Happy woman sitting on couch opening a carton box received

Lower Value Redemption

There have been a number of loyalty studies that show not all consumers are hoarding points in an effort to purchase something aspirational like a trip.

A study by Blackhawk Network in 2018 showed:
  • 80% of members are looking for opportunities to redeem points for rewards well below the $100 mark.

With many consumers looking for ways to expand purchasing power and increased demand for contactless payments combined with limited options to redeem for travel over the last year, finding ways to increase customer participation at lower point values takes on the added impetus for loyalty program managers. Increasing customer participation and interaction at a lower point and dollar values become imperative in creating a long-term and loyal customer.

Even prior to the pandemic over half of the customers rated rewards just as important for both big-ticket, small, and habitual purchases (Wirecard).

Offering more redemption options across values not only helps increase engagement for your brand today, expanding redemption options to offer lower priced items can also help increase interaction and decrease point liabilities in the future when redemption for travel returns to more normal levels.

So how does a loyalty program offer expanded redemption options at $100 and below?

You could expand your catalog of offerings through third-party merchandise fulfillment, but this can be an expensive proposition and would still limit the number of options available to program members. Given the myriad of restraints, this is not the ideal solution for loyalty programs to expand redemption offerings and ultimately deliver against consumer demands.

However, there is a channel that consumers are deeply experienced, it actually expanded through the pandemic, contains almost unlimited reward options at or below $100, redemption is immediate (and in some cases delivery too), and it does not have the same burden as carrying a bespoke catalog or managing returns, and that is through e-commerce. Indeed, according to Charles Ehredt at Currency Alliance, participating in marketplaces – which might include Instagram, Amazon, Rakuten, WeChat, Google, and more – is becoming a requirement for most consumer-facing brands.

Giving consumers the option to utilize point balances to redeem for desired products and/or services online outside of a closed system has actually been shown to improve the customer experience. In fact, instantly redeeming points for purchases at other merchants was shown to improve the experience for 84% of those who have done so (Bond)

With so many brands offering their goods and services through the internet and e-commerce this is a natural place to look for loyalty programs to expand their offering.

But how do you monetize points to maximize this opportunity?

That is easy, by integrating your loyalty program with an online network of retailers and offering loyalty points as a payment option. Seeing points as ubiquitous or as a currency helps identify many other options for redemption and increases interaction with the program member and your brand.

With an almost infinite number of redemption options online that have values below $100, points as payment can;
  • Expand interactions and engagement with program members
  • Increase program flexibility
  • Improve the customer experience
  • Deliver on an untapped consumer need

With over $200 billion in points available and $100 billion unused, it is imperative for loyalty programs to increase the variety of redemption options available across values and in particular those below $100 to meet the needs of program members.

Not only does this approach increase engagement, but it also increases brand interaction as members make added purchases to achieve minimum point thresholds for purchases, and ultimately increases retention over a longer period of time because it takes less time to accumulate enough points for members to achieve reward status.

Isn’t that rewarding for everyone?


Jonathan Silver
Engage People Inc.

Comments are closed.