Rewards: The New Currency

By Craig McLaughlin,

There is a growing trend in the loyalty rewards space -- using reward points as currency, creating a more holistic, streamlined approach to loyalty programs.

Because of current U.S. economic conditions, this trend has grown faster than anticipated. One-third of consumers find retail loyalty programs "more important" when battling tough economic times. In addition, 32.3 percent of consumers said the recession has made their participation in retail rewards programs more important. (Colloquy)

All told, participation in loyalty programs is up to 19% since 2007 (Colloquy). Over 60% of U.S. households said that loyalty card programs were important in their shopping decisions. (AC Nielsen) And the trend isn’t just for the older shoppers. Participation in loyalty programs -- especially among younger adults - has risen 19% since 2007, with retail loyalty programs getting the highest scores for adding value (Colloquy.)

All this said, it’s clear that rewards are no longer just “points.” Loyalty currency has evolved beyond its single program utility to a viable and relevant form of tender incorporated into consumers’ everyday spending behaviors. Consumers have amassed billions in rewards currency across many types of programs but will no longer accept static, analogous rewards for their spending behavior. Careful spending and reward benefits are critical in today’s economy.

But reward programs have remained largely unchanged since the 1970s...providers source preferred relationships with category vendors, offering limited product selection. To avoid the negative connotations, however, of discounting – the “old school” reward program model -- many marketers today are taking a more holistic view of their loyalty programs, focusing on broadening customer relationships, offering awards and recognition for existing relationships.

There are three key points in creating “relevant currency” for today’s consumer:

1.    Selection –what consumers expect
2.    Price – connected into the retail world, real time pricing, participating in sales, etc.
3.    Convenience – we want things now

One major trend experts in the marketing space have identified for reward programs is that programs will begin to develop direct merchant relationships, allowing loyalty program members to convert their loyalty points on-site at the merchant partner for discounts, merchandise and/or services. This model allows retailers to offer an unmatched product selection, the convenience of mobile redemption and in-store pickup, while utilizing leading-edge technology for real-time pricing and customized retail promotions. This paradigm-shifting model puts retailers in a situation where they can deploy consumer based marketing opportunities, making consumers more likely to use them and come back frequently. Revenue grows, consumer loyalty grows and everyone wins.

These direct relationships with retailers open up innovative new user experience opportunities such as:

  • In-store pickup (Instant availability);
  • Mobile Research and Redemption;
  • Unlimited access to latest, greatest products;
  • Promoting retail offers (BOGO’s Free Shipping, Coupons, Discounts, etc.); and
  • Real-time pricing.

A key goal, of course, to any financial provider is to drive card usage, and these direct merchant relationships and the technology behind it does just that, ultimately opening up a whole new world. The incentive of in-store pick up, discounts, promotional offers, etc. drives consumer spending and tightens their relationship with the issuing bank. In short, the bank is giving the consumers more relevant currency -- what they want when they want it -- with web and mobile offerings. 

All of this allows the financial institution to achieve:

  • Balance build;
  •  Enhanced value creation;
  • Richer partnership with retailer;
  • Innovative and efficient marketing delivery;
  • Endless possibilities for partner subsidized earn and burn promotional offers; and
  • Volume leverage for strategic banking relationships.

When considering a loyalty rewards program, a more holistic solution involving all parties involved in a single transaction is what is going to resonate with today’s consumer. Many of the world’s top retailers are already seeing the benefits and it’s time to take a look at the options available to you.

Craig McLaughlin is president, CEO and founder of Bridge2 Solutions (, a marketing solutions platform providing innovative marketing and fulfillment solutions. His experience includes CIO of a Southeast incentive firm, where he developed their incentive and promotion platform and over 10 years with Accenture as a senior manager. He can be contacted at

More Web Exclusives/Guest Commentaries

Login or Register to post a comment.