Loyalty programs are a cornerstone of modern retail. They promise valuable “perks,” discounts, and rewards to thank you for your repeat business. When used wisely, these programs can indeed offer real savings. However, the way some perks are structured or advertised can be misleading. They might not provide the value that consumers initially expect. Understanding the common ways loyalty perks can be less beneficial than they seem helps you assess their true worth. Here are eight ways loyalty programs can be misleading with their supposed perks.
1. The “Points” That Devalue Without Warning
A common perk is earning points for every dollar spent, which can be redeemed for future discounts or rewards. However, companies can and often do devalue these points by increasing the number needed for a reward. The 1,000 points you earned last month might get you a $10 discount today, but next month that same reward might cost 1,200 points. This makes your accumulated loyalty worth less over time.
2. “Exclusive Member Pricing” That’s Open to Everyone
Many grocery stores offer lower prices on items exclusively for loyalty members. This is framed as a special perk. In reality, these loyalty programs are almost always free and easy to join at the register. The “exclusive” price is therefore the standard price for nearly every shopper. The program’s main function here is to gather your purchasing data in exchange for these widely available discounts.
3. “Free” Birthday Gifts That Require a Purchase
A popular loyalty perk is a “free” item or discount during your birthday month. However, this “freebie” often requires a qualifying purchase to be redeemed. For example, you might get a free dessert, but only with the purchase of an entrée. While still a discount, it’s not truly “free” if it compels you to make a purchase you might not have otherwise made.
4. Tiered Status Levels That Encourage Overspending
Many programs feature tiered status levels (e.g., Silver, Gold, Platinum) that offer better perks at higher tiers. This gamifies spending. It can encourage customers to spend more money than they normally would just to reach the next level and unlock a slightly better perk. The extra amount spent to achieve the status often outweighs the financial value of the new benefits received.
5. Rewards That Are Difficult or Inconvenient to Redeem
A loyalty program might offer appealing rewards, but the process of redeeming them can be intentionally cumbersome. For travel programs, reward availability might be limited to undesirable dates or have extensive blackout periods. For retail programs, you might only be able to redeem rewards in-store, or the online redemption process might be clunky. This difficulty reduces the number of rewards that get claimed.
6. Perks That Expire Before You Can Use Them
Points, rewards, and discount vouchers earned through loyalty programs almost always have an expiration date. Sometimes this window is surprisingly short. The program banks on members forgetting about their rewards or not accumulating enough for a redemption before they expire. This is a common way that the “value” promised by the program is never actually delivered to the consumer.
7. Personalized “Deals” That Target Your Weaknesses
Loyalty programs track your purchases to create a detailed profile of your habits. They then use this data to send you “personalized” deals on items they know you frequently buy or might be tempted by. While this can seem helpful, it’s also a sophisticated marketing tactic to trigger purchases. The “perk” is a targeted ad designed to get you to spend money sooner or more often.
8. The Illusion of Savings on Inflated Base Prices
For some membership-based loyalty programs (those with an annual fee), the “exclusive” member prices on products might not be as low as you think. The retailer might have slightly higher base prices overall compared to competitors. The loyalty program’s “discounts” might only bring the price down to what you could find elsewhere without a membership fee. The feeling of saving is an illusion created by the membership structure.
Evaluate Loyalty Perks with a Critical Eye
Loyalty programs are designed to benefit the retailer first and foremost by encouraging repeat business and collecting data. While they can offer real value to consumers, it’s important to approach their “perks” with a critical eye. Understand the real value of points, read the fine print on redemptions and expirations, and don’t let the pursuit of status or personalized deals lead you to overspend. The most beneficial loyalty programs are those that easily integrate with your existing shopping habits, offering clear and straightforward savings without requiring you to change your behavior or spend more.
Which loyalty program perks do you find most misleading or least valuable? What are your tips for getting the most out of rewards programs without falling into spending traps? Share your experiences!
Read More
5 Ways Loyalty Point Programs Can Feel Rigged (And How to Maximize Your Rewards)
4 Things You Need To Know Before Signing Up For A Loyalty Program
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