Debit card loyalty points go largely unredeemed
Debit rewards programmes have often been touted as an easy way to gain and retain customers but, as banks eliminate debit rewards programmes as a result of changing legislation, a survey by Mintel Comperemedia has found that debit card reward programmes alone aren't likely to foster customer loyalty.
The survey examined consumers' debit reward behaviour and attitudes, and found that nearly half (47%) of respondents who participate in a debit card rewards programme have never redeemed their points.
"A few different types of people fall into the group who never redeem debit rewards points; some are saving up for something bigger, while others simply haven't accumulated enough points," explained Susan Wolfe, vice president of financial services for Mintel Comperemedia. "However, a number of people participate in a debit rewards programme because it's so easy to sign up, but then never use the programme again - and this indicates that the rewards programme isn't working as a way to nurture loyalty."
The company segmented survey respondents into three groups:
- Heavy redeemers (those who redeem about once a month);
- Medium redeemers (those who redeem every 2-6 months);
- Light redeemers (those who redeem less often, e.g. once a year).
Some 36% of heavy redeemers and 30% of medium redeemers (compared to 55% of light redeemers) said they would continue to use their debit card the same way if their bank eliminated their debit rewards programme, suggesting that debit rewards programmes are not a particularly strong incentive to stay loyalty to a particular banking institution.
The survey also assessed consumers' willingness to pay for membership of a debit rewards programme, and found that 36% of heavy redeemers were willing to pay as much as US$4 per month, while 61% would be willing to pay US$1 per month. Not surprisingly, those who redeem most often are the most willing to pay extra for the benefits they receive.
"Overall, rewards aren't going away, and many banks will continue to offer and promote these programmes," concluded Wolfe. "But we will see a shift in strategy, in that rewards will be offered as a benefit to different levels of customers and, in that way, these programmes will become part of an overall loyalty offering rather than merely being a debit rewards programme."