Unprecedented events came with unexpected changes. Since last year, COVID-19 has reshaped our habits on how we live, work, and shop. Undoubtedly, we see it continue to have an influence over consumer spending habits. With hospitality and travel being the most impacted industry, we have seen a significant shift in consumer earning and redeeming activity in the travel category.
Here’s what we have already seen change today.
- Contactless Payment – Consumers prefer tapping or using virtual debit or credit cards to pay for purchases. According to Visa, 62% are tapping a credit or debit card when they shop in person.
- Remote Work – More people have transitioned to work from home, meaning more time spent at home.
- Hygiene Safety – Mask requirements to enter businesses and hand sanitizer widely available and encouraged.
- Online Shopping – With more time at home, consumers are more likely to spend more time shopping online. PYMNT.com reported consumer spending at online retailers increases 34.9% year-over-year.
Loyalty Programs in the Time of COVID-19
During the COVID-19 era, ampliFI Loyalty Solutions has been keeping track of consumer spending and redemption activity to study the impact of COVID-19 on loyalty programs and cardholder engagement across over 2,000 of our clients.
While transaction and payment volumes generally decreased across the overall payment industry, you may be surprised at the outcomes of rewards card programs. ampliFI tracked rewards program activity on both credit and debit cards before and during the COVID-19 era. Our data shows total spend has remained surprisingly consistent, outside of a one-month decline at the beginning of lockdown. However, the notable difference is where consumers are spending, indicating a shift brought about by macroeconomic changes. In reviewing both before and after the pivotal month of April 2020, transaction spend in the merchant category codes of fuel, travel, and restaurants dipped substantially and are yet to recover. Offsetting the April 2020 dip was an increase in grocery spend and a large increase in retail spend. In both cases, transaction spend has remained above the pre-COVID benchmarks. Therefore, consumers active with rewards cards have maintained flat YoY (year-over-year) spend.
Apart from spend trends with transaction activity, ampliFI also studied redemption trends across our client reward programs.
The data also shows that redemptions remained a critical component within rewards programs, as we’ve seen a steady increase in redemption activity. Due to travel restrictions, consumer redemption volumes have shifted away from travel redemptions into gift cards, cash equivalents, and merchandise; items that provide financial relief or entertainment. However, as COVID-19 restrictions continue to ease, we can see travel redemptions have begun to cautiously increase, but are still well below benchmarks and trends of pre-pandemic days. In summary, our study confirms the impact on rewards card portfolios has been minimal. While the transaction spend categories and redemptions have shifted, our client’s portfolios have maintained volume during a difficult economic time. Impactful engagement strategies and loyalty programs continue to bring the card to top-of-wallet and results in the growth of rewards card portfolios. ampliFI continues to follow and leverage the COVID-19 spend and redemption data stream to create a loyalty program that works for everyone.
Talk to us and see how we can ampliFI your loyalty & rewards program today!
Sources: https://usa.visa.com/dam/VCOM/blogs/visa-back-to-business-study-jan21.pdf https://www.pymnts.com/news/ecommerce/2020/remote-payments-retail-covid-19-social-distancing/
ampliFI Loyalty Solutions is proud to serve nearly 2,100 financial institutions, delivering robust loyalty and reward programs for 20+ years with the continuity of positive feedback that drives us to be the best in the industry.