News | February 28, 2011

Trending Now: Instant Redemption Rewards Reach Customers Neglected By Traditional Loyalty Programs

By Denis Huré, CEO and Jill Goldworn, President and Co-Founder of the first club

There is no doubt that loyalty programs are on the rise today. In the U.S. alone, there are 1.8 billion individual memberships in loyalty programs, everything from airlines to convenience stores to movie theatres. In light of this huge number, the general perception is that consumers are happy to join loyalty programs - eager to enjoy the added rewards that come with loyalty programs. The reality, however, is that they're not. Confirming this expectation gap, a recent survey by the Chief Marketing Officer Council found that some 32% of consumers surveyed felt that participation in loyalty programs holds "little to no value." Ouch.

What has emerged as a result of this disconnect is a new direction in loyalty programs: instant reward redemptions. In the past, instant rewards have been limited to cash or discounts at the register; maybe a free item of very low value. Technology, thankfully, has given rise to this new breed of instantly redeemable rewards – the digital, downloadable kind. These instant rewards promise to finally eliminate some of the traditional problems associated with loyalty programs, like engagement and delivering value.

Problems with Traditional Programs
According The Journal of Retailing, "the rewards associated with loyalty programs provide a means to establish reciprocity between the customer and the company." But problems that have plagued this interaction, or reciprocity, throughout the years and usually stemming from the delay between collection and redemption by loyalty program members. Whether a program's threshold for redemption is too high, or the redemption process is too cumbersome (which often the case, ask any FFP member), traditional loyalty programs suffer from program inefficiency. And here's where instant redemption provides instant relief, specifically in two areas:

Low-Threshold Consumers
In the past, a big problem has been the loss of "low-threshold" consumers. For these consumers, who maintain a low accumulation of points (or whatever program currency), the traditional loyalty program concept fails: if the point threshold is too high, the program has become irrelevant because the consumer feels the reward is not obtainable. In such cases, the loyalty program is actually hurting the brand. It suffers because the consumer disengages from the brand before they have received an added "reward" for membership.

Instant reward redemptions provide companies a very affordable alternative to offer these low-threshold consumers an easy way to burn low point accumulations. Loyalty program managers also benefit, as studies have shown that these "light buyers" represent a large increase in spending and purchase frequency post-redemption. In other words, they're not a segment to be ignored.

Delayed Redemption
Another area of concern with loyalty programs is cumbersome redemption processes. Regardless of the delivery method, timing is of the essence in loyalty programs. In fact, the timing is (almost) everything. The longer the delay in collecting a reward, the less powerful the loyalty creation5. Here, instant rewards reduce the delay between collection and redemption and, therefore, a larger chance for loyalty engagement success.

Digital Content: The Ultimate Instant Reward Redemption
Digital content, offering loyalty members downloadable content (such as the latest selection in music, movies, software, books, games, magazines), is emerging as the premier medium for the delivery of instant reward redemption. The sheer selection of digital content that is available, along with its monetization potential, makes it an excellent vehicle for instant reward redemption programs. Consumers want instant rewards, and digital content is the next logical step. Research from Mintel confirms this fact: 47% of consumers surveyed said their choice of loyalty program would be influenced by instant redemption options, such as cash or discounts. Jackpot!

So with this information acquired from recent surveys and obvious positive consumer sentiment, the next question seems to be: is digital content a good substitution for cash or discounts?

In a word, yes. According to Mintel's study, 61% of respondents said that lower overall cost for merchandise they would have purchased anyway is an important attribute of a loyalty or rewards program. It's feasible to assume then, that relevant content - content that the consumer is likely to purchase regardless - is a good substitute for cash or discounts. And considering that 65% of internet users have paid for intangible digital content, there is a huge market for relevant and engaging digital content waiting to be developed. In the UK, a recent YouGov survey showed that among those aged 18-34 who had engaged in digital activities, 22% spent more than £5 on digital books, the digital content category receiving the highest spend.

Digital content presents a win-win strategy
Digital content gives businesses the chance to burn points off their balance sheet, while offering the entire spectrum of loyalty program participants the opportunity to redeem points for merchandise in which they are interested or already purchasing on a regular basis.

In essence, instant digital rewards have bridged the gap between reality and perception. By making rewards instantly redeemable, businesses can give their customers the value that they seek: relevant rewards instantly and anywhere, loaded onto the devices they use in their everyday lives. Instant digital rewards, it seems, have created a new trend in loyalty programs: programs that work - for everyone.

Loyalty: Looking Forward
Featuring latest statistics and defining characteristics of various industry loyalty programs presented by the first club, "Loyalty: Looking Forward" can help program managers grasp emerging loyalty trends and their digitized, instant future. For more information, visit

About the first club
the first club is the first global solutions provider to present a new, better, and more effective way to offer rewards and build loyalty by delivering relevant, digital content that is instantly gratifying to today's consumers. the first club digital solutions can enhance loyalty, promotions, incentives and any type of rewards programs by offering the latest in premium content that will engage consumers worldwide, with attainable low-level rewards. Consumers can redeem rewards instantly to access the very latest in digital content in 12 languages, including millions of music tracks, mobile phone apps, games, eBooks, audio books, and soon casual games, digital magazines, movies and TV shows to engage with their favorite brands. the first club solutions are easily integrated into existing loyalty and reward programs, are cost-efficient and scalable to encourage low level reward redemption, increase customer loyalty and create additional revenues for brands. For more information, visit or

SOURCE: the first club