Consumers Love Loyalty Programs, So Here’s What Issuers Should Do, Says Mastercard

PURCHASE, N.Y.—Consumers love credit card loyalty programs, but how successful issuers are with the offerings will depend on how well they address new trends in

this line of business, Mastercard says.

“To remain competitive and stay ahead, issuers must be mindful of the trends transforming the loyalty landscape,” stated Mastercard.

Four Trends

The company outlined four key trends it says financial institutions should pay attention to, including:

1. Powerful, nimble platforms.  Such capabilities are essential to meeting consumers’ high expectations today, and it’s just as important to leverage data analytics to deliver more relevant offerings to them, the company said. “Consumers have grown used to real-time, responsive communications – they want their rewards now, not later – so, that means providing instant points delivery, digital gift cards, or redeeming points at the point-of sale. A huge benefit to the data consumers generate with every interaction is that issuers can use data analytics to personalize offers and real-time communications to reward customers differently. This is critical to accomplishing a seamless experience and retaining consumers,” Mastercard said.
2.  A seamless user experience across devices and channels and a frictionless redemption process. That’s critical for keeping a card in first position in cardholders’ wallets, Mastercard said, adding digital-first consumers expect interactions across devices and channels to be easy and seamless. “Making it easy for consumers to earn and use their rewards has even proven to drive up spend. It’s important to note that many issuers’ rewards platforms need significant upgrades to deal with today’s digital and personalized world, and APIs have become critical to delivering a seamless consumer experience.”
3. Digital and multi-channel engagement increases program awareness and reinforces the aspirational value to cardholders. The result is improvement in cardholder spend and retention, the company said. “U.S. consumers are enrolled in 3.3-billion loyalty programs—about 10 per household. However, issuers can be in danger of losing mindshare, and cardholders, if they fail to engage users access across all digital channels. For example, only 22% of rewards cardholders are very or extremely satisfied with the program’s mobile app. That’s a huge opportunity to double-down and stand out,” Mastercard said.
4. Consumers want more flexibility and personalization from their loyalty programs to earn more rewards in more ways, and redeem those rewards anytime, anywhere. They want the freedom to redeem rewards at the point-of-sale for “exactly what I want,” Mastercard explained. “To remain relevant and keep consumers engaged, issuers need to ensure that loyalty programs meet the needs and preferences of each generation. For instance, by 2025, Millennials will earn as much as Baby Boomers, Generation X, and Generation Z combined. Growing up in the on-demand Internet age, self-reliant Millennials value freedom and independence, and seek to fully enjoy life. By allowing cardholders to self-select the benefits that are most meaningful to them and offering more opportunities to use points in meaningful ways, redemptions—and retention—will rise.”