“Money Talks” … “Cash is King” … “Money Makes the World Go Round.” There are so many adages about the value of cash that the link between motivation and money seems pretty direct.

However, it is less straightforward when it comes to loyalty programs and rewards. Are cash rewards the critical motivator and builder of brand attachment? Or are tangible trophy rewards a better catalyst for building long-term value?

The link between rewards, consumer motivation, and long-term value for financial institutions is complex. So, we’ve come up with a short story to simplify it.


Nana’s Christmas Gift

Picture this scene. It’s Christmas morning, and you’re sitting on Nana’s lap. Nana knows you are a huge baseball fan and have started collecting baseball cards. Nana spends $100 and buys you a Chicago Cubs Greg Maddux rookie card for Christmas. You are ecstatic because he’s your favorite baseball player. Best Christmas gift ever!

Who gets the credit for the gift? Nana, of course.

The following year, Nana had two more grandchildren and less time on her hands. Instead of shopping for a gift, Nana gives you $200 in cash for Christmas. She doubled the amount spent on you from last Christmas!!! Since you still love baseball, you combine that $200 with the money you saved from mowing lawns and take your money to the local sports store to buy a big box of baseball cards. You find a few great rookie cards in the shiny box and are very excited.

Now, who gets credit for buying the baseball cards? Nana? Or you, because you’re the one who saved up the money?

Nana’s first gift was a tangible item, forever directly associated with her and Christmas.

Nana’s second gift of $200 cash is a traditional gift; even though it was double the value from the following year, it’s weakly associated with Christmas and Nana. You take credit for the purchase of the baseball cards.

The tangible item is more memorable.


What does this mean for loyalty programs?

While “cash is king” in many situations, the numbers don’t add up when looking at the results for reward programs sponsored by financial institutions. In a nutshell: money does not buy engagement.

Many financial institutions are frustrated with the lack of uptick from their loyalty program. Cash-back programs are introduced as an incentive to drive top-of-wallet spending on credit cards, but they aren’t living up to the promise. So why are there so many cash-back cards? Financial institutions are listening to what cardholders say, not what they do.

The implications are clear: trophy item redemptions drive top of wallet spend on cards–making them the clear winner.



RAZR Financial helps hundreds of financial institutions make the “deal better” so people redeem their points for tangible rewards instead of cash. We help to create a more profound cognitive association between the consumer and the financial institution regarding long-term value from members.

Contact us here to start getting the most out of your loyalty program today!

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