Consumers prefer smaller rewards they can redeem faster for making purchases with payment cards over larger perks such as airplane tickets that they earn more slowly, according to a study conducted by Synergistics Research Corp.
Forty-four percent of consumers told the Atlanta company that lower-value benefits, such as cash-back rebates applied to their bill or gift cards, were their favored type of reward program. By contrast, only 16% of respondents said they prefer rewards programs that accumulate points toward large items.
Those are both significant changes compared with a similar study in 2006, when Synergistics found that 26% of consumers favored small rewards and 33% wanted to save up for large benefits.
Today's consumers want benefits that seem tangible and immediate, said Bill McCracken, Synergistics' chief executive, and they often say that calculating points for some long-term reward cards is complicated, especially for travel-based rewards cards.
"Consumers don't want points or miles," McCracken said. "They want some kind of cash component that is easy to see and understand."
Travel-based reward cards, which are part of the long-term, high-value rewards sector, have "really decreased in preference in a mass-market view," McCracken said.
In fact, 36% of respondents said cash rebates likely would increase their credit card spending, while only 13% said travel rewards would do so.
Synergistics surveyed 1,000 consumers online in late 2009. It released the results June 4.
Twenty-four percent of participants said they split their spending between cards that offer long-term and short-term rewards, down from 28% who said so in 2006.
Additionally, 44% of participants said they are not willing to pay for a credit card reward program, while 27% said they would be willing to pay at least $50 annually.
Though most consumers have been "conditioned to expect a rich rewards program for free, the economics of that model is going away, and it is hard for consumers to understand that," McCracken said.
Most issuers are moving to a two-tiered system, offering one card with no annual fee that support lower-value rewards and a fee-based card with richer rewards, McCracken said. "There really isn't going to be any middle ground."
"Consumers' perceptions of reward programs are evolving in reaction to the current economic environment. Consumers are much more oriented toward immediate rewards and have adopted a 'show me the money' attitude," Genie M. Driskill, Synergistics' chief operating officer, said in a press release. "Providers need to be aware that rewards marketing is changing and that programs will need to be adapted to the changing consumer perspective."