Engage People: 84% of Consumers Would ‘Pay with Points’ if Offered by Retailers
Given the current state of the economy, saving money and combating inflation are top-of-mind for U.S. consumers. The opportunity to “Pay with Points” (PwP) delivers against both of these goals. Consumers weigh in on the continued popularity of PwP as a payment option, with many open to changing their credit cards to those offering the solution. This creates a big opportunity for retailers.
Continued financial pressure placed on consumers by prolonged inflation, along with the overall state of the economy, have many turning to creative ways to save money. One of those ways is leveraging loyalty and rewards points to supplement everyday spending, especially if the points can be used in any purchase amount. A new survey from The Wise Marketer in conjunction with Engage People, titled “Paying with Points – ‘Tomorrow’ Is Too Late,” has identified a strong appeal for Pay with Points (PwP) as a loyalty program perk, with 84% of consumers reporting that they would use this loyalty currency if it was offered by their credit card provider.
Consumers aren’t halting spending, but they are looking for deals and perks from retailers to keep them coming back. A recent customer loyalty survey by PwC noted that, as inflation persists, more than half of respondents are motivated to keep buying from a business if they get good value for the price of a product or service. This mentality contributes to the appeal of loyalty points as currency.
In The Wise Marketer’s latest research, consumers who already use loyalty points to make purchases mentioned that bringing down the total cost at checkout is a key benefit, citing that every little bit helps to save money. For those who have yet to use points at checkout, the perception is still positive. One respondent noted that loyalty points are a great way to combat inflation and help consumers reach their goal of purchasing something that wouldn’t have otherwise been possible without their loyalty points.
Overall, The Wise Marketer’s findings underscore continued growth in demand from consumers for reward programs that offer the ability to pay with points for things like groceries, online shopping, fast food, and gas. Moreover, consumers find even greater value in loyalty points that can be used within a controlled network of brand partners. Given the rising demand, retailers are presented with a unique opportunity to revamp their loyalty programs to include this high-demand redemption option.
But before being able to take full advantage, retailers need to overcome the challenges associated with offering PwP. These generally include establishing trust, demonstrating value, and converting customers.
Establish trust early in the relationship to fuel adoption
As is the case with any new payment option, some consumers may be reluctant to trust paying with points when the perk is initially offered. Part of this can be attributed to resisting change, but there are also security concerns. While nearly 40% of consumers indicate they don’t see a downside to paying with points, according to The Wise Marketer, roughly 21% either don’t trust the payment option or they feel it would be too complicated to use. This is especially true for cardholders under the age of 35.
That’s why retailers have to take advantage of the opportunity to establish trust, including debunking securing concerns , through education. Loyalty points are a funded currency that customers have already earned, and they have a fixed value. This means there is no risk or liability for the consumer to use these rewards. In fact, this currency is so stable that airlines used it as a way to offset losses during the pandemic.
In order to make customers feel more comfortable with using loyalty points to supplement purchases, retailers would be wise to market them like gift cards or discount codes — two payment options that customers feel confident using.
Just like gift cards and discount codes, loyalty points need to be integrated into the online and in-store checkout flow to make them easy to use. From there, it’s all about optimizing the payment experience, ensuring customer support is available and responsive for any issues that may arise, and sending purchase confirmations instantly to instill confidence.
Demonstrate value to encourage usage
Along with establishing trust, the value of incorporating PwP as a payment option needs to be demonstrated early and often to drive adoption and repeat use. For retailers to achieve this, it starts with clearly defining a value proposition and marketing it in meaningful ways. The best way to do this is by setting up a promotional launch campaign, as well as an employee incentive program that encourages staff to promote the loyalty program perk in their stores. From there, referral programs, exclusive discounts, and personalized offers can keep customers coming back.
The Wise Marketer’s research found that the top benefits of PwP include convenience (44%), ease of use (44%), getting more from rewards programs (37%), and providing a fast payment option (37%). Incorporating these messages into marketing and other communications can also ensure that consumers are aware of the value of loyalty points. It goes beyond just saving money.
Consumers who already use points as a payment option say that they enjoy the convenience and “hassle-free” factor of paying with points. They also cite feeling invested in the brands they make purchases with, which should act as a motivator for retailers to adopt PwP.
Take advantage of opportunities to convert
The findings of this year’s survey from The Wise Marketer indicate that retailers have a huge opportunity to draw new customers to their loyalty programs by offering competitive perks. Out of all respondents, 76% said they were either highly or somewhat likely to switch credit cards to get better “Pay with Points” options.
Notably, cardmembers with retail cards are even more likely to be willing to switch cards to get better access. Breaking this down demographically, more women and consumers over the age of 50 are not fully aware of PwP. These groups represent the greatest opportunity for conversion for retailers.
The opportunity for conversion is highest among early retail adopters and a threat to those who adopt PwP later. According to Marigold’s State of Brand Loyalty in the U.S. in 2023 report, a third of customers leave loyalty programs because brands are not delivering on their individual needs.
The ability to pay with points is becoming more essential in the minds of consumers, according to The Wise Marketer. Offering this payment option can help retailers attract and retain customers, and marketing the benefits in targeted ways can help lead to the conversion of demographics who may not be fully aware of them.
PwP has been gaining momentum in recent years with brands like Amazon and Walmart being among the early adopters. Inflation is only strengthening the demand as consumers look for ways to combat higher prices for things like gas, groceries, dining, and other common, everyday expenses.
Mike Capizzi, Dean of The Loyalty Academy™, who led The Wise Marketer’s research, said, “Pay with Points is a format that over the past few years has marked a significant shift in the way customers interact with loyalty programs and payment options. PwP represents a convergence of reward systems and transactional processes, offering customers a novel and potentially appealing way to utilize their accumulated loyalty points directly at the point of sale.”
2024 is the year for retailers to get on board with offering this loyalty program perk, and by overcoming the hurdles listed above, they’ll be in a prime position to attract new pools of customers and solidify their loyalty from the very beginning.
Survey methodology
The findings represented above are a result of proprietary research conducted by The Wise Marketer on behalf of Engage People to study U.S. consumers’ understanding of and reaction to “Pay with Points” as a loyalty program reward option. A quantitative survey was conducted online with an established consumer panel from October 17-23, 2023. The sample size was 1,000 U.S. consumers who both have and have used a rewards credit or debit card in the past 12 months. Those surveyed were geographically and demographically balanced by gender, age, and household income.