Wildfire Systems Inc. released a survey that provides insights around consumers’ expectations for their banking reward programs amid rising inflation. Over 1,000 adults participated in the survey, and here are the key takeaways:
Cash(back) is king!
Consumers place a high value on cashback reward programs.
- 78% of respondents prefer cashback over other card reward types, such as points or travel rewards.
The Rising Cost of Goods
The rising costs of goods has left consumers pulling off desperate attempts to pinch pennies.
- 90% of consumers are more interested in receiving discounts, utilizing coupons, and earning cashback rewards due to rising prices.
- This phenomenon does not discriminate by income, either. 82% of those with a household income of $100,000 or more say they seek money-saving tactics when shopping and place a high value on their rewards programs.
Convenience Needed
There is an overwhelming need for convenience with card reward programs.
- 79% of consumers prefer their rewards to be automatically applied to their purchases.
Customer Loyalty
Consumer loyalty is on treacherous water due to inflation.
- 24% of respondents would switch or already have switched their banks because another bank offered a cashback rewards program or had a better version of a rewards program than their current bank.
Jordan Hirschfield, Director of Prepaid at Mercator Advisory Group, recently examined how loyal consumers can be swayed by rewards programs in his deep dive on the Dunkin’ Rewards Program. Both merchants and banks alike need to be mindful of consumer needs during a time of inflation.
Banks have first-handedly witnessed the rising costs of goods as they see their consumers rack up debt. CNBC highlights how inflation has caused the price of goods to increase as much as 100%. This indicates that consumers are not buying more things to rack up this debt; they are simply spending more money on the same things they typically purchase. Banks are making a killing off this, as a part of their revenue comes from interchange fees. Interchange fees are paid to banks by merchants who accept debit and credit cards. A main lever to interchange is total purchase price, and when that goes up, interchange revenue goes up (for unregulated debit and all credit transactions).
To help during these hard times, banks should enrich their cashback programs, given the evident demand. The threat of a quarter of customers switching banks for a better program hopefully will motivate banks to act on these findings.
Overview by Sophia Gonzalez, Research Analyst, Debit Advisory Service at Mercator Advisory Group.