Summary
This article discusses loyalty programs and some of the issues associated with them. In the United States there are 1.8 billion people participating in loyalty programs in every industry from airlines to grocery stores. With all of these people participating, you would think people find value in these programs. The truth is, however, 32% of people surveyed believe that loyalty programs “hold little or no value”. This article describes the two main problems with loyalty programs and the new trend that is becoming the solution. The first problem is “low-threshold” consumers. Many consumers feel that the reward is unobtainable. They only accumulate a low number of points way below the amount required to cash in on the reward. The other problem is the difficult redemption process. Once a consumer has accumulated the points to receive a reward, the process to redeem a reward is long, difficult, and has many restrictions. The solution to these problems is instant reward redemption through digital content. With this new technology people who participate in loyalty programs can receive instant rewards such as music, movies, books, and magazines for a low amount of points instead of having to accumulate a large amount of points to redeem cash and discounts. With instant rewards programs more people are likely to participate and 47% of consumers said they would prefer instant rewards over traditional discounts.
Reflection
I think this article addresses legitimate problems with loyalty programs. I’m sure we’re all members of at least one type of loyalty program but how often do we really benefit from them? And when we do, it takes so much time and effort to redeem our rewards. In certain loyalty programs I think the digital content would be really beneficial. There are some programs that require so many points to redeem rewards. In those programs I would definitely rather cash in points for digital content such as music and movies. There are some loyalty programs however that I would prefer discounts relating to that particular program for example, airline miles and hotels. The reason I would participate in these programs would be to receive free flights or a discounted hotel stay. I would take the inconvenience of the redemption process and the time it takes to gain enough points to receive a greater reward. For loyalty programs that offer smaller rewards I would prefer an instant reward program. Overall I think the idea of instant rewards will be really beneficial to many companies that offer loyalty programs.
Hure, Goldworn. “Making Hotel Loyalty Programs More Effective.” Ehotelier. February 2011. http://ehotelier.com/hospitality-news/item.php?id=A20432_0_11_0_M
I definitely agree with the article saying that people believe that some loyalty programs hold no value for them either because the rewards are unobtainable or too hard to redeem. I also agree with you that some of the more difficult or time-consuming redemptions like for hotels or plane tickets are worth it, while receiving instant rewards of music or movies are good for smaller rewards. Some loyalty programs take too long to get anything. I like places like Godiva where one gets a free piece of chocolate every month just for being a loyalty member and Subway where it is very easy to get points and since there are so many levels, one can redeem points for a cookie, which is about ten points to a free foot long sub which is about seventy-five. Hotels are finding ways to make their loyalty programs more effective, I know at Embassy Suites if we had a VIP or a member then these people were given special food and drinks to their room as a gift. Things like that make members feel good about being part of the program while slowly accumulating points towards their free room or other rewards.
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