As we get through the holiday season crunching peppermint sticks and sinking our teeth into home-baked cookies, it’s worth wondering:
Do consumers prefer hard or soft benefits from their rewards program?
According to this blog post I read last week about a new Mintel study about credit card rewards, the answer is “both.”
According to the Mintel study, cash rebates — a super-hard benefit — show the most resonance for consumers. But, it also points out that consumers are burned out on frequent flyer programs and the discipline and time needed to accumulate and cash in miles. Instead, spontaneous travel options, like the opportunity to qualify for a trip they would not have been able to take, are more popular. And time-sensitive, unique experiences — the surprise and delight kind — are also desirable, especially related to luxury destinations, professional sports and cultural events.
The results make sense to me, in the context of the flood of specials, coupons, discounts and other price-oriented deals that come from almost every credit card and every retailer. Consumers know retail prices are basically fluid, based on the season, the economy, etc. So while straight discounts are still popular, customers like to feel like they’ve really “gotten” something — so a hidden or unexpected deal is key.
In addition, people love to be surprised and delighted, as well as to be recognized and respected. So personalized deals and exclusive benefits have a significant draw. Excitement and experiences are, in a sense, even more desired than EDLP (Every Day Low Prices) — something we confirmed in COLLOQUY’s 2008 study on word-of-mouth.
So what’s the future for hard vs. soft benefits?
In my mind, it’s clear that some mix of hard and soft benefits offer the best value proposition — taking advantage of the fact that consumers are practical and understand the benefit of a cash incentive n their credit and loyalty cards, but also long for “surprise-and-delight” option. Of course, it can be tricky to find the right balance of hard and soft that works for a particular program and its target audience. That’s where test and learn needs to come into play — so retailers can give consumers what they really want, while still creating a viable, long-term, workable program for themselves.
