The Psychology of Getting Someone Started With Miles and Points

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I was e-mailing with Stephen M. about his son’s credit card strategy, credit score, and options. He observed that he’s been focused on getting the most from rewards ‘for at least 8 years’ but “it is kind of funny, I tell people who travel a lot about it, but very few do it seriously.”

When frequent flyer programs began in the U.S. programs would give you 5000 miles if you spent all your points. That’s because they were afraid you would no longer be locked into an airline if you spent all your miles, you’d get off the treadmill and become a free agent. They stopped doing that. And the reason why is telling.

Consumer behavior was the opposite of what the airlines initially expected. When a customer spent their miles they wouldn’t become a free agent. Instead their mileage-earning in the program would increase. Successful redemption demonstrates that the decisions a member was making were good ones. It’s proof, so members double down.

That’s why programs make a mistake when they devalue too far, make redemptions too hard, or focus on low value redemptions. Consultants bastardize the lesson, they know redemptions matter so they think the solution is to make redemptions easy, let customers spend their points at less than a penny apiece on toasters. But an LCD toaster doesn’t motivate future behavior the way a trip to Hawaii does.


Singapore Airlines is a Chase Transfer Partner

There are lessons here for getting friends and family started with miles and points, too. I think to my own experience at work, people thought “oh that’s just something Gary did” it wasn’t something that my co-workers could see themselves doing. But once I started helping people to do it, one at a time and over a period of years until several people in the office were taking amazing trips on points, there was a tipping point where even more people got started doing it — without my help.

At first most people don’t think what we can do with miles and points is real, or it’s too complicated, not the kind of thing they could see themselves accomplishing so they turn off. That’s why I try to get people started slowly, low cost. I want low barriers to entry, I want to overcome anxiety and make it easy to take the plunge.

It’s why I say Chase Sapphire Preferred is a better card than Sapphire Reserve for getting started in the hobby even though I believe Sapphire Reserve is the better card overall and use it myself.

There’s low commitment with $0 the first year fee (then $95) for the Sapphire Preferred versus $450 for Sapphire Reserve. It doesn’t matter that you get a $300 rebate on travel spend – hotels, airfare, etc. – with Sapphire Reserve that covers most of that cost. The headline amount is a barrier to getting started for someone that hasn’t yet proven to themselves the value of earning flexible points that transfer to miles, someone that hasn’t redeemed them yet for high value rewards.

I want people to see the benefits via a successful redemption, then they come back and get ramped up to do more. People have to prove the value proposition to themselves before going full speed.

A few days ago I wrote, Which is Better: Chase Sapphire Preferred or Reserve? and I observed,

There’s a huge debate amongst my readers, every time I talk about the Chase Sapphire Reserve someone will argue that the Chase Sapphire Preferred Card is clearly the better card (usually pointing out the slightly better signup bonus and the lower fee).

But if I cover the Chase Sapphire Preferred Card — highlighting the lower fee and suggesting it’s the best card for getting started in this hobby — readers will rightly point out just how valuable the Chase Sapphire Reserve is.

Both are right and at the same time both can be wrong, because each card is more appropriate for different people.

That was my lead-in to the article, and as predicted there were commenters suggesting their view was clearly right and any other opinion was disingenuous.. at best.


Hyatt is a Chase Transfer Partner

But that point of view isn’t how you help people see their way to a better state for themselves. A $450 up front fee looks like, sounds like, feels like a barrier until they see the benefits of the card are real. Points seem like an amorphous concept until you use them to actually fly in a premium class of service all over the world. Airport lounge access is just a concept to someone that hasn’t escaped the craziness of the terminal.

Plus it can be easier to get the Chase Sapphire Preferred Card since it’s a Visa Signature rather than Visa Infinite, so doesn’t require being approved for as much available credit on a new card. That’s great for someone still getting started too.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

More articles by Gary Leff »

Editorial note: any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer. Comments made in response to this post are not provided or commissioned nor have they been reviewed, approved, or otherwise endorsed by any bank. It is not the responsibility of any advertiser to ensure that questions are answered, either. Terms and limitations apply to all offers.

Comments

  1. I agree Gary! Different strokes for different folks. Everyone has to start somewhere. When there was 100K bonus for CSR, it made more sense to get that card. But now it isn’t heavily bonused. So the less expensive CSP’s annual fee is more logical. Who knows maybe Chase will introduce an even higher placed card. Then people can jump at that one.

  2. FF programs are so complicated now it is hard to get value out of them without a lot of study. Needing a Ph. D. in ff programs is a turnoff for people getting started or remaining active. Do you think complexity and fine print (not to mention moving the goalposts through devaluation) is a problem for ff programs that could lead to a decrease in use?

  3. People’s eyes gloss over almost immediately when I start talking miles and points. I get so many comments from the benign “miles are worthless” to “your credit score has to be terrible” or even more ridiculous ones like “is that legal?” (in regards to having multiple credit cards). The very few willing to just listen have been hooked immediately after their first redemption, just to prove your point.

  4. The value of the CSR drops off if you already get lounge access, GE/precheck and travel protections from one if the many other cards. 1x more points for restaurants is not worth $55 more to me ($150 first year)

  5. I tried to get a coworker to get the Sapphire explaining how it was easily worth $800-$100 but he ended up getting the Chase Freedom with a bonus of $150. Not bad but without UR, he is just getting the limited 5% rewards with no transfer options. The funny thing is he actually spends over $1,000 on flights every year on personal travel, it would be such a fast payout!

  6. Interesting points Gary. I agree somewhat except that frequent flyer programs have devalued so much, that I am putting their value closer to 1 cpm. And at that rate, so it is a fair amount of work for a $100 or $300 rebate that comea with risks. I have a friend who wants to take his family of 4 to Europe in business class this summer. He has just a few poonts. So we set oit a credit card sign up plan to earn miles and I showed him possible flights. Turned out that the lack of availability and extra costs for hotels and long layovers that we decided in the end just to have him purchase business class flights to Europe and I had him sign up for a cash back card.

  7. I agree with john completely. Complexity, frequent devaluations, time spent searching for worthy redemptions, large annual fees, and much more transparent and competitive no annual fee cash back cards make most travel rewards credit cards and associated loyalty programs a tough sell. I also submit that the fundamental question should not be psychology but finance – does it pay. I got my first travel rewards credit card, AMEX Starwood personal, when I ran the calculations and realized that a 4% or more net return after the $65 annual fee was not hard to accomplish. The game has changed for the worse. Most of our annual spend is now on cash back credit cards.

  8. I agree Gary! Different strokes for different folks. Everyone has to start somewhere. When there was 100K bonus for CSR, it made more sense to get that card. But now it isn’t heavily bonused.

  9. I think it is all about education (@john, @JimT, etc.). I have a few friends that ultimately picked up the CSR and in the past when the card was newer, in airport bars and restaurants, I have always made a comment to people who had the card just acknowledging that it was a good card to have. Do you know what a majority of people said to me in response to commenting on their CSR? “100k points. Couldn’t miss out on that.” You could tell that they knew what those 100k points meant, they knew how to use them and they probably had a theoretical redemption in mind. Too many people either think it’s too hard to accumulate miles (which is accurate when they are fearful of CCs and don’t fly often) and its too hard to redeem miles (which is accurate when availability is low and rules restrict everything). A CSR would never interest someone who has no idea how to use the points.

    I only got into the miles and points game after months of research through these travel blogs. I had to be persuaded against traditional thinking that opening multiple CCs was okay, and I had to be educated on what exactly I needed to do to redeem for the awards I wanted. It wasn’t a quick process.

  10. Awesome article, Gary. Free travel is definitely not for everyone because of the learning curve. It can seem really overwhelming, but we’ve found that it’s best to calm fears of credit and legitimacy by starting out slow. And, like Gary said, you have to walk them through it. That first free flight or $500 gift card is an adrenaline rush. By then, we see people willing to put in the time. I definitely see the value for everyone because of getting these big bonuses again, and we built that into our software along with automated key date reminders. – Zac Hood, Founder – travelfreely.net

  11. While I understand Gary’s positioning (and to be fair his incentivization), I think most of us actually derive true value from the complexity. Simplification and low hurdle rate isn’t a good thing – who is gushing about JetBlue or Southwest’s programs?

    I would also posit that those most able to derive value from this complexity are already in the top tier of income and wealth measurements, or have the ability/skills to be.

    Finally I might suggest that fellow readers are in fact competitors for limited award availability and in fact helping others may be detrimental to one’s own success (a selfish view, to be sure).

  12. I agree that it can take a bit of time to *really* optimize credit card benefits. But it is amazing how many people are happy with mediocrity, even when it is easy to achieve better. People who think they’re doing well with a 2% cash back card, when they could get a 2.5-3% card (Alliant Credit Union.) Or who put all their spend on the lousy United card at 1x earning, when they could have a Chase Freedom Unlimited and Sapphire Preferred, earn 1.5x-3x on everything, and transfer those points to United (or elsewhere.) It’s worth a little bit of strategy for me, to save several thousand dollars a year. But I wasted decades too, doing it suboptimally. At least there’s blogs like this now to help out.

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