IdeaWorks, best known for its fatally flawed annual award availability ‘study’, has a new report (.pdf) on non-travel rewards offered by loyalty programs. (HT: Today in the Sky)
The study is sponsored by (and contains a full page ad for) Switchfly, a company that sells merchandise, experiential, and other non-travel rewards platforms to these programs.
Unsurprisingly, the report offers non-travel rewards an unabashed thumbs up from its very title:
Sure there’s some cool stuff, but the issue to always consider is — at what price?
– On Israeli carrier El Al, would-be grooms choosing to pop the big question can redeem 120 points plus pay $60 for the airline’s in-flight marriage proposal kit.– A 35,500-point offer from Qantas is a good for a private sidecar tour of Beijing. It includes a gourmet lunch and sparkling wine served along the wall of the Forbidden City.
– Etihad Airways stages raffles that cost 100 miles per ticket. A sample prize: an Abu Dhabi Grand Prix package for two with four nights at the St. Regis resort. Also included: VIP tickets to the race and round-trip business class.
Miles for Magazines can make sense to generate cheap account activity to keep points from expiring, or on those rare occasions you have earn points for transactions with a partner (there have been offers that let you essentially earn more points than you’ll spend on the subscription).
But as a general matter you really shouldn’t redeem miles for merchandise.
Sure — there are people who travel for work, and the last thing in the world they want is to use their points for more travel. Programs feel pressure to fulfill award requests with available seats or rooms, so having some other options that the occasional member takes them up on can be good for overall economics.
On the whole merchandise rewards just represent a very bad value. Programs have to go out and buy whatever you are redeeming for. They may get some volume discounts, but it’s expensive for them to access these awards compared to discounted inventory with the loyalty programs’ own travel provider(s).
A saver award seat, or a hotel night when the property is at less than full occupancy, is going to be cheaper to the program than buying a toaster. That’s why your points will go further with travel than non-travel items. The Aeroplan miles for merchandise items I’ve checked have yielded about 1/4 of one cent per point in value.
As more than one loyalty program head has told me, people don’t participate in airline frequent flyer programs to get a washing machine.
If you don’t want travel, make sure you don’t have an airline or hotel rewards card. Get cash back instead. And consider using the points you do have for experiences where there’s not a ready market price, and you’re getting access to something you couldn’t buy yourself as a result of leveraging the connections, the sponsorship, or other clout that a multibillion-dollar business has to open doors for you.
I remember when I first saved up enough points to purchase a TV. It was August 2003. I used 800,000 yes that is eight hundred thousand points for a Plasma TV. I was so damn excited, I even wrote to Ken Chenault from American express, gave feedback on their site and thanked him for my TV. Now I won’t even trade in points for a gift certificate unless there is a compelling reason. Its all about better hotel experiences, using points to reduce last minute travel expenses and yes most important International business or first class travel. Over the past few years I have learned how to acquire ,save and use points thanks to people like Gary and Ben. There is allot to remember and I still need help finding the best flight options, it can be a challenge finding them. I also don’t follow all of the advise but like everything you need to learn understand and make adjustments that work for you. I have come a long way since spending that 800K Amex points on a TV.
OK, I found an “In-Room Spa Menu” on my bed at the Westin Tianjin this evening.
A “Four Handed Massage”: Two therapists. Four hands.
“Services are offered in the comfort and privacy of your guestroom.”
Cost: 60/90 minutes RMB 1100/1400 (about $200-$250).
OR 13500/16875 Starpoints.
My condolences to Leonard. Now I don’t feel so bad about that purse I bought for my wife years ago with club Carlson points.