While it's a common practice for businesses to cultivate customer loyalty by offering incentives in exchange for purchases, there exists a notable degree of dissatisfaction among cardholders regarding the quality of the rewards they receive.
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GLOWhile it’s a common practice for businesses to cultivate customer loyalty by offering incentives in exchange for purchases, there exists a notable degree of dissatisfaction among cardholders regarding the quality of the rewards they receive.
According to a survey conducted by PYMNTS Intelligence for the report titled “The Role of Reward Programs in Consumer Credit Usage,” one specific consumer group, Generation Z, expressed the highest level of dissatisfaction. Over 40% of Gen Z consumers indicated a desire to earn rewards when using their credit and debit cards, but they were not satisfied with the rewards currently offered by banks.
The report, based on data from surveys involving more than 3,200 consumers, revealed that while 71% of respondents expressed high satisfaction levels with the rewards earned through their primary credit cards, further analysis unveiled decreasing satisfaction levels.
Specifically, 41% of Gen Z respondents expressed dissatisfaction with their earned rewards, and 26% of all respondents felt that their rewards were inadequate to cover desired purchases. Additionally, 31% reported dissatisfaction with lengthy reward redemption processes.
This pattern of frustrations likely contributes to the fact that 36% of credit card holders chose the simplest reward option over a 90-day period: cash back.
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Data from PYMNTS Intelligence indicates that over a 90-day period, 72% of cardholders made use of their rewards. However, the clear preference for cash-back rewards suggests a desire for simpler and more tangible benefits compared to existing offerings.
These findings highlight an opportunity for financial institutions to reassess the loyalty strategies they provide to better align with consumer expectations. This is especially important for catering to the needs of the youngest adult generations, including Gen Z and millennials.
These younger consumers are often characterized as tech-savvy and prioritize efficiency, which contrasts with the current inefficiencies present in many reward programs. Therefore, FIs should explore innovative approaches beyond traditional methods, ensuring that reward programs are tailored to individual preferences while streamlining the redemption process, which is a source of frustration for nearly one-third of consumers.
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