The Value of a Rewards Program: Loyalty Redeemers Spend More

By Annie Cox, VP Product Management Loyalty Solutions, Velera
How many cards are in your wallet? If you’re an average U.S. consumer, chances are you have around four to choose from at any given time, according to Experian, in plastic and/or electronic form. You can likely use any one of them just about anywhere you go. But, when you’re ready for the check at your favorite restaurant, paying for gas or groceries or shopping online, which card do you reach for and why?
The 2024 edition of Velera’s Eye on Payments study, which presents findings from an online survey of 1,850 credit union members and non-members across the U.S., reveals some potential reasons for why consumers keep certain cards top-of-wallet. For credit union members, three-quarters say that rewards are important when choosing whether to use their debit (73%) or credit card (75%). And, when it comes to the most popular types of rewards that credit union members receive, a majority report they earn cash back on their debit card (53%) and credit card (55%), while four in 10 have the option for using points online for shopping (41% for debit and 37% for credit).
With rewards being a key factor in card usage decisions, it pays to entice your cardholders with loyalty programs that keep your brand top-of-wallet. But there’s more to rewards than keeping your members engaged. According to the Mastercard report “Relationship Rewards: A Game Changer for Financial Institutions,” those who redeem rewards are highly valuable customers. “These ‘redeemers’ spend, on average, almost three times more on their cards than non-redeemers. They are also more loyal, keeping their cards longer than non-redeemers, with 17 percent less attrition,” according to the report.
Redeemers of Velera’s CURewards® loyalty program are spending approximately two times more than their non-redeeming counterparts. It’s clear that redemption rates are an indicator of the strength of your loyalty program and have a direct positive correlation to the return on your investment. Are your members taking advantage of rewards and redeeming points regularly?
Get the Most Out of Your Rewards Program
To drive engagement with your rewards program, consider simple marketing efforts aimed at awareness, personalizing your messages whenever possible and reviewing your program to keep it fresh.
- Build awareness: Spark curiosity in your program with banners on your online banking app, as well as email blasts that explain how your program works. Here’s a good explanation from Motley Fool Money: How Do Credit Card Points Work?
- Track rewards points: Show points totals on quarterly emails or eStatements, highlighting ways to use accumulated points based on members’ spending habits. Include a link to your credit union’s loyalty website to drive traffic and encourage cardholders to redeem.
- Celebrate redemptions: To show the value of your loyalty program and drive traffic back to your rewards site, send emails congratulating cardholders on their redemptions — perhaps even recommending related items that can be redeemed in the future.
- Nurture redeemers: Keep your program top-of-mind with birthday, anniversary or seasonal emails offering personalized redemption options that align with cardholders’ spending habits.
- Review and adjust rewards: To stay competitive in today’s market, be sure to regularly review and adjust rewards structures and track how points are being used. You know your members best, so ensure you’re offering what’s attractive and relevant to them.
Measure — and See for Yourself
According to a Visa Consulting and Analytics report, redemption rate is the most telling metric, signaling “the attractiveness of your program and the extent to which customers are engaged with it.” Take a look at your own membership: Are those who redeem rewards truly spending more than members who are not engaged with your loyalty program?
Given their importance, redeemers deserve to be nurtured. Build a strong base of top redeemers — and see your revenue grow as members increasingly reach for your card.
Annie Cox, CCUE, CUDE, is vice president of Product Management Loyalty Solutions at Velera. In this role, she manages a suite of growth solutions including CURewards®, Member Loyalty Enterprise Rewards and Merchant Funded Rewards programs, helping credit unions define growth strategies. Prior to managing Loyalty Solutions, Cox was a member of the Velera New Product Development team. Before joining the company in 2006, she specialized in member education and growth initiatives in the credit union industry.
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