Experts Forecast Increased Reward Program Spending, YOY Deal-Seeking Behavior This Holiday Season
Amidst cost of living, inflation and other economic challenges facing them every day, consumers are spending a significant amount of money via their reward programs—20% more than by this time last year, according to new data from Valuedynamx, a Collinson company and a leading global provider of curated, data-driven purchase rewards. The data also shows people are actively looking for and taking advantage of deals offered by rewards programs (e.g., card-linked and affiliate offers).
With many retailers offering Black Friday deals the entire month of November (a phenomenon being referred to as “Black November”) and more promotions expected in the month of December, shoppers will have ample time between now and the end of the holiday season to find the right deals to protect their budgets. Reward program spending is a popular option since consumers can make targeted purchases that earn rewards, such as points, miles, or cashback that they can redeem later while simultaneously helping save money during the holidays.
“Shoppers are intent on finding the best deals this season—perhaps so they don’t have to cut down on their gift giving and can even earn rewards for themselves while doing so,” said James Berry, managing director at Valuedynamx. “Our data provides valuable intel for marketers competing for share of wallet. Retailers are making lofty investments in advertising spend this year and competition is fierce to capture shoppers’ attention and dollars. While some retailers may have inventory they need to move, others may simply be leveraging holiday shopping season as an opportunity to connect with shoppers now so they can nurture long-term connections and loyalty. Shoppers increased their reward program spending by 22% last year compared to 2021; they are on pace to match, if not eclipse, that pace this year. Already in 2023, we’ve seen a 20% increase in retail spending via loyalty programs through the end of October compared to last year. Now is a perfect time for marketers to engage with customers—not just for seasonal sales, but to also establish and leverage touchpoints that will build long-term relationships. The most effective promotions will secure initial sales during the holiday season and then extend the consumer-merchant relationship into the months to come via ongoing offers and touchpoints.”
Read More: SalesTechStar Interview with Michael Walton, VP Product, Sales Hub, HubSpot
Other datapoints indicate that:
- Select merchant categories are thriving—and poised for continued growth. Clear consumer-preferred categories such as food and drink, health and beauty, and entertainment and leisure are already experiencing YOY reward program shopping increases (116%, 44% and 28% respectively). The large increase in food and drink specifically can be attributed to increased adoption of food delivery services.
- Younger shoppers will be creative in how they pay. While credit/debit cards and cash will be the top overall payment options, research from Blackhawk Network (BHN) found a significant number of shoppers (particularly younger generations) will leverage alternative payment options, like points they’ve earned through merchants, and buy-now, pay-later (BNPL). In fact, BHN’s research found 43% of Gen Z shoppers plan to leverage points to pay and 23% will use BNPL (as opposed to 15% of shoppers in general, according to Bankrate).
- Consumers have planned for 2024 travel. While travel bookings typically used to spike in January, consumers are ahead of the game this year. More than 50% of travel spend in October was for upcoming travel in 2024 and that number is likely to increase as consumers continue to look for opportunities to earn points and miles for future travel.
- Some promotions are more valuable—and lucrative—than others. Many businesses—particularly travel companies—are offering more reward points for purchases made on certain days or via specific promotions. For instance, a popular international airline will be launching a promotion this holiday season where users that spend $200 and subscribe to its e-newsletter will earn 500 bonus points; the rewards points double when people spend $500. Additionally, offering promotions that connect shoppers to brands digitally will help organizations reach people during the holiday season and easily follow up once it’s over.
- People are also being practical. The banking and insurance category is experiencing a 116% YOY increase—likely due to rising insurance premiums and reactionary tactics by shoppers to maximize the value of their non-discretionary spend.
“Shoppers will be looking to their rewards programs to gain extra value and stretch their budgets this holiday season,” added Berry. “Our research found that before they shop, 59% of debit and credit cardholders check for merchant offers associated with those cards (e.g., tailored offers based on previous shopping behavior, loyalty points, reward points, travel miles) before they make purchases. This savvy, strategic spending will help shoppers save money and this intel can help marketers reach and engage people during ‘The Golden Quarter’ where they are actively seeking out deals.”
Read More: Outreach Announces Artificial Intelligence Integration with Webex by Cisco
