Study Says $16 Billion Worth of Loyalty Program Rewards Go Unredeemed Each Year

by Mercator Advisory Group 0

A new study by Colloquy and marketing technology from Swift Exchange estimates U.S. consumers build $48 billion of value in loyalty program value, but that a third of it goes unredeemed.

The number of loyalty memberships in the U.S. is currently 2.1 billion, exceeding 2 billion for the first time, up from 1.8 billion in 2009, according to COLLOQUY’s 2011 loyalty rewards census 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. The overall membership of 2.1 billion represents a 16 percent increase compared to the 2009 report, but shows a slowdown when compared with 2007 to 2009 when memberships rose 34 percent.

The financial services sector is the biggest provider of rewards at $18 billion a year, with the travel and hospitality sector as the second-largest 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.

The strategic challenge of user engagement was stressed in the report. Mercator has identified similar consumer behavior issues in its CustomerMonitor Survey Series. For example, among debit rewards participants, less than one fourth of consumers in the Mercator study had ever redeemed rewards from those programs.

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