First Data recently conducted a consumer loyalty study, examining rewards programmes offered by financial institutions, and found that although credit card rewards programmes are popular with consumers, many have experienced frustration with the rewards that are offered.
Key findings from the study, which examined the opinions of more than 1,000 US consumers, included:
- Credit card rewards most popular with consumers
The majority of consumers surveyed (76%) belong to a credit card rewards programme, with the average number of memberships being 2.1 per consumer. Consumers who belong to credit card rewards programmes tend to be very active members, with 89% indicating they have used the programme at least once since signing up.
Only 27% of consumers currently belong to a debit card rewards programme, with the average number of memberships being 1.1. his difference is primarily due to the fact that credit card rewards programmes have been around for longer, and that credit cards are very competitive and are not necessarily tied to a consumer’s primary bank (unlike debit cards). Rewards programmes for debit cards are a relatively new idea and consumers don’t yet necessarily expect to earn rewards for using their debit card. Only 11% of consumers belong to other banking rewards programmes (such as those tied to savings accounts).
- Frustration with rewards offered
In addition to the frustrations that many consumers have with earning and using rewards, they also experience frustration with the actual rewards themselves. Specifically, 38% of consumers indicated that the programmes offer rewards they can’t use, while 37% believe that they don’t have enough choices when it comes to selecting a reward. One-third (33%) indicated that the rewards programmes they belong to offer rewards they don’t like.
- Unique rewards
Credit card rewards programmes were identified by 16% of consumers as being most unique compared to other types of loyalty programmes. The most compelling characteristics of a unique rewards programme involve the actual rewards and redemption, including: “easy to use or redeem”, “variety of rewards to redeem”, and “good or valuable rewards”.
- Ability to select rewards
When asked to identify the features of financial institutions’ reward programmes that are most important, 13% of consumers selected “ease of using points or rewards”, and another 13% cited “being able to select or redeem benefits of my own choosing”. Only 9% indicated that the most important feature of a rewards programme is an “automatic redemption process”.
- Cash back still preferred for credit and debit rewards
Cash back was identified are the most preferred reward by consumers for both credit card and debit card reward programmes. More than half of the consumers who are members of credit (56%) and debit (55%) card rewards programmes indicated that they were currently receiving this type of reward. Points or miles that are redeemable for merchandise or upgrades was rated by both credit and debit card rewards members as their second most preferred reward.
The full findings of the study have been made available as a free download from First Data’s web site – click here.