Only gullible think rewards programs are for them

Fist clutching money

I've long suspected that bank rewards programs are far more popular with the marketing managers and consulting firms that design and launch them than with actual customers.

Now I have proof.

I stumbled upon a new study by rewards marketing firms Colloquy and Swift Exchange that finds that roughly one-third of the $48 billion in rewards points and miles issued each year go unredeemed. This in a rewards-infested nation where the average household has signed on for 18.4 rewards programs.

What gives?

The study points to a few design flaws. Some bank, credit card and airline programs require a minimum point balance before rewards can be redeemed. Others require multiple visits or transactions before they give up the goodies. And some industries, particularly hotels and airlines, have taken to shortening the redemption period and canceling points.

What, like we're going to hop a flight to Omaha just to use the points?

Then there's the obvious: rewards programs don't want to give it up. They want our business, but not if it costs them a dime.

Even Colloquy managing partner Kelly Hlavinka mildly scolded these cheapskates for missing the whole point: “If redemption equals engagement and engagement delivers customer satisfaction and profits, then loyalty marketers should encourage their members to make the most of their rewards. In short, redemption is good.”

To which business no doubt replies: Sure, pal. Call us in a few years when the recession is over.

Look, most of us long ago filed rewards programs somewhere between Publishers Clearing House and online "You're a Winner!" pop-ups on the Tickle-Me-Elmo excite-o-meter. This study simply confirms what we already know: rewards programs benefit the guys who run them, full stop.

In fact, once you've dispensed with the illogical logic of all that pretty and costly marketing malarkey, the real mission of rewards is to separate the more gullible among us from the herd and brand a target on their backs for the sole purpose of selling them more stuff. After all, it's far easier (that is, much less expensive) to preach to the choir.

If there's any illusion left regarding rewards programs, it's on the part of the financial institutions that seem to think our loyalty can be bought, much less so cheaply.

For them, the bad news is just beginning.

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