Loyalty Rewards Card Members Choose Electronics Over Home Improvements for Redemptions
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Added: 10/17/2005
Type: Summary
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Loyalty Rewards Card Members Choose Electronics Over Home Improvements for Redemptions
It appears more Americans would rather play with their high-tech toys than make improvements to their homes, according to Maritz Loyalty Marketing's Almanac, a yearly analysis of the redemption activity for all Maritz Loyalty Marketing clients. When it comes to the top reward choices, the data shows that American consumers have shifted their preference from home improvement rewards to the latest electronics. Redemptions for Best Buy gift certificates moved ahead of Home Depot in popularity among loyalty rewards card customers as compared to the previous year's redemptions.
Maritz Loyalty Marketing, the world leader in credit card consumer loyalty programs with nine out of the top 10 U.S. banks as clients, found that gift certificates currently are the most popular reward type. Following is a breakdown of reward types by popularity:
• 57 percent of loyalty reward card customers redeem for gift certificates;
• 37 percent redeem for in-kind rewards such as lower APR, cash back and lower/no fees;
• 2.7 percent redeem for travel; and
• 2.6 percent redeem for merchandise.
The high redemption rate for gift certificates might lead some to believe they are the best item for customer rewards programs to offer, but according to Gail Sneed, director of professional services, Maritz Loyalty Marketing, creating a successful rewards program isn't that simple.
Rewards that Build Loyalty
"While it may appear merchandise and travel are not as popular among rewards card clients, successful programs offer a range of rewards specifically targeted to customer segments," reveals Sneed. "The top banks understand that to attract customers and retain those that may not spend at an elevated level, they need to offer cash back, low APRs and lower fees, as well as gift certificates that don't take a lot of points to earn. But to build loyal customers who will stick with their card for a long time, and to appeal to higher-income earners, banks need to offer a variety of merchandise and travel rewards that customers can work towards earning, while they continue to use the card."
When analyzing in-kind offerings, such as cash back, APR reductions and statement credits, Maritz Loyalty Marketing found a preference among rewards card members for cash back (62 percent preferred) versus statement credits (38 percent preferred). According to Sneed, even though it's human nature to want cash in hand, card members should choose the credit so that they can reduce future interest payments by paying down an existing account balance.
"Both customers and credit card companies need to be smart about choosing their rewards," said Sneed. "Thinking long-term as opposed to instant gratification is always the best choice – for banks and card members."
Some other results from Maritz Loyalty Marketing's yearly rewards redemption data include:
• Portable MP3 players broke into the top 10 merchandise items redeemed at no. 9, behind such items as DVD players (no. 1), Omaha Steaks (no. 3) and golf balls (no. 6);
• Electronics (video games, televisions, stereos, DVD players, etc.) received approximately 40 percent of the overall redemptions in the merchandise category;
• Home Goods (appliances, furniture, art, etc.) received nearly 20 percent of all merchandise category redemptions; and
• Entertainment (home video, music and magazine subscriptions) received approximately 14 percent of redemptions within the merchandise category.
About Maritz Loyalty Marketing
Maritz Loyalty Marketing designs, launches and operates full-service loyalty marketing solutions that deliver superior results through a unique understanding of how to drive preferred behavior to achieve true loyalty. In addition to loyalty strategy, planning and consulting, their loyalty solutions include rewards-based loyalty programs and one-to-one communications programs that identify, retain and grow best customers for many of America's largest, most successful corporations. Maritz Loyalty Marketing is unique in the full-service scope of its internal resources that encompass all of the strategic, analytic, market research, operational, technology, creative, communications, rewards and fulfillment services that support their clients’ customer loyalty programs nationwide. A unit of Maritz Inc., Maritz Loyalty Marketing is based in St. Louis, Missouri. Maritz Inc. provides market and customer research, communications, learning solutions, incentive initiatives, meetings and event management, rewards and recognition, travel management services, and customer loyalty programs. Maritz has a presence in 42 countries, with key offices in the United States, Canada, the United Kingdom, France, Germany, and Spain. For more information, call 1-877-4MARITZ, email e-mail protected from spam bots, or visit www.maritz.com">www.maritz.com.
About the Maritz Loyalty Marketing Almanac
Maritz Loyalty Marketing’s Almanac is a yearly analysis of the redemption activity for all Maritz Loyalty Marketing clients. The summary reports on consumer product preferences through a variety of metrics, providing insight for Maritz Loyalty Marketing in new program design and to assist our clients with making sound decisions about their product offering. Activity reported represents all Maritz Loyalty Marketing programs for the 2004 calendar year.
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