Loyalty Link: Do Reward Program Participants Really Want Discounts?

Although two-thirds of consumers (66 percent) say they participate in loyalty programs because of the discounts, redemption patterns say otherwise, according to a Maritz Poll commissioned by St. Louis, Missouri-based Maritz Loyalty Marketing. The survey found that when it's time to select their awards , most members redeem points for gift certificates.

"Consumers' stated preferences and their actual behavior in loyalty and rewards programs do not always match," says Gail Sneed, director, market development for Maritz Loyalty Marketing. "It's critical for companies to avoid making assumptions about their target audience's preferences and desires, and rather employ a strategic approach to truly understand customer behavior. Otherwise, programs could fail to accomplish their intended goals."

When asked about their award preferences, respondents in the Maritz Poll say that cash back (54 percent) is their top choice, followed by merchandise (49 percent), gift certificates (34 percent) and travel (29 percent). But redemption patterns paint a different picture, with consumers redeeming loyalty points in the order of gift certificates, cash back, discounts, merchandise and travel.

Sneed notes that while discounts can be important in attracting loyalty-program participants, companies should do more to track members' purchasing and redemption habits. "Most people involved in a loyalty program have a specific reward in mind," Sneed says. "We encourage our clients to look at what customers do and respond," with appropriate award choices. The creation of wish lists also keeps participants' eyes on the prize, she adds.

Another way to keep members interested is to create various tiers within a rewards program, offering lower-ticket awards at the bottom and increasing perks at higher levels, Sneed says.

?Leo Jakobson