How Choice and Privileges Devalue Reward Redemption Reward redemption programs are designed to incentivize customers to make purchases and build loyalty. However, the abundance of choices and privileges associated with these programs can ironically lead to the devaluation of rewards. Choice Overload: When customers are presented with a vast array of redemption options, it can create cognitive dissonance and make it difficult for them to make informed decisions. This can result in redemption delays, lower perceived value, and diminished motivation to earn rewards. Privilege Inflation: As reward programs mature, they often introduce tiered privileges based on spending or loyalty levels. While this can encourage elite customers to engage more frequently, it can devalue rewards for everyone else. Customers who are not eligible for the highest tiers may feel cheated and less inclined to redeem their rewards. Reward Dilution: The availability of multiple redemption channels (e.g., online, in-store, third-party vendors) can lead to a dilution of rewards. By partnering with other businesses, companies may offer rewards that are not specific to their products or services. This can reduce the distinctiveness and value of the rewards in customers’ eyes. Diminished Exclusivity: When rewards are easily redeemable, they lose their sense of exclusivity and specialness. Customers may start to take the rewards for granted and become less motivated to accumulate them. This can lead to lower program engagement and reduced customer loyalty. Strategies to Counteract Reward Devaluation: * Limit Choice: Offer a curated selection of redemption options that align with customer preferences. * Differentiate Privileges: Provide unique and tailored benefits to elite customers without marginalizing others. * Enhance Reward Relevance: Design rewards that are specific to the company’s products or services and offer value that customers cannot easily obtain elsewhere. * Maintain Exclusivity: Use redemption mechanisms that create a sense of scarcity and exclusivity. * Monitor and Adjust: Regularly track redemption rates and customer feedback to identify areas where rewards may be devalued and make necessary adjustments. By carefully managing choice and privileges, companies can preserve the value of their reward redemption programs and continue to drive customer engagement and loyalty.Choice Privileges Devalues Award Costs
Choice Privileges Devalues Award Costs In recent weeks, Choice Privileges has made adjustments to its award redemption rates, both at Preferred Hotels properties and its own hotels. Preferred Hotels Devaluation A few weeks ago, Choice Privileges devalued rewards for stays at Preferred Hotels properties, which are not owned or managed by Choice Hotels but offer additional redemption options for members. Own Hotel Devaluation Now, Choice Privileges has partially increased redemption rates at its own hotels. Previously, redemptions were limited to a maximum of 35,000 points per night, except in Asia Pacific where they cost up to 75,000 points. That maximum has been eliminated. As a result, some hotels now show redemption rates of up to 45,000 points per night, including in cities like New York City. However, many hotels still start at 8,000 points per night, and some properties that previously cost 35,000 points have not changed their rates. Impact on Program Value Choice Privileges has generally maintained a consistent value proposition, despite rising hotel prices. While this devaluation is disappointing, it is less severe than it could have been. Pitfalls for Luxury Travelers Choice Hotels has a large portfolio, but it lacks luxury properties compared to programs like Hilton Honors, Marriott Bonvoy, and World of Hyatt. This devaluation makes it harder to justify accumulating Choice Privileges points for luxury stays. Conclusion Choice Privileges has devalued award prices for some of its properties. The maximum redemption rate has been eliminated, and some hotels now cost more than before. Members should be aware of this when planning award redemptions and considering which loyalty program to accumulate points with.
Choice and Privileges Devalue Reward Redemption The proliferation of loyalty programs and rewards systems has resulted in a devaluation of rewards, according to a recent study. The study, conducted by [research firm], found that consumers are increasingly overwhelmed by the sheer number of rewards programs available, and as a result, the value of individual rewards has diminished. One factor contributing to the devaluation of rewards is the fact that consumers are now able to choose from a wider range of rewards options. In the past, loyalty programs typically offered a limited number of rewards, such as free products, discounts, or gift cards. However, today, consumers can often choose from a wide range of rewards, including travel experiences, event tickets, and charitable donations. This increased choice has made it more difficult for consumers to find rewards that are truly valuable to them. As a result, many consumers are simply redeeming their rewards for whatever is available, rather than waiting for a reward that they really want. Another factor contributing to the devaluation of rewards is the fact that many loyalty programs now offer privileges to members who spend a certain amount of money or who achieve a certain status level. These privileges can include things like early access to sales, exclusive discounts, and free shipping. While these privileges can be valuable, they can also make it more difficult for consumers to earn rewards. In order to qualify for privileges, consumers often have to spend more money than they would otherwise. This can lead to consumers feeling like they are not getting a good value for their money, and it can also make it more difficult for them to redeem rewards. The devaluation of rewards is a serious problem for businesses. When consumers feel like they are not getting a good value for their loyalty, they are less likely to continue participating in loyalty programs. This can lead to businesses losing valuable customers and revenue. Businesses need to find ways to address the devaluation of rewards. One way to do this is to offer more valuable rewards that are tailored to the needs of individual consumers. Another way to address the devaluation of rewards is to reduce the number of privileges that are offered to members. By making it easier for consumers to earn rewards, businesses can help to restore the value of loyalty programs.
