24/04/2012 12:56 BST | Updated 24/06/2012 06:12 BST

The Cynical Guide to Loyalty Programmes

Financially, times are tough for most of us at the moment and the recent budget hasn't done much to make life easier for cash strapped consumers. But are we missing out on ways to make our household budgets go further?

We recently conducted an experiment to test the findings of our research, which highlighted that a lot of people are too cynical to accept offers and freebies, even when the offer is handed to them on a plate. We placed an approachable young lady in busy bus stations wearing a sandwich board saying "Ask me to pay your bus fare and I will". We wanted to see whether commuters would take her up on the offer, but only about six people in each bus station did so, even when they could see that other passengers had received a free bus ticket with no catches.

When the results of this experiment and our research were published, it really seemed to strike a chord with Huffington Post readers. Some of you thought we were stupid (which we took on the chin!), but no one actually believed that we would give something away without there being some sort of catch involved. To quote one comment, "If a total stranger offered me something for gratis and said "no strings attached", I'm afraid I wouldn't believe."

OK, so the sandwich boards in bus queues experiment was a bit of fun, but there was a serious message behind it. As the founder of a loyalty programme and having worked in this industry for several years, I have been amazed at the number of people who don't claim back points that they are entitled to, thereby missing out on deals and discounts.

It's easy to see where this scepticism has come from, in this age where we are constantly bombarded online, by post and over the phone, with supposedly great offers and deals. But is it right to be cynical about all offers of goodwill or do you risk missing out on real value? Given that there are billions of loyalty points that go unused every year and many more genuinely good offers not taken up, it's clear that opportunities are being missed. You can make these offers work for you, but you have to play the game to make sure you get the best value. So, my tips for the cynical shopper:

  1. Don't let your points expire. A lot of loyalty points have an expiry date, so you need to use them or lose them. Some supermarket vouchers have an expiry date on the back and many of us save them for a rainy day only to find that the date has passed when we get them out to use them.
  2. Watch out for joining fees or annual fees. These can mean that you aren't any better off from using the programme. For example, a number of cashback schemes will take for themselves the first sum of cashback you earn each year, so you need to wary of this practice. It might be fine if you think you will spend a lot through the scheme to recover this fee, but if you are not sure, it's probably best to shop elsewhere.
  3. Beware of product mark-ups on redemption. Some programmes will quote a cash value discount when you spend your points against tickets or products online or over the phone, which can seem appealing at first glance. But it is worth shopping around to make sure that the loyalty programme is not marking up the cost of the product you are buying in order to cover the cost of redeeming your points. They are not compelled to be price competitive and it is common to see the entire cost of your points invalidated because you could have bought the product or ticket more cheaply by going direct.
  4. Don't pay unnecessary fees or charges. Sometimes you will be required to pay high booking or admin fees for the privilege of using your points to pay in full or part cash. If booking online, check the terms and conditions, if booking over the telephone, ask the agent to declare any additional fees associated with using your points to pay.

If you follow these basic rules you should be able to get the best value from these programmes and make being cynical work for you.