Last week Pepper Rewards announced a change to the earning structure in the app. I covered that change here, or at least what I thought the change would be. It turns out that the way they went about the change was completely different to what I thought they’d communicated and the end result is that they’ve made an absolutely absurd change to the earning and redemption structure in the app.
As a recap, Pepper points used to be worth $0.25. That was a little weird because it meant that 4 points were worth $1, but that made it somewhat easy to do the calculation in your head as to how much your points were worth.
The subsequent email from Pepper Rewards announcing the changes stated that from May 20, 2024, $1 = 100 points. I took that to mean that when redeeming your points, it would cost you 100 points to get $1 off. I was pleased about that because it meant each point would be worth 1 cent – far more straightforward.
It turns out that’s not what they had in mind. Points that you redeem aren’t worth 1cpp (cent per point) following the update after all. Instead, for every $1 you spend in the app you’ll earn 100 points. You’re still earning 5% back, it’s just credited as 100 points for every dollar spent.
The reason this is utterly ridiculous is because it means their points are now worth 0.0005 cents, or five one-hundredths of a cent. In what world does it make sense to make a change like that?! For example, my points balance is now 781,500 which looks great, but gives zero sense as to what that’s worth. When clicking through, it does show that it’s worth $390, but how does it make any sense that 781,500 points would be worth $390 (or $390.75 to be precise)?
It’s hard to fathom why they’d make such a customer-unfriendly change such as this. The only reason I can think of is that it’s to deliberately make their earning/redeeming structure harder for customers to understand. If that truly is their reasoning behind it, that’s very concerning. If there was some other reason behind the change, it makes me think they’ve no idea what customers might be looking for despite their recent surveys as making your points worth 0.0005cpp is simply nonsensical.
Update: Just after publishing this I saw that I had a reply to the email I’d sent Pepper Rewards last night. The explanation I received for the change is as follows:
This change in points allows us to be more flexible in how we approach promotions with our partners and reward our users with item brand level offers, item level offers etc.
It still makes zero sense to me though that this was the best way to go about this change. From an earning perspective, they could’ve simply made each $1 spent worth 5 points, with points then being worth 1cpp at the redemption stage. That would be far more straightforward and an approach I’d imagine would’ve still allowed them to be flexible with promotions and rewards.
I’m annoyed.
Their explanation makes zero sense too….
Makes total sense to me.
It’s same as the casino game apps I see on ads where you bet millions of chips on slot machines.
It’s not realistic but gives you false sense of playing with huge amount of money.
Same logic is applied here. By inflating the amount of points earned, you give consumers false sense of larger earnings.
Let’s take an example.
App #1 = spend $100 earn 100 points
App #2 = spend $100 earn 5000 points
Both redemption value is same but by giving inflated points, you make consumers feel they earned more points. so, consumers are more likely to use App #2.
Unfortunately that’s just how it is. It’s not geared towards educated consumers but for common consumers who fall for it.
We see these examples every day. Most common is $9.99 feels cheaper than $10.
I think this may have been true in the past – i.e. pre-information age – but I don’t think this is nearly true enough to equate to meaningful differences for all but the largest of companies
I’m not familiar with Pepper rewards, but prior to this change were your 781,500 points worth more than $390?
Before the change I had something like 1,560 points which were worth $390. The value of my earnings hasn’t changed and so there hasn’t been a devaluation – they’ve just made it much harder to calculate how much your points are worth.
I called their phone support yesterday and a rep gave me a totally different story. The rep told me that the way points are currently calculating is a system issue that they are working to resolve.
I’m hoping they resolve it sooner rather than later.