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Good Points Blog


Point-of-sale rewards redemption: Real value or too expensive?

Clearly consumers are motivated by the almighty dollar. Studies show that consumers in traditional rewards programs tend to redeem for cash back or retail gift cards. With 30 years of experience managing loyalty programs for some of the biggest brands, Connexions Loyalty has data that validates this trend. Across our client programs, 78 percent of redemptions are in the form of cash or gift cards.

In a recent Connexions survey, a panel of rewards program members and respondents identified cash and retail store gift cards as their two favorite redemption items. When asked what they would redeem points for in the future, the responses remained virtually the same.

However, inserting a hypothetical variable shifted the paradigm significantly: a point-of-sale redemption option would allow consumers to use points or miles to pay for anything anywhere, just like dollars. This variable alters consumers’ perceptions of rewards programs. Prior to its introduction, only about a quarter of consumers identified the redemption values of points programs as strictly “budget help.” After the introduction of a point-of-sale option, however, the idea of points as “budget help” becomes much more pervasive, and the idea of points as “play money” is identified by survey participants far less often.

A staggering 89 percent of members indicated that they would be interested in point-of-sale redemption, with 47 percent highly likely to redeem points at the point-of-sale. What would respondents redeem for at the point of sale? Groceries and everyday items topped the list while cash became a much less attractive option.

POS rewards could be the ultimate consumer experience with a relevancy that strikes to the heart of what consumers truly value. A recent Javelin mobile marketing survey found that as mobile phone penetration slowed at 85 percent, more consumers were turning to advanced handsets. Smart phone adoption drastically increased (34 percent in 2010 has been projected to grow to 68 percent by 2015). With the proliferation of sophisticated mobile devices, you can envision an easy-to-use, convenient process to redeem at point of sale. From the consumer perspective, you can to see why POS rewards could be the Holy Grail of loyalty programs.

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