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Rewards Programs in the U.S. Financial Services Market
Synergistics Research Corporation, Jan 2010, Pages: 164
In 2005, Synergistics launched one of the first evaluations of the reward market, with its report, Evaluating Rewards Marketing Programs. This new study examines consumer usage of and reaction to reward programs for financial services such as credit cards, debit cards, and checking accounts. Relationship and balanced-based rewards, as well as the overall impact of rewards on customer loyalty are evaluated. The research involves a United States Internet Survey with 1,000 consumers age 18 or older.
Research Issues
Reward programs are well established as a key marketing strategy. However, as a result of economic pressures some providers are finding it necessary to scale back their reward programs. To what extent have consumers recognized this decline in reward value? Are rewards losing their luster as a marketing strategy?
Since the introduction of frequent flyer points and Discover's cash rebate, reward credit cards have proliferated. More recently, reward programs are being associated with debit card marketing efforts. Cobranded credit and debit cards also offer their users discounts or rewards at their partnering organizations. A number of providers have taken the next step and established integrated programs which link credit and debit card reward programs. Some have moved to relationship programs which reward consumers for the breadth and depth of their financial relationship. Rewards and discounts can be based on balances or services used. Discounts on other banking services, such as a lower loan rate, can also be earned.
But even with the almost frenetic pace of activity, questions still loom around the objectives and costs of these programs. In the current environment, should providers be seeking acquisition, retention or revenue through their reward programs? Consumers may be confused regarding various aspects of the programs. Some consumers may have even dropped out or are silent participants who have forgotten signing up for reward programs.
Providers need to address these issues, as well as others as they move forward with rewards marketing programs. Developing an understanding of consumer perceptions, attitudes and expectations, as well as behavior patterns, will assist providers in optimizing the effectiveness of their reward marketing programs.
** Please note that due to restrictions this report cannot be sold to clients in the US or Canada**
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