Study: One-Third Of Loyalty Rewards Uncashed


Of the $48 billion in consumer loyalty reward points dispensed each year, at least one-third (or $16 billion) are never cashed in, according to a study from Colloquy and Swift Exchange.

Broken down to the individual, the "2011 Forecast of U.S. Consumer Loyalty Program Points Value" study finds that the average household that is active in loyalty programs earns $622 a year, but does not redeem $205 of those rewards.

That's enough to buy an airline ticket, purchase a week's worth of groceries or even a smartphone, says Kelly Hlavinka, Colloquy managing partner. Loyalty marketers have work to do, because while unredeemed points may translate to short-term corporate savings, they do not equate to long-term customer relationships.

"If redemption equals engagement and engagement delivers customer satisfaction and profits, then loyalty marketers should encourage their members to make the most of their rewards," Hlavinka said in a statement. "In short, redemption is good."



The financial services sector is the biggest provider of rewards at $180 billion a year. The travel and hospitality sector is the second-largest industry in terms of rewards, at $17 billion a year. The retail industry, although it makes up 40% of all loyalty program memberships, issues the smallest value in rewards at $12 billion a year.

The study comprises consumer-oriented reward programs from a host of merchants, including those from travel and hospitality, retail and financial services. Taken together, the sheer amount of currency issued by this group demonstrates the economic muscle and potential untapped benefits for all involved in rewards programs, which were launched some 30 years ago.

Marketers need a "transformational tool" that can translate rewards and points into tangible goods, says Nancy Gordon, chief operating officer of Swift Exchange, in a statement. The rewards industry is "ripe for transition from a culture of accumulation to one of realization in the fullest sense," she adds. "That means helping consumers make rewards-based purchases as easily as they buy anything else in their daily lives."

The number of loyalty memberships in the U.S. is 2.1 billion, exceeding 2 billion for first time -- up from 1.8 billion in the 2009 report. The average household has signed up for 18.4 programs, compared with 14.1 programs in 2009. Despite the increase in overall membership, the average number of programs in which households actively participate is just 8.4. Overall membership of 2.1 billion represents a 16% increase compared to the 2009 report, but a slowdown from 2007 to 2009 when memberships rose 34%.

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