Americans Waste $16 Billion in Potential Loyalty Rewards Annually
American consumers waste nearly $16 billion in rewards points and miles annually, according to a recent study conducted by Cincinnati-based loyalty marketing company Colloquy and the global commerce firm Swift Exchange. The study, titled “2011 Forecast of U.S. Consumer Loyalty Program Points Value,” shows that merchants from the retail, travel, financial services and hospitality sectors issue about $48 billion in points and miles annually as part of consumer loyalty programs, and only about two-thirds of them are actually redeemed.
This amounts to the average household leaving over $200 in unredeemed rewards on the table each year.
Signing up for a rewards program can be as simple as clicking a box online or filling out your name and address on a merchant’s form. Staying on top of numerous different programs is the hard part, especially considering nearly every retail establishment, from your local movie theater to your supermarket to your airline of choice has its own loyalty program or rewards credit card.
It is likely that a combination of factors is responsible for this stark divide between dispensed rewards and those that are actually translated into tangible benefits for consumers. Indeed, these factors range from consumers forgetting to redeem the points and miles they earn to the complexity of rewards programs preventing hassle-free redemption. After all, with all the fine print, restrictions and expiration/blackout dates it’s nearly impossible to keep the details of one’s various loyalty memberships straight, let alone strategically redeem them so as to maximize the value of the points and miles they provide.
Cynics might argue that rewards programs are structured this way for a reason. Their surface appeal drives business while their true complexity limits lost revenue. However, Kelly Hlavinka, managing partner of COLLOQUY, argues that barriers to redemption actually hurt companies in the long run.
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