Marketers face dilemma with loyalty reward choices

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By: Wise Marketer Staff |

Posted on September 8, 2015

Marketers and consumers are often dealing with the dilemma of choice when it comes to rewards programmes. Marketers have to choose from a wide range of loyalty options for their customers, and then consumers themselves must navigate a menu of perks, benefits and lifestyle factors when deciding which rewards programme to actually join, according to Brandon Logsdon, president and CEO for fuel rewards provider Excentus.

So which is more successful for marketers and more valuable to consumers? Cash-back, or retailer-specific rewards programmes? Coupons or instant cash-register discounts? Airline miles or hotel points?

In July 2015 the company conducted a survey of over 1,000 US adults in order to gain hard data about which incentives and rewards today's consumers prefer, and to gather new insight into which loyalty programmes deliver the highest levels of activity, the greatest likelihood of increased sales, and the deepest brand loyalty.

The survey found that fuel savings rank first as consumers' preferred incentive/reward - higher even than credit card cash-back and rewards programmes, retailer or brand coupons, airline/hotel miles and instant discounts at checkout.

More than half of consumers (54%) say they belong to a programme that enables them to earn rewards that they can redeem at the gas pump as cents-per-gallon savings on fuel.

When asked to list the programmes in which they currently earn rewards, the ability to save on fuel also ranks at the top of the list:

  • 37%: prefer fuel savings rewards;
  • 32% cash back on credit cards;
  • 25% retailer/brand coupons;
  • 24% (tie) instant cash-register discounts and credit card rewards;
  • 22% retailer-specific rewards;
  • 17% airline miles;
  • 16% (tie) restaurant/grocer rewards and members-only rewards;
  • 14% hotel points.

Not only are fuel savings rewards programmes top-ranked for earning ability, they also rank #1 for activity. Nearly half (46%) of consumers say they earn, buy, redeem or check their rewards daily or weekly. Among those who engage actively with their rewards programmes, 29% earn savings on fuel, 24% earn cash-back on a credit card, 17% earn credit card rewards, 16% take advantage of instant cash-register discounts, 15% earn retailer-specific rewards, 13% use retailer/brand coupons, 10% earn restaurant/grocer rewards or airline miles, and 6% earn hotel rewards.

A winning combination?
So why do consumers embrace the ability to save on fuel more than other rewards programmes? Their responses indicate their rewards behaviours are baked into their everyday shopping routines, giving them the ability to earn rewards from familiar retailers and merchants they already patronise and then redeem those fuel savings rewards for an everyday expense: fuel. They embrace the broad ability to save money, and almost one-fifth want to save specifically on the costs of driving. According to the US Department of Transportation, US drivers average 13,476 miles a year, while those in the 20-54-year-old age group average more than 15,000 miles on the road each year.

Consumers' primary reasons for joining rewards programmes of any kind revolve around their ability to save money. Almost half (47%) say they like saving money any way they can, and 23% like the ability to earn rewards/points on everyday purchases. The merchants and brands from whom consumers regularly earn fuel-savings rewards include grocery stores (68%), retail stores (22%), credit cards (16%) and restaurant/dining outlets (7%).

Another 9% say the money they save on fuel makes room in their household budgets for other everyday expenses and purchases. When asked specifically why they joined a rewards programme that allows them to save on fuel:

  • 46% say the rewards were offered as part of an existing loyalty programme;
  • 40% join to save money;
  • 37% join because they can earn rewards at places they already shop;
  • 19% save specifically to save on the cost of driving;
  • 15% join because the fuel-savings incentive is linked to a credit card.

Always interested
Marketers might raise questions, especially about an incentive toward a product that is subject to fluctuating market prices. Do fuel savings have lasting impact in a marketplace where gas prices can swing wildly and quickly? The survey indicates a resounding "yes." More than two-thirds of respondents (67%) say they pay attention to the price of gasoline, and consumers agree it is important to earn rewards toward fuel when gas prices rise (64%) or fall (54%).

Furthermore, the survey indicates that the ability to save on the cost of fuel is powerful enough to change consumers' behaviours and brand preferences - the true sign of an effective loyalty programme. More than two-thirds of respondents said they would be willing to change brands, switch brands or buy in-store rather than online in order to save anywhere from 10 cents to $1 per gallon on gasoline.

With so many rewards programme options available, today's marketers need data to make informed decisions about the most effective, impactful loyalty programmes to offer they customers. And once a rewards programme is in place, they need equally supportive, results-oriented data that both proves a programme's value and answers key questions about its impact on the retailer or merchant. Does the loyalty programme increase revenues? Does the incentive encourage regular and frequent spending, earning and redeeming? Does the rewards programme influence consumer behaviours, and does it deepen brand loyalty among members and customers.

"Today's consumers are looking for rewards and incentives that are relevant to their lives, easily woven into their shopping habits and lifestyles, and able to make a tangible impact on their household budgets," concluded Logsdon. "Armed with recent data, retailers, merchants and brands can launch programmes that meet the needs of both savings-conscious consumers and revenue-focused marketers."

The 'Road to Rewards' report has been made available for free download from the Excentus web site - click here (free registration required).

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