In a world where the digital landscape continually evolves, “gaming” has taken on multiple meanings and connotations. In the realm of credit card issuers and loyalty programs, the term refers to actions that are both legal and, from the customers’ perspective, strategic. For credit card enthusiasts, the points and miles game is a captivating challenge, one where they aim to accumulate rewards as efficiently as possible and then use them for maximum value. However, this isn’t always seen as a win-win for card issuers and rewards programs.
The conflict arises from the belief that gaming tactics are a burden, costing issuers more than they gain. While the notion might hold some truth, there’s a more harmonious approach that many businesses have yet to embrace. It’s a strategy that welcomes gaming, enables customers to indulge in it, and stands to benefit both the company and its clients.
The Cost of Eliminating Gaming
Efforts to eradicate gaming often lead to a series of anti-fraud measures and stricter regulations to deter excessive bonus-hunting. While these measures aim to protect issuers and programs from incurring financial losses, they also risk alienating honest, loyal customers who enjoy playing the points and miles game within the rules. It’s this tipping point that many issuers grapple with: the balance between protection and customer retention.
Customers who have been inadvertently affected by anti-gaming measures are not afraid to voice their concerns, and they have a valid point. They believe in doing business with providers who respect their loyalty and adherence to the rules. Losing these customers often outweighs any potential gains from curbing gaming.
The Games We Play
In the world of points and miles, the game has a positive connotation. Gamers explore avenues to make their money go further, seeking maximum value for their loyalty. However, from a credit card issuer’s perspective, gaming implies actions they disapprove of, such as repeatedly signing up for credit cards purely for welcome bonuses or quickly canceling cards once those bonuses are earned. The clash of interests is clear: what’s a rewarding game for enthusiasts is often a costly nuisance for issuers.
The friction extends to loyalty programs as well. In the past, gamers would creatively stretch the boundaries of programs, earning high-level airline elite statuses through economical flights or booking free one-way trips as extensions to round-trip awards through imaginative use of stopovers.
Losing Valued Customers
As someone who writes about this subject, I often hear from frustrated individuals who have not participated in excessive gaming behaviors but have still faced adverse consequences. Some were turned down for new credit card applications or found their hard-earned points vanishing. Understandably, these customers express their intent to take their business elsewhere, seeking providers that value their patronage.
Certainly, preventing excessive gaming is essential to the sustainability of credit card issuers and loyalty programs. Allowing individuals to receive welcome bonuses for the same cards repeatedly would lead to substantial financial losses. However, imposing strict limitations should not discourage honest, loyal customers.
A Balancing Act
One example of a program that imposed a “lifetime” rule was Amex, meaning customers could only earn a welcome bonus once for a given card. This approach makes sense, as providers should ensure that customers genuinely appreciate their products and services. However, there’s a fine line that sometimes gets crossed. When credit card names change or features are significantly altered, it’s reasonable for customers to expect a new welcome bonus opportunity.
A more effective approach in dealing with gaming is to allow and manage it, rather than discourage it altogether. Credit card issuers should set clear limits and ensure that gaming tactics don’t place an undue burden on their systems.
Embracing Gaming for Success
An alternative and underutilized approach is actively inviting gaming. By carefully implementing such strategies, businesses can generate more revenue and maintain higher customer engagement. One notable example is American Airlines’ revamped elite program.
American Airlines redesigned its program to allow transactions that earn AA miles to also accumulate Loyalty Points. It’s now possible to achieve top-tier AA status by earning miles without ever stepping on a plane. The brilliance of this approach lies in the fact that both American Airlines and the customer benefit. Merchants who offer AA miles in their transactions pay for those miles. Moreover, American Airlines doesn’t incur additional costs in providing in-flight benefits to gamers with elite status who rarely fly the airline.
Furthermore, gamers are more likely to choose American Airlines for future flights due to their elite status, ultimately enhancing customer retention.
In conclusion, the world of points and miles gaming is a multifaceted one. Instead of seeking to eliminate gaming, a more harmonious and balanced approach is to welcome it and set manageable limits. By doing so, both customers and credit card issuers can emerge as winners in this ongoing game.