A trend we have talked a lot about over the past couple of years here at iSeatz is Microburn: point redemption opportunities which are less than your least expensive primary product. We reviewed the value of these opportunities in depth in an October 2019 blog post. That pre-pandemic article couldn’t have been more prescient, as the COVID-19 pandemic has highlighted the desire for microburn options to maintain loyalty tier status, activity, and stave off point expiration. We also more recently discussed this in our State of Loyalty: 2021 Hotel Ancillary Report, released earlier this summer:
“With loyalty members unable to redeem points for travel for much of 2020, microburn ancillaries offered unique opportunities for member engagement, as well as increased ancillary revenue to offset lost bookings and reduced point surplus on the books. According to CBRE Research conducted in October 2020, ancillaries helped buoy revenues last year. “During August 2020, other operated revenues increased by 0.2 percent POR over August 2019, while miscellaneous income increased by 26.0 percent.””
The most common microburn opportunity in a reward portfolio is Gift Cards. eGift cards, in particular, provide instant gratification, purchasing versatility, low level of effort, and the quickest path to redemption for reward members. While physical gift cards still allow members to microburn points, they lack the immediacy and versatility of digital cards. Given this, it’s not surprising that eGift Cards are growing at 18% CAGR 2020-2024, and point redemption for physical cards is declining (-3% YOY 2018).
In addition to the value realized by the reward member, loyalty programs also benefit from adding gift cards to their ancillary offerings. Microburn opportunities lower financial liability of the rewards program, by preventing stockpiles of points from sitting on the books. They also provide a variety of products by which to segment and personalize offers to members, driving stronger engagement, especially during off-peak travel periods. Many programs will use gift cards as a replacement or stop-gap for other ancillary categories. For example, a rewards program may offer a gift card for a food delivery service, in lieu of a direct redemption through a supply partner.
While gift cards are one of, if not the most ubiquitous ancillaries within a reward program, not all gift card solutions are created equal. So what should you look for when integrating gift card redemption into your reward program portfolio?
- Integrated purchase path vs supplier link-off. Supplier link-offs for ancillary redemption are common because they are an easy setup and require little investment, but poor CX means you’re losing out in the long run. In addition to losing member recognition, point bank integration, and personalization, you’re also losing revenue. Our data shows that iSeatz custom frontends convert at rates 30X higher, and keeping customers on your site means you have more opportunities to cross-sell and upsell. You’ve spent time and resources acquiring your customers. Why send them away?
- Purchasing flexibility. Can members purchase more than one gift card at a time? For more than one recipient? Can they purchase in advance and schedule delivery for a specific date?
- Customer data and reporting. How easily can you store and access customer transactions? Can you integrate this data into your CRM? In a world where first-party data is king, it’s crucial to make sure you’re not losing valuable data during the booking process.
- Supplier and servicing. Supplier inventory and stability should be a given, but worth calling out. In a world where more and more shoppers head online, a wider inventory of retailers means you can personalize and target offers for more customers.
To learn more about adding an eGift Card solution to your loyalty program, reach out to firstname.lastname@example.org.
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