Financial Insights Finds Only 33 Percent of Consumers Influenced by Reward Points When Choosing a Credit or Check Card
FRAMINGHAM, MA – JUNE 11, 2003 – A new report by leading independent research and advisory firm Financial Insights uses data from the 2003 Financial Insights Payments Survey to evaluate the effectiveness of reward programs designed to drive the adoption of new payment technologies. Until now, there has been little harddata to determine the effectiveness of these programs, but recent Financial Insights survey research has found that only 33 percent of U.S. consumers rely on reward points to any degree when deciding which credit or check card to use.
"While reward programs are somewhat effective with certain high income or highly educated consumer segments, their potential to increase customer acquisition and retention has been oversold," said Aaron McPherson, research manager for Payments in Financial Insights' Retail Financial Services Group. "In addition, the significant cost associated with administering a rewards program is likely to outweigh the benefits gained, unless the card-issuer is specifically targeting the high-income/highly-educated customer base."
The report, titled "How Effective Are Reward Programs at Driving Payment Card Usage?" goes on to predict that as rewards programs become more prevalent, their value to card issuers, merchants and consumers will decline. In light of these realities, the report provides several suggestions on how card issuers can modify rewards programs in order to make them more effective.
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About Financial Insights, an IDC Company
Financial Insights provides independent research services to users and providers of financial industry technology. The company was formed in November 2002 by combining Meridien Research and the IDC Financial Services Advisory group. The Retail Financial Services practice offers four areas of focus: Payments, Channels, Customer Strategies and Wealth Management. The Capital Markets practice offers Trading Technologies and all aspects of Risk Management. The Corporate Banking practice covers cash management, wholesale payments, trade finance, and small business banking. Each practice delivers reports detailing new issues and challenges and uses its knowledge to advise clients on technology related decisions. Financial Insights is an IDC Company, headquartered in Framingham, MA. Visit www.financial-insights.com for more information.
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