YOLO. FOMO. #takemeback
For brands looking to connect with millennials, and Gen Z behind them, the key may be tapping in to that love of travel with travel rewards.
The Death of Cash Back
Although cash back has been a popular cardholder benefit for years since 1980's, the overwhelming sentiment from loyalty executives were that cash back cardholders were less loyal and they struggled to push these cards top-of-wallet.
In contrast, travel rewards cards, including co-brand cards, were building genuine, meaningful connections with their cardholders. American Express has become the card most synonymous with travel with their Amex Travel Rewards Platform which allows for direct booking of flights, hotels, cars, and activities. They also partnered with Coachella to offer exclusive cardholder rewards, and these investments in experiential rewards appear to be paying off. Amex reported that 36% of new sign ups last year were amongst millennials.
Chase, Capital One, and Citibank all have their own versions of a travel platform, and most have travel rewards cards that are focused on points accrual for travel related purchasing.
Avocado Toast & Instagram
Another trend motivating for experiential rewards: social media. No one is taking pictures of their cash back rewards deposit. No one is taking pictures of their points balance. But they are taking pictures of their vacations, upgrades, and exciting experiences. The more cards can insert themselves into these moments the more free advertising they earn.
Customers are looking for surprising, stimulating experiences and Instagrammable environments.
Steven Taylor, Accor CMO
Getting creative with experiential rewards
Financial companies are getting creative in how they build their experiential program.
Amex acquired Resy in spring 2019, and now offers 1500 points for reservations booked through the platform. With Amex Points worth roughly $0.02 each, this equates to almost $30 in benefits earned on each reservation. They're also offering a suite of experiential dinners in NYC.
“Experiential marketing is a core part of what we do now, from an overall marketing standpoint. It’s truly part of our DNA.”
Jennifer Breithaupt, Global Consumer CMO at Citigroup
The Citi Private Pass program is involved in nearly 15,000 events annually, ranging from celebrity chef cooking classes to volunteer opportunities. According to Breithaupt they "sell out everything." Their research department works overtime to quantify the brand ROI. A few statistics shared by Breithaupt:
- 85% agree with the statement: “I have a much more positive perception of companies after attending their events.”
- On average, 21 photos are taken during live events and shared on social media.
- 38% visit the sponsoring company’s website.
- 32% purchased the sponsor’s product or service.
- 30% used or wore an item with the company’s logo, such as a shirt.
- 30% recommended the sponsor’s products or services to a friend or colleague.
These partnerships and strategic investments all aim to associate credit card brands with exciting events and cardholder memories.
Card Wars
The major players include the Amex Platinum card, which comes with a host of travel benefits including airport lounge access, airline fee credit, Uber credits, and 5x points earn for flights and hotels booked through their travel platform, which also has a host of additional benefits like cheaper international flights and discounts on upgrades.
The Chase Sapphire card is a relatively new entry into the market, but is specifically focused on points accrual for dining and travel. Travel perks include no foreign transaction fees for the global jetsetter, trip cancellation insurance, and baggage delay insurance. These benefits seem focused on removing the pain of a trip gone bad.
Conclusion
Credit card companies are in a unique position to gain a greater share of the millennial wallet through travel. Among all age groups millennials are most likely to prefer travel-related redemption, with over 49% saying this is their primary engagement with credit card rewards
We believe the credit card and financial companies who leverage travel experience to woo millennials will be able to grow this segment more quickly, and drive greater loyalty.
Rewards need to be more than transactional. They need to mean something to the cardholder. If you can create that meaning then every time they use their card they will remember that vacation, that concert, that meal, and your card will uniquely put a smile on their face.
Interested in building or augmenting a travel rewards platform solution? Our team can help. We work with global financial brands to create travel and technology strategies to drive loyalty. Reach out at hello@iseatz.com.