If Points become more fungible, do they still drive consumer engagement?
This week I was talking with a new DCA member – Points4Purpose – about setting consumer rewards “free.” Old-school loyalty programs often issued rewards in a currency akin to Chuck E. Cheese tokens – in a totally closed system. I mean Mr. Cheese no disrespect: those tokens have been collected and, of course, studied in detail. But they really only worked in one place. Rewards that can only be used in a narrow space are simply not as valuable, making them less potent in driving consumer behavior.
On the Other Hand…
Many consumer rewards are now redeemable beyond the original issuer, but there’s still a reticence to truly set points free so consumers can use them as they please. What if it drives up the cost of the program? What if it doesn’t increase loyalty to our program or brand? All due respect to Sting, even if we love points programs, should we really set them free?
Questions DCA Members Are Asking:
- How motivated are our customers by redeeming within our program?
- How much “breakage” do we see – where consumers abandon points or disengage from the program? Would it help if they could make use of their points elsewhere?
- What would our best customers want to be able to spend their rewards on?
- What redemption options could be brand-reinforcing for us?
- Is there a way to pilot an expanded set of points redemption options with a subset of our best customers?
Related DCA Resources