Are Loyalty Points Really A More Disposable Currency?

As loyalty programs continue to evolve, a big question arises: Are loyalty points becoming more disposable?

Recently, news broke that the U.S. Department of Transportation launched an investigation into major U.S. airlines for potentially unfair practices within their rewards programs.

The story highlights how the significant stored value in major loyalty programs has become so important that governments are stepping in to protect consumers, particularly in case of major changes such as devaluation.

This raises a broader conversation about the value of loyalty programs, especially given the reduced earning potential of many major programs over the last few years. For instance, Boots in the UK famously reduced its best-in-class earning value rates, and many grocery programs worldwide have shifted from offering points per transaction, in favour of awarding points exclusively for products on promotion.

Despite this, most loyalty commentators, apart from a few specialists, tend to focus on points earned rather than their value when spent. This is also generally how most programs are marketed. At the same time, more convenient redemption processes are being introduced, which can cloud the underlying value of points.

Simple cashback has been the major redemption option for a while, but it’s not always the best deal — even when served up as a pay-with-points capability for recent purchases. For example, one major Australian program offers $100 in cashback for significantly more points than a $100 gift card to a major grocer, something very likely to be fully utilized, yet cashback remains the most popular option. 

New direct pay-with-points on merchant e-commerce sites have added convenience, but do they provide better value? Given the immediate decision to burn points instead of cash at checkout, does the consumer have enough time to properly assess the value? 

Some pay-with-points capabilities aren't delivering substantial value, except in highly targeted ways for specific consumer segments, for example Amex and Amazon.

However, in an era where consumers will pay extra for home delivery on a single fast food burger, does convenience trump absolute value?

Not necessarily. The latest Deloitte annual report on consumer loyalty expectations and preferences suggests that all age groups, including Generation Z, are still really focused on the value of loyalty programs. 

New rewards categories have their place, and Gen Z shoppers, for example, show more affinity for special events than older generations. But even here, Caddle’s recent survey found that all consumers are really aware of redemption value, with some major pain points being “special offers that aren’t enticing enough (39%), followed by geographical restrictions (27%) and too many redemption restrictions (26%)”.

Classic loyalty redemption stores can still offer great value but must work hard to engage consumers and demonstrate superior worth. 

At RewardsOps, our team of expert merchandisers are dedicated to providing a curated selection of products that truly resonate with program members. We don’t just add new items to the catalog — we ensure each product's relevance and appeal. 

By focusing on exclusivity, understanding where else the products are available, and offering competitive pricing and promotions, we add real value. We strive to go beyond the basics, carefully selecting products based on a blend of historical data, current market insights, and anticipated trends to create a catalog that engages and excites our audience.