Instant redemption 'best loyalty incentive'
While loyalty programmes are powerful marketing tools for credit card companies, supermarkets and restaurants, it is the idea of 'instant redemption' that entices almost half of consumers to favour one rewards programme above another, according to research from Mintel.
In examining the driving factors behind consumers' choices of which loyalty programmes to actively participate in, Mintel found that instant redemption opportunities (such as cash back at the check-out) were cited by 47% has potentially swaying them to use one particular loyalty programme more than others.
Consumers are similarly attracted to relatively generous cash back opportunities - an option that would be the deciding factor for 36% of respondents.
However, consumers were somewhat disenchanted with airline miles, as only 7% said that a programme that offers airline miles would be an effective incentive for their choice of loyalty programme - although it is noteworthy that these consumers tended to be from higher income groups.
"In any sector that uses loyalty marketing, loyalty programmes are fast becoming a very important part of the relationship with the customer," explained Susan Menke, vice president and behavioral economist for Mintel Comperemedia. "It seems that now is the time to focus on adding or improving loyalty programmes to help engage customers and maintain and even grow their relationship with the post-recession consumer."
After the consumer has chosen a favourite rewards programme, the study asked what they want to see more of, with 61% citing "lower overall costs for merchandise that they would have purchased anyway". At the same time, "getting merchandise, or taking trips that they wouldn't normally be able to take" was deemed important by 25% of those surveyed.
"Loyalty programme members are quite often the most profitable customers for marketers, and those who make regular use of loyalty programmes tend to be more brand loyal," said Menke. "By personalising redemption opportunities and offering easier-to-redeem savings, marketers can potentially lure and retain more customers."
Some 24% of those surveyed said they actively examine credit card offers in order to compare rewards programmes, while 10% said they had already switched to a different primary credit card in the past because of a better rewards programme.