More Than 30% of Card Users Opt for Cash Back Rewards
While it’s common for businesses to foster customer loyalty by offering perks in exchange for purchases, cardholders have a certain degree of dissatisfaction with the quality of the rewards they are earning. One consumer segment in particular — Generation Z — voiced the greatest degree of dissatisfaction when surveyed by PYMNTS Intelligence for the report […]
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While it’s common for businesses to foster customer loyalty by offering perks in exchange for purchases, cardholders have a certain degree of dissatisfaction with the quality of the rewards they are earning.
One consumer segment in particular — Generation Z — voiced the greatest degree of dissatisfaction when surveyed by PYMNTS Intelligence for the report “The Role of Reward Programs in Consumer Credit Usage.” More than 4 in 10 Gen Z consumers said they want to earn rewards when using their credit and debit cards, just not the rewards banks currently offer.
The report drew on data from surveys with more than 3,200 consumers and found that 71% of respondents were very or extremely satisfied with the rewards they earn using their primary credit card. However, satisfaction levels dropped with deeper analysis.
Not only were 41% of Gen Z respondents dissatisfied with the rewards they earned, but 26% of all respondents said the rewards they earned were insufficient to cover the purchases they desired. Another 31% said the lengthy reward-redemption procedures were an issue.
This thread of frustrations may likely be the reason that 36% of credit card holders opted to receive perhaps the simplest reward option over 90 days: cash back.
PYMNTS Intelligence data confirmed that 72% of cardholders used their rewards over a 90-day period, but the overriding preference for cash-back rewards suggested they were looking for more straightforward and tangible benefits than what is now being offered.
The findings identify an opportunity for financial institutions to rethink the loyalty strategies they offer to ensure they truly meet consumer needs. By doing so, FIs could close the gap between reward programs and what consumers expect — particularly the youngest adult generations.
Gen Z and millennial consumers, in particular, have a reputation for being more tech-savvy, and they value efficiency, placing them in conflict with current reward program inefficiencies.
FIs should consider innovating beyond the traditional and better tailoring reward programs to meet individual preferences while simplifying the redemption process, which is an irritant for nearly one-third of consumers.
The post More Than 30% of Card Users Opt for Cash Back Rewards appeared first on PYMNTS.com.