Using miles for things other than travel has been an increasing trend, the loyalty programs have been offering several new options over the past few years — whether it’s redeeming miles for other travel like hotels and rental cars, or for LCD toasters.
The idea is:
- that miles are a general currency, they can be spent like money. Heavy travelers may not want more flights.
- if there are limited award seats available getting members to spend miles on other things satisfies those members rather than frustrating them.
But frequent flyer programs can buy saver awards (likely to go unsold, spoiling inventory) at a deep discount, a much deeper discount than they can buy toasters — especially since mileage programs aren’t usually the ones in the fulfillment business actually warehousing and shipping the toaster. So merchandise rewards are rarely a great value, especially compared to travel.
There are only a handful of corner cases where you should consider miles for something other than travel.
- You genuinely don’t value more travel
- For accessing experiences you couldn’t obtain on your own
- Or redeeming a small number of orphan points
Miles Should Be Used for the Travel
Miles are almost always best spent for travel. That’s because earning miles isn’t just a rebate on your travel or credit card spend.
Miles are a rebate combined with the leverage of bulk purchase of distressed inventory. You take the basic rebate and then pair it with the program’s ability to spend it for distressed inventory (seats that will go out empty, purchased at a deep deep discount relative to retail as a result) and which are purchased in bulk quantities (a program isn’t just buying one seat the way that a customer might, they are buying millions of those distressed inventory seats from the airline).
That’s the sort of leverage you get redeeming miles for travel. You get your rebate to spend on things you get to buy for pennies on the dollar.
When you redeem miles for merchandise you are generally using them just as the rebate — a program buys you merchandise. And you give up the leverage. And programs don’t want to spend very much.
Ok to Use Miles for Experiences
If you don’t want more travel, consider using the miles to fly friends and family to you before buying a new toaster.
But that doesn’t mean there aren’t things you can redeem for that provide outsized value. I don’t like using miles just as a rebate. But if, instead spoiling inventory, you combine it with other clout you can still get leverage for your redemptions.
Airlines, hotels, and credit card companies have sponsorship arrangements with sports franchises. They do deals with music companies. They make arrangements with theatres. Multi-billion dollar corporations generally have access and connections that you or I simply couldn’t replicate ourselves. So if we can put those connections to work for us, it can wind up a good personal value. Here I’m thinking about where you use your points for experiences that don’t have a market price, you can’t just go online and buy the item.
Miles for Sunglasses is Dumb
United sent out an email promoting a discount offer for using your miles to buy sunglasses.
Hurry! Limited time for this discount, spend only 10,000 miles.
… for a pair of sub-$60 sunglasses.
At the special sale price you’re only doing a bit better than half a cent apiece in value for your miles. Although in fairness they do cover shipping.
The good news is there’s a “miles plus money” option. And wasting fewer miles is better than wasting more miles.
What’s MileagePlus saying here, really? That your MileagePlus future is so bleak, you might as well wear shades?
If United is going to market this, they ought to at least slap on a warning label.
Put another way, I do think programs ought to do something to educate their members about the value of their points. Don’t push members to redeem for low value items, that only encourages them to believe the miles they’re spending are low value. It’s in a program’s interest to convince members that their proprietary currency is worth more than a $30 discount on sunglasses (via miles and money).
Don’t be blinded by these marketing come-ons. Your miles are worth far more if you use them correctly.