Loyalty programs, whether they belong to airlines, hotels, or credit card issuers, are highly sophisticated data and analytics operations. Before they offer any benefit, they’ve already calculated how much it’ll cost them and what they expect to get in return.
A key part of that calculation is breakage. That’s the number of benefits that go unused. It includes things like expired free night certificates or airline miles that sit untouched in an account. I would also argue that under usage, when you redeem a reward but don’t get the maximum possible value, falls into this category as well.
We often blame companies for creating programs that encourage breakage. However, many times the fault lies with us.
Some breakage is unavoidable, but a good amount is self-inflicted. We’ve trained ourselves to believe that every redemption must be perfect, and this mindset often leads to missing out entirely.
You don’t have to maximize every redemption
Whenever I write about an award booking, I know someone will point out that I didn’t get the absolute highest value possible. I’ve heard it all, whether it’s using a 50,000-point hotel certificate at a property that costs 36,000 points or redeeming airline miles for a domestic economy flight. The comments come quickly, saying I should have held out for a better use.
But you know what’s worse than redeeming points for less than the maximum value? Letting them expire completely. I am guilty of this myself. I once let an IHG free night expire while waiting to use it at the perfect time.
The same mentality comes up when people talk about sign-up bonuses. A recent example is the Chase Sapphire Preferred 100,000-point offer. Several websites claimed it was worth $2,000. That number assumes you’ll transfer points to travel partners and redeem them at two cents per point with World of Hyatt or by finding an exceptional flight deal through a program like Aeroplan.
The reality for most people is different. If you use Chase Travel, those points are worth 1.25 cents each. That’s a big gap between possible and probable. The truth is, not everyone will use points for an aspirational hotel stay or the perfect international business class seat. And that’s completely fine.
Reset your expectations
When experts talk about breaking bad habits, they say you must retrain your brain. I can’t tell you how to do that, but I can tell you what’s worked for me.
Stop obsessing over theoretical value. Start thinking about how rewards programs allow you to travel more or make your trips a little better than they otherwise would have been. Use your points and benefits when they fit your plans, even if it’s not the absolute best redemption. In short, use your rewards whenever you can, for whatever you like.
The worst outcome is not a so-called bad redemption, it’s letting the benefit go completely unused. Programs keep issuing points and certificates because they know how many of us will let them sit idle. Don’t help them by doing the same.
Final Thoughts
I’m not saying you should blow your points on poor redemptions like merchandise or gift cards. But don’t hesitate to use a free night or book a convenient flight just because someone else online might say, “You could have done better.”
There will always be another offer. The programs are designed that way. They want you to stay in the game. Enjoy the benefits you’ve already earned and stop waiting for a perfect use that may never come.
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1 comment
Great post! Good may be the enemy of great (satisficing) in the business world but waiting for “great” may well result in loss of benefit value when it comes to our miles and points “hobby”.