Do credit card redemption reward programs work in China? An empirical study

PurposeThe purpose of this paper is to investigate how a redemption reward program of credit card works in China. The study also seeks to assess Chinese credit card users' level of awareness about the reward‐point programs. Additionally, the factors affecting the redemption of reward points, one customer loyalty program used by many credit card issuers worldwide, are also identified.Design/methodology/approachA telephone survey and a followed regression analysis were conducted in five major cities in China with more than 400 samples.FindingsLack of awareness about the reward points programs and the redemption procedure was shown. Low customer awareness about point‐based reward programs and, not surprisingly, low redemption rates were also discovered. The important conditions positively affecting redemption of reward points were found to include awareness of the reward point program, a positive attitude about the incentives, and average frequency of credit card usage. Also, redemption rates were higher for cards that had been issued more recently. Moreover, redemption behaviors and credit card usage habits may be changed in time of financial crisis.Practical implicationsAwareness of reward points programs, redemption procedure, and benefits of redemption of reward points should be increased by better and more effective communication strategy, provided by credit card marketers, to customers or potential customers.Originality/valueThe lower‐middle class market segment in China is studied to provide background information regarding behavior towards credit card reward programs in the banking industry. Additional information is provided towards marketing managers who hold the responsibility of promoting their usage and rewards.