NEW YORK (MainStreet) — Americans are great at accruing loyalty rewards points, especially from retailers, banks and credit card companies. Unfortunately, they’re just as good at not cashing those rewards in.
A new study from Colloquy, a marketing firm in Cincinnati, shows that about 33% of the 48 million rewards points earned by American consumers each year go unused, presumably due to neglect and misinformation, for a total value of $16 billion.
That news will probably make the companies that promote them happy, as the banks, credit card companies and retailers benefit from a huge de facto profit-making engine without having to lift a finger.
Of the $16 billion in unused loyalty points, the average American consumer squanders $205 – enough to buy a round-trip plane ticket from Philadelphia to Miami, or to pay the average U.S. household phone bill for the month.
“American consumers are leaving significant dollars on the table every year,” says Kelly Hlavinka, a managing partner at Colloquy. “This report should alert savvy consumers to a great opportunity to stretch household budgets, and to do so by simply consolidating their loyalty rewards participation with their favorite brands, making it easy to accumulate and redeem them faster than ever imagined.”
But one issue consumers who want to use loyalty rewards payments have is trouble understanding what purchases do and don’t qualify for the points. A cynic may wonder if complicated rewards rules are an intentional way for a company to make some extra cash, but it could be that either consumers are indifferent about using all their points (unlikely in this economy), or they’re confused about how to leverage their rewards points, which the study’s researchers feel is more likely.
“Three decades after the inception of the modern frequent flyer program, the rewards industry is ripe for a transition from a culture of accumulation to one of realization in the fullest sense,” says Nancy Gordon, chief operating officer for Miami-based Swift Exchange, which co-sponsored the study. “That means helping consumers make rewards-based purchases as easily as they buy anything else in their daily lives.”