As more consumers participate in brand loyalty programs, more of those loyalty points are going unclaimed -- to the tune of $100 billion, according to marketing firm Bond Brand Loyalty.
The problem for marketers is that if consumers aren't taking advantage of the points they're accumulating by cashing them in, they may not have a positive view of the program. (Worse, unclaimed rewards create a financial liability for brands.)
There are number of reasons why such bounty is left sitting in wallets. It is in part a question of educating consumers: Some brand loyalty marketers are failing to communicate reminders about redeemable points to program members.
"Some people don't redeem because they are disengaged with the program, even to the extent that they don't know their current points balance or what redemption options are available to them," said Sean Claessen, executive VP of strategy and innovation at Bond Brant Loyalty.
A recent study by Accenture found that 77% of consumers participate in some kind of a retail loyalty program, 46% have joined a hotel program, and 40% are part of an airline program–up from 72%, 36%, and 31% over the last year, respectively.
Brand loyalty programs that rate highest when it comes to ease of points tracking and account activity were Papa John's Papa Rewards, Domino's Pizza Pizza Profile, MyMK from Mary Kay Cosmetics, Walmart Savings Catcher and H-E-B Points Club Rewards, from the Texas-based grocery chain.
However, not all loyalty customers are in it just for the immediate reward of cheaper gas or cash back on purchases. According to Claessen, some loyalty members have a method to what seems like the madness of not redeeming.
Some points hoarders, for instance, prefer to maintain a minimum balance of grocery loyalty points just in case they forget their wallet while picking up last-minute ingredients for dinner. And others are aspirational -- building up points to score flights or hotel reservations for that once-in-a-lifetime vacation.
In other words, Claessen said, unredeemed points aren't always a signal that marketers are doing something wrong. However, he added, there probably is room for improvement in many cases. "To improve member engagement and drive redemption behavior, you should encourage goal setting, foster better awareness of accumulation status and communicate progress on a regular basis."
To arrive at its $100 billion tally, the company surveyed more than 28,000 consumers in the US and Canada in relation to more than 400 different loyalty programs from credit card and airline loyalty to casual dining and retail. It calculated the value of the average balance of unredeemed points in each loyalty sector evaluated, factoring in the number of consumers in those programs and their activity rates.
For consumers, the promise of loyalty programs are the rewards. So, it stands to reason that if they aren't redeeming points, they may not feel as though that promise is fulfilled. It turns out, according to the Bond report, redeemers are twice as likely to be highly satisfied with their programs than non-redeemers, and only a quarter of loyalty members are very satisfied with the level of effort required to earn a reward or benefit.
Plus, a lot of people have no idea what benefits they qualify for because they don't know their points levels. According to the report, 57% of members don't know their points balance, and 38% are unaware of their points value.