While 36% of consumers have been enrolled in a credit card rewards programme for at least five years, amazingly almost half of them have never redeemed their points for a reward, according to new research from Maritz Loyalty Marketing.
The firm's survey found that while credit card rewards programmes continue to grow in popularity with consumers, there is still much room for improvement. But despite this, consumer perceptions of credit card loyalty schemes clearly have a profound effect on purchasing behaviour, based on the discovery that the rewards programme is still a major factor for 60% of surveyed consumers when they are deciding which credit card to use for a purchase.
"Credit card issuers recognise the popularity and value of these programmes but are missing something when it comes to persuading the customer to redeem their points for rewards," said Gail Sneed, director of financial services market development for Maritz Loyalty Marketing.
Why redemption is vital
This is an important problem for card issuers to address; when a consumer redeems for a reward, the percentage of those indicating a rewards programme influences their decision rises to 75%.
"Credit card issuers must be more proactive when it comes to communicating with the consumer, especially about reward redemptions," added Sneed. "Customising credit card rewards programmes to fit the customer's lifestyle is one step toward increasing reward redemption."
Preferred rewards
When consumers were asked what types of rewards they prefer to redeem their points for, the favourites were: cash back (73%), free merchandise (27%), free travel (26%), gift certificates (25%), special members-only offers or discounts (12%), special benefits or upgrades (10%), and free tickets to events (7%).
Interestingly, more women (33%) prefer to redeem their rewards for merchandise compared to men (22%). And more women (29%) than men (21%) prefer gift certificates.
Aim for lifestyles
"The smart credit card issuers are customising their loyalty programmes to offer consumers rewards that not only interest them but suit their lifestyle needs," concluded Sneed.
These findings concerning credit card reward redemptions were extracted from a larger survey conducted in October 2003 by Maritz Research to gauge attitudes and behaviours related to loyalty programmes for retailers, hotels, airlines, credit cards, and restaurants. The credit card programme data was based on 407 interviews with randomly selected adult participants in an online panel.
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