Loyalty & Rewards

Loyalty Points And Rewards Programs Are Retooled After COVID

Loyalty Points, Rewards Programs Are Retooled

COVID-19 has left entire industries rethinking their rewards programs before all of that that stored-up goodwill loses its value — along with the customer relationships that such programs are meant to promote in the first place.

For example, American Express recently announced new rewards and statement credit offers across many of its premium credit cards, including The Platinum Card from American Express and the American Express Green Card, as CNBC reported.

The network said AmEx is enhancing rewards programs for many co-branded consumer credit cards to include such things as bonus rewards at U.S. supermarkets.

Delta SkyMiles Blue, Gold, Platinum and Reserve cards earned their holders 4x miles at U.S. supermarkets between May and July. Similarly, the Marriott Bonvoy Brilliant American Express card and Marriott Bonvoy American Express card earned 6x Marriott Bonvoy points on up to 7,500 eligible U.S. grocery store purchases between May and July, CNBC said.

Enhanced program options come as COVID-19 has shut down most of the usual travel-related purchases that earn travel points. The Wall Street Journal recently reported that business-travel purchases plunged 97 percent year over year in July’s final week.

All told, the Journal estimated that COVID-19’s travel-related hit to airlines, hotels, restaurants, convention centers and entertainment venues “will probably amount to north of $2 trillion, based on pre-pandemic estimates by the Global Business Travel Association.”

Which makes this the perfect time to revisit loyalty programs, many of which were underperforming before COVID-19 – and not just in the travel sector.

“We definitely saw the changes due to the pandemic ‘shape shift’ [in] redemptions from travel,” PSCU VP of Loyalty Solutions Annie Cox recently told PYMNTS. “There was a push for cash options that might help members and supplement income at a time where they need it. There was also a move toward charitable donation. Being able to put that in front of the member as an option outside of travel has really been key.”

Cox said that post-pandemic loyalty is about “putting many options into place. [It’s] having a program that’s flexible, that lets the member know: ‘We’re not just about travel. We have other options, and whatever best fits your needs, you can use your points or your cash back to deliver on that.’”

Rewards Need an Overhaul, Anyway 

Rewards programs needed work even before COVID-19 struck.

“The loyalty program should now be seen as the ultimate focus group,” PYMNTS recently reported. “Does a company know what is important now vs. January? Ask the loyalty program members. Send them an email. Get them involved in the future of the company. For a good example, look to a non-retailer. Choice Hotels has 45 million members in its loyalty program. Even though the pandemic was almost void of travel, they stayed in touch.”

“The result of that contact was an expanded program with more time to redeem points, new elite status benefits and extra benefits for healthcare workers,” our report found.

Such is the creativity that loyalty program members are now anticipating. But it’s clear that – as is the case in so many areas – COVID has exposed weaknesses in the program design that must be addressed.

It a recent hotel sector study, The Loyalty Divide: Operator and Consumer Perspectives, Oracle observed that “hoteliers are heavily invested in loyalty programs,” yet found that “guests [are] far less engaged in the programs than hoteliers realize. Some 61 percent of business respondents believe guests will sign up to every loyalty program on offer, where in reality only 24 percent of guests do, with a third rarely signing up to any loyalty program at all, a figure that hotels guessed to be just 6 percent.”

The disconnect between hotels and guests pertaining to redemption is a testament to poor customer knowledge, among other things. “We have a long way to go until [rewards] are truly personalized, but I think we’re getting closer and closer,” Brett Narlinger, head of global commerce at Blackhawk Network, told PYMNTS.

“As a consumer, I want my reward to be my choice. We’re seeing a significant shift toward something that is meaningful to a consumer, because if they feel a connection and they see something that [shows you] we’re paying attention, that is going to make those next-level connections we’re going to see in the next normal,” Narlinger said.

That’s why more industries are taking the time to get loyalty right — perhaps “relevant” is a better word. After all, few consumers currently want to use rewards points for plane tickets, hotel rooms or travel upgrades, even though those (until recently) held more magical value than anything that can be “bought” with points.

Issuers and Airlines Are Making Loyalty Cards Count

Credit cards have long offered airline points and miles, and that strategy is continuing throughout the pandemic – but with a supercharged quality designed to rev up usage.

Chase Sapphire Reserve members will receive a slew of extra points on gas station purchases through Sept. 30, and on subscription fees for services like Netflix or Spotify.

Likewise, the Citi Prestige Card will allow cardholders to spend their $250 annual travel credits at supermarkets and restaurants through December. Capital One said it is “expanding redemption options for Venture and Spark Miles cardholders now through Sept. 30, 2020 to include alternative statement credit options, such as food delivery and takeout.”

Still up in the air is the future of those ubiquitous frequent flyer program miles, and the many credit cards that deal in points for purchases. American Airlines got out ahead of this early, announcing in April that it was extending elite status for AAdvantage members until Jan. 31, 2022 amid reduced schedules. The carrier also lowered elite status qualifications for 2020 and extended certain Admirals Club memberships, among other adjusted perks.

Expect more such retooling of loyalty programs as the extent of COVID damage becomes clearer to players spread across the rewards space.



About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.