John Boccuzzi, Jr.

BrainTrust Query: Cash Back Popularity on the Rise, But Is There a Better Way?

March 11, 2010

FROM RETAILWIRE:
Cash is king. During the past two years, this age old encouragement from our fathers has been driven home with punctuation. In the loyalty and rewards game, cash is king in a different way. Will cash back rewards continue to become more and more popular with consumers, or is it just a temporary reaction to this recession?      [more...]

The real key to any loyalty program is simplicity for the reward holder. The airlines have struggled because of blackout dates and expirations on miles. They made it very tough for a frequent flyer to earn free flights. Hence, loyalty was not that high.

I find Marriott, Costco and Staples to be three of the best loyalty programs in the market today. Why? They're easy to understand and more importantly, to use. Costco and Staples are both cash-back rewards. The one difference is Staples uses cash back for future Staples purchasers while Costco will give you cash when you redeem your loyalty check. Marriott points are easy to earn and even easier to use. Loyalty is high for those two reasons.

Yes, the recession has certainly helped consumers focus more on cash for loyalty, but I also believe that consumers like cash rewards because it is the easiest to understand. Imagine if American Airlines offered cash back, no expiration checks that could be used for any American airline product including airline tickets, in flight movies and food. Would this drive loyalty more than saving 30,000 miles for one round trip with limited seats and blackout dates? Only a market test can tell us the answer to this question and I hope they or another airline does.