aware of loyalty program options, but are not utilizing any rewards or services, or simply do not know how to redeem.
And the study suggests that for today’s shopper, loyalty is contingent upon control coupled with flexibility, the firm said, which is the guiding principle for its “Pay With Rewards” program that is grounded in these findings. The program’s accompanying slogan, “It’s your points, your way,” is modeled after the modern-day consumer, as it reflects shoppers’ desire for frictionless and meaningful spending. Pay with Rewards allows shoppers to select and redeem rewards at the point-of-sale through its app, enabling greater and more strategic use of consumers’ earned loyalty points.
Jamie Samaha, senior vice president of global products and services at Mastercard, told WWD, “In our space, what we’re seeing is that if you can get these things right, you’re going to see a more engaged consumer, a consumer who is willing to give you their business and a consumer you’re going to have a more intimate, loyal relationship with.” He added, “Often when people think about loyalty, they think the value is the points that you get. And that’s certainly an important part, but I think at Mastercard what we’re thinking about is a much broader spectrum when we bring our loyalty services together.” This spectrum is inclusive of customized benefits or access; the use of internal data to glean insights about the consumer and their current or future wants and needs; using the Mastercard network to provide cardholders with personalized, instant offers happening at the point of sale, and the overall digital experience of how each consumer engages.
The study found that 62 percent of respondents in the redeemers’ category said they are “very satisfied” with their respective redemption process and programs, but that they desire the freedom to redeem loyalty points at will and without restriction. Respondents added that banking apps should improve features such as redemption and reward functionality, specifically referring to the availability of point balances via mobile.
And a redeemer is quite the jet-setter: High-volume cardholders reported greater usage of travel redemptions, while younger cardholders skewed higher for travel and event tickets. Low-volume cardholders utilize financial services rewards programs for more practical needs, such as grocery store rewards, illustrating a preference to “save money on things they do every day.” To further bolster the growth of loyalty redemption in the travel sector, Pay with Rewards offers enhanced concierge, new guarantees, partnerships, offerings and “Priceless Cities,” which connects Mastercard members to unique experiences around the world.
Thirty percent of non-redeemers said they have not redeemed a reward in the last year or longer, and 20 percent of that group stated they had not found the “opportunity” to redeem, suggesting that a more mobile and streamlined redemption process may encourage loyalty usage and spending. And 9 percent of respondents switched cards in the last year, citing “Rewards Offer” as the number-one reason why they chose their new card, among other reasons such as annual percentage rate offers, balance transfers and special introductory rates, which accounted for only 7 percent, the report said. The survey found that less than 50 percent of respondents said they could identify any of the benefit and incentive options available on their cards, pointing to a generally low awareness of card benefits.
Sixty percent of Millennials in the under-redeemers category said they would switch to a bank that offered rewards for additional “banking behaviors,” and maintaining balances was one of the more popular rewarding behavior options tested, the firm said. Interestingly, 60 percent of under-redeemer respondents either cannot redeem at all, do not know if they can redeem at checkout, or are unaware as to whether their points can be used to buy things on the fly, though they may be accustomed to redeeming points online.
However, 69 percent of under-redeemers would redeem at checkout or point-of-sale if given the option, while 24 percent said the incentive would likely result in greater use of their card. Eight percent said they would switch to banks offering this redemption option and 26 percent of Millennials said they would switch banks specifically to employ this feature, illustrating the pull of a clear, frictionless shopping experience.
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