$48 Billion in Consumer Loyalty Points Dispensed Annually

Americans accumulate approximately $48 billion in rewards points and miles annually, according to the results of a first-ever study on the perceived dollar value of loyalty programs that illustrates the real economic power of these programs for consumers, issuers, merchants and manufacturers.

But out of roughly $48 billion worth of perceived value in reward points and miles American businesses issue annually, at least one-third – representing $16 billion in value – goes unredeemed by consumers, according to the study, “2011 Forecast of U.S. Consumer Loyalty Program Points Value.”

Put in perspective, the average household that is active in loyalty programs earns $622 a year, but does not redeem $205 of those rewards. That’s enough to buy an airline ticket, purchase a week’s worth of groceries or a smartphone.

“American consumers are leaving significant dollars on the table every year,” said Kelly Hlavinka, Colloquy managing partner. “This report should alert savvy consumers to a great opportunity to stretch household budgets, and to do so by simply consolidating their loyalty rewards participation with their favorite brands, making it easy to accumulate and redeem them faster than ever imagined.”

The study from Colloquy and Swift Exchange comprises consumer-oriented reward programs from a host of merchants, including those from travel and hospitality, retail and financial services. Taken together, the sheer amount of currency issued by this group demonstrates the economic muscle and potential untapped benefits for all involved in rewards programs, which were launched some 30 years ago.

“Three decades after the inception of the modern frequent-flyer program, the rewards industry is ripe for a transition from a culture of accumulation to one of realization in the fullest sense,” said Nancy Gordon, Swift Exchange COO. “That means helping consumers make rewards-based purchases as easily as they buy anything else in their daily lives. To accomplish this, marketers will need a transformational tool that can translate rewards and points into real mind share.”

In other key findings:

- The financial services sector is the biggest provider of rewards at $18 billion a year
- The travel and hospitality sector is the second-largest industry in terms of rewards at $17 billion a year
- The retail industry, although it makes up 40 percent of all loyalty program memberships, issues the smallest value in rewards at $12 billion a year.

Hlavinka said the research results indicate loyalty marketers have work to do, because while unredeemed points may translate to short-term corporate savings, they do not equate to long-term customer relationships. “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,” she said. “In short, redemption is good.”

The number of loyalty memberships in the United States is 2.1 billion, exceeding 2 billion for first time, up from 1.8 billion in the 2009 report. The average household has signed up for 18.4 programs, compared with 14.1 programs in 2009. Despite the increase in overall membership, the average number of programs in which households actively participate is just 8.4.

Overall membership of 2.1 billion represents a 16 percent increase compared to the 2009 report, but a slowdown from 2007 to 2009 when memberships rose 34 percent.

Full details can be found at www.colloquy.com/whitepapers.

Colloquy comprises a collection of publishing, education and research resources devoted to the global loyalty-marketing industry. Owned by LoyaltyOne, Colloquy has served the loyalty-marketing industry since 1990. Swift Exchange is owned and operated by Signature Systems LLC.

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