Which Drives Greater Loyalty?

Loyalty programs are a cornerstone of customer engagement, but which rewards structure truly fosters long-term retention—cash back or experiential rewards? In our latest webinar, Sarah Cole and David Hinkemeyer explored this critical question, diving into consumer spending behaviors, reward preferences, and the psychological drivers behind different redeemer types.

Key Takeaways from the Webinar

Cash back remains one of the most universally appealing incentives in loyalty programs. Consumers are drawn to its simplicity and the immediate financial benefit it provides. In fact, 62% of consumers prefer cash back offers when selecting a credit card or banking product, making it a go-to choice for financial institutions looking to attract new customers. However, while cash back offers quick and tangible rewards, these programs often experience higher attrition rates, ranging from 10-15% annually. The challenge for brands is ensuring continued engagement beyond the initial appeal of instant savings.

On the other hand, experiential rewards—such as travel perks, exclusive events, and unique lifestyle experiences—tend to create stronger emotional connections with consumers. Programs that offer aspirational rewards encourage long-term engagement, with data showing that points-based programs featuring travel or experience-driven incentives have lower annual attrition rates of 5-10%. Consumers who save points for larger redemptions often spend more per transaction and maintain a deeper connection with the brand over time. The emotional impact of these redemptions helps build lasting loyalty, making experiential rewards a powerful strategy for sustained customer engagement. Check out some real life redeemer activity below! (identities have been changed to maintain privacy)