Apr 18, 2006

Surprise rewards are more effective than points (Gartner)

"Surprising good customers with a sudden, unexpected discount or upgrade would go miles toward making them swear by a brand for life," says a Gartner research analyst in an article in Forbes. "That would be a religious experience for most people, compared with having to calculate, 'Let's see, I have 5,995 points, when do I get something?' Points for the sake of points is just buying off the customer, it doesn't drive loyalty."

Rewards currencies are a complicated and roundabout way of giving customers a discount. Since all banks give loyalty points, miles, etc., card issuers need to go further to differentiate their brands. A bank recently told me that when they asked people what types of rewards they prefer, the answer was points, but not just 0.5 per cent or one per cent; people want more, much more. Customers are experienced and jaded. Bored. Since banks can't afford to give more, cardholders are going to be dissapointed if banks continue going down only this path.

Surprise rewards work. They appear as a receipt promotion at the bottom of the customer's credit or debit card receipt. They are unexpected. They surprise customers out of their boredom. Since they are delivered based on each individual merchant's promotional marketing objectives, targeted based on each merchant's requirements, they tend to be high value surprises, paid entirely by merchants. Banks migrating to EMV can have this feature built into their cards at a relatively small incremental cost above what they are already paying to upgrade to EMV.

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