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State of the Industry: Point of Sale Rewards Redemption: Holy Grail, Real Value or Too Expensive?

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Imagine for a moment: You have landed five, 10 or maybe 20 years in the future. As a loyalty marketer, you are excited to learn that the ultimate customer loyalty experience has been discovered and implemented. This ultimate experience is the thing that all consumers want.  So, what is this Holy Grail of loyalty? It is point of sale (POS) rewards redemption, allowing consumers to use points or miles to pay for anything anywhere, just like dollars.

Clearly consumers are motivated by the almighty dollar. Studies have shown that consumers in traditional rewards programs tend to redeem for cash back or retail gift cards. Affinion Loyalty Group (ALG) has 30 years of experience managing loyalty programs for top financial institutions, hotel and airline companies, and automotive manufacturers. Across ALG’s client programs, 78 percent of redemptions are in the form of cash or gift cards. But, given the ultimate flexibility of cash and gift cards, how are redeemers using this money? Is the currency of rewards points used for fun or luxury items, or is it regarded as a way to extend a budget?  And does that perception change when the parameters of the program change?  Would the inclusion of a POS redemption option change behavior?  Would the value of the points at POS matter? Or, would the convenience or “cool” factor be enough to motivate consumers to use their points at the cash register? One thing holds true: there are more thought provoking questions than answers when it comes to the topic of POS rewards redemption.

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