Half of UK consumers that hold a reward card still strongly prefer to use the card because of its rewards programme, while only 13% will use it because of low APR, according to the latest a syndicated market research tracking study run by the Auriemma Consulting Group. ACG found that consumers are attracted by card rewards with high promotional earnings rates and perceive these to be more valuable than those rewards cards that offer slow and steady earning capabilities.
Other Key Findings
* Cash remains king with cashback cards clearly the most popular type of reward. Barclaycard’s Platinum cashback card was perceived as being the most valuable cash card in the UK market offering cardholders 2% cash back on purchases made at petrol stations and supermarkets for life and 0.5% on all other purchases. It is a simple concept with a powerful consumer proposition.
* Petrol-related rewards schemes have huge potential. While only 5% of rewards cardholders have petrol-related benefits, 56% ranked the benefit as highly valuable. Even those not having petrol-based benefits perceived them to be the second most valuable rewards type behind cashback cards. Citi Shell MasterCard was perceived as one of the most valuable rewards programmes in the market – holders earn up to 6% rebate on fuel purchases.
* For a reward programme to be successful, consumers need choice on how they redeem rewards. The majority of reward cards holders (over 60%) find rewards cards to be most valuable when they offer the ability to choose the reward they receive. ACG believes banks should consider a heavy bias towards open redemption when developing product constructs in order to keep their card at top of wallet.
Matt Simester, Director at Auriemma Consulting Group comments, ‘rewards programmes clearly remain an important element in attracting and retaining card customers. However, consumers need to ensure they choose the right programme to suit their spending habits and lifestyle. Issuers need to understand that consumers want more control in redemption but the trade-off is that rewards programmes do not have to be as rich in benefits as they have been. I think we’re entering a new era for rewards programmes in the UK and many of the traditional propositions need radical review.’
About Auriemma Consulting Group
Since 1984, ACG has offered comprehensive, high-quality management consulting to the credit and debit card industry. The information in this release was originally published in a syndicated market research report that provides insight into the impact of consumer perceptions on credit card usage. The data was generated from a survey of 502 credit card users and published in Q1 2008.