Values and Rewards

Reward points, air miles, cash backs, etc… Customer loyalty is a big thing for businesses nowadays, and various incentive schemes have been created to promote it. The rewards are often valuable in that they allow a consumer to cut down the purchase cost directly, or to ‘store’ the saving for a later date.
However, we need to be aware of the value of each point.

For example, Real Canadian Superstore has a value of one cent for each of its PC plus reward point.
At one time, a selected variety of its Quaker cereal products was priced at $2.47, and you would also get 250 PC points. So 250 points equal 25 cents.
But you don’t actually ‘save’ 25 cents at the time. You just accumulate it and maybe redeem it later after you have accumulated enough points. The points are just an enticement to keep buying stuff from the Superstore or any of the Loblaw-owned companies.
So was the cereal a good buy? If you like the product and want it now, it is a decent deal. But if you could wait, every now and then the product was priced at $1.97 or even lower. That would be a much better deal even with no reward point offered.
The bottom line is ideally you want to save some real cash now, not to convert your cash into a virtual form of saving that can only be redeemed at a later date. So even if the above-mentioned product was offered a 500-point reward, the deal does not offer a better value than if the product was offered at $1.97 with no reward point.

2 thoughts on “Values and Rewards”

  1. Have never thought of that before! It is wise to do some math before buying and thinking that we are saving! Thank you MML!

    1. Thanks Andrew. Yes, the big businesses are always working overtime trying to figure out creative ways to part us and our money 😉

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