The long-term success of any rewards program hinges on customer redemption. Help your customers redeem, and you'll both win.
According to a Mastercard rewards survey, rewards offers are the number one reason cardholders switch cards. If you have a loyalty program, you should be thinking about it as a powerful retention tool — not a cost center. Here, we've identified three of the biggest barriers to reward redemption, and how you can tackle them to ensure cardholders are getting the most from your rewards program.
Offer a Seamless Redemption Experience
People are busy. If you ask them to pull out a separate loyalty card or present coupons to redeem their rewards, they likely won't bother. Complicated or inconvenient redemption processes could be the reason that 30% of consumers haven't redeemed rewards over the last year or more. If you're looking to increase redemption rates, focus on creating a seamless redemption experience.
Make it easier for cardholders to redeem their rewards by allowing them to redeem at point of sale (POS), which eliminates the need for coupons and vouchers, and by integrating loyalty programs into mobile banking apps. According to the rewards study, 69% of consumers say they would redeem their rewards at POS if given the opportunity. On top of that, 26% of millennials would switch banks for this option.
Many consumers aren't able to redeem rewards at POS, but even those who can may not realize they have the opportunity. By offering card-linked programs as a redemption channel, you can give your customers the choice and flexibility they desire. When it's time to make a purchase, they can automatically redeem their rewards without having to search for the original coupon.
Eliminate Confusing Offers
The Mastercard rewards study indicates that less than half of cardholders are even fully aware of their loyalty program benefits. When companies don't clearly outline what points can be used for ahead of time or they have too many stipulations for redeeming them, consumers may get frustrated, leaving rewards on the table.
Small, thoughtful changes can go a long way toward ensuring cardholders understand exactly where they stand with their rewards, building trust and encouraging them to keep earning and spending. Provide your customers with more ways to redeem their points, and helpful tools like points-to-cash calculators that show them the current value of their points, or mobile alerts or emails that outline how many points they have.
Personalize Your Program
Many cardholders don't redeem rewards because either they don't see the benefits for themselves, or they're not sure how to participate. Sending personalized offers allows customers to see the value they're getting and saves them the trouble of seeking out their rewards. The rewards study shows that when cardholders receive personalized offers, issuers see up to 18% spend lift from those who redeem, and a 75% reduction in churn. Use data-driven insights to tailor experiences to cardholders so you can build deeper connections and long-term loyalty.
Building in specific milestones to indicate progress will also motivate cardholders to engage with your program. In order to encourage customers to earn and redeem rewards, it's important to define and communicate milestones that demonstrate the value of your programs and hold consumers' attention.
Take the Path to Long-Term Retention
Help your customers see greater value in your rewards offerings, and you'll unlock the key to longstanding customer relationships. It's a win-win.
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