The Battle For Transaction Rewards

The Battle For Transaction Rewards
Last week Zil Bareisis posted a great blog entry regarding American Express’ Tweet Your Way to Savings Program. It’s a mighty interesting concept and provides quick cash back rewards to cardholders. It raises a few relevant questions for me:
  1. Are social rewards a passing fad? While this Amex/Twitter hookup received a fair bit of attention is it going to stick? It reminds me of a SPG promo announced about a year ago that offered 250 Starwood points for every Foursquare checkin during a hotel stay. Being a regular traveller, I tried this a few times and received some bonus points. I’ve since totally forgotten about it, and I am a points junkie! I don’t have any hard stats but I’d wager that usage of this promo has dropped off. Will the Amex/Twitter offers follow the same fate? There are hard dollars and a larger number of merchants involved here (see list of Twitter offers here) so it’s a tad different.
  2. Do social rewards increase brand loyalty? Everyone likes a good deal these days but how much loyalty is this actually creating? Would you, for example, switch to McDonald’s from Burger King in order to cash in? Would this create additional loyalty towards Burger King?
  3. Will social rewards drive folks to regularly transact using Amex cards (over another payments vehicle)? There is a battle brewing between merchant rewards online banking solutions and American Express. As Zil noted, there are quite a number of vendors in this space. Cardlytics in particular has been successful at penetrating the large bank market and has also formed partnerships to deploy via Intuit and Fiserv. The Amex/Twitter program is a direct attack against online banking merchant rewards. It’s but a blow in what is going to be a drawn out battle to own the transaction.

There are lots of questions for the moment and not a lot of answers given the immaturity of this space. I welcome your thoughts and comments.

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