This viewpoint highlights the opportunity for players in the loyalty and rewards ecosystem to accelerate the use of their programs and drive cashouts of points for prepaid purchases. Inflationary pressure, supply chain issues, and rising interest rates are causing consumers to demand rewards as a valuable addition to their payment options. At the same time, retailers are devaluing points to avoid deterioration of profit margins while increasing use of payouts in the current economic market, assessing the strength of loyalty.
In this current environment, multiple facets of the loyalty value chain should be aware of the opportunities and options to maintain customer allegiance, enable and encourage individuals to convert their points into redeemable prepaid currency at the time of purchases, and provide continuing benefits to loyal consumers. Capitalizing on the psychological and emotional benefits of rewarding customers can accelerate deeper customer relationships, encourage additional spending, and result in more profitable use of prepaid reward cash-outs.
Retailers, under pressure to maintain profit margins while combating rapidly rising inflation, are working to balance the value of their points with the historical trend that consumers who belong to loyalty programs spend more at their chosen retailer than the average customer. Financial institutions (FIs) must continue to highlight the benefit of their rewards programs while creating more accessible entries to redeeming points during the shopping experience. And finally, third-party players within the loyalty industry can benefit from partnering with both retailers and FIs to participate in the ecosystem for the benefit of their mutual customers.