Banks often partner with companies to sell their each other’s products. Citi’s savvy marketing department targets credit cardholders with campaigns designed to sell its partners’ products and shares the proceeds. Over the past couple of years, Citi has expanded its partnership program to include 1-800-FLOWERS.COM, and now offers a “Pay with ThankYou Points” (Citi’s loyalty program currency) option for purchases made at 1-800-FLOWERS.COM. This week, Citi targeted Miles Wife with this offer. Let’s examine whether using the Citi ThankYou Rewards “Pay with Points” option at 1-800-FLOWERS.COM to buy merchandise is a deal, or no deal.
Miles Wife received the offer below in her inbox, wielding the Valentine holiday-inspired call to action, “Use points to find gifts for your loved ones”
Clicking through the offer, she is presented with the 1-800-FLOWERS.COM offer that includes the “Pay with Points” option and a 20% off promo code
She clicked through to 1-800-FLOWERS.COM, added 2 dozen roses to the shopping cart, entered her Citi card number and was presented with option to apply Citi ThankYou Rewards instead of cash for the purchase. Citi charges 11,249 Citi ThankYou Points for the ~$90 purchase. Were Miles Wife to redeem ThankYou Points instead of cash, she would save ~$90. We’ll
pretend assume for the purposes of this post that $90 is a fair holiday-season price for 2 dozen roses.
Before she spends points purchasing flowers, how can Miles Wife determine whether it is a deal to pay for the flowers using points, or pay using cash? As a comparison, let’s take a look at different method to spend 11,249 Citi ThankYou Rewards to help us make a value-based Pay with Points vs. pay with cash decision. Citi’s ThankYou Rewards program partners with South American-based Avianca’s LifeMiles program. This partnership allows the transfer of Citi ThankYou points to your Avianca LifeMiles account to redeem for air travel. We’ll select business class airfare USA to Europe, one of more popular destinations from USA, as our example for comparison purposes.
LifeMiles can be used to redeem for travel to Europe on any of the Star Alliance partners (United, Lufthansa, Brussels Airlines, Swiss Air, Turkish Air, + others) for travel from USA to Europe. From the Avianca LifeMiles Star Alliance partner award chart, LifeMiles charges 60,000 miles to fly to Europe Zone 1 (much of Western Europe) in flat-bed business class.
Similar to the 1-800-FLOWERS.com analysis, before redeeming airline miles, let’s compare the cost of redeeming miles to pay for the ticket to the cost of purchasing an airline ticket with money. A quick check of Google Flights, filtering in Star Alliance airlines only, shows the Atlanta to London business class ticket price of ~$6K.
A bit of simple math will help guide her decision to pay using points vs. to pay using cash. A commonly used points measure that provides a rough-estimate value of miles is “cents-per-mile” (CPM). To calculate CPM:
$6,000 (price of business class ticket US-to-Europe) divided by 60,000 LifeMiles (cost of US to Europe business class travel)= $0.1/mile, or 10 cents per mile (10 CPM).
Put another way, each mile redeemed for travel pays 10 cents toward the retail price of her airfare.
The higher the CPM, the better the value she’ll receive for redeeming the miles. At the 10 cent per mile valuation, 11,249 ThankYou points are worth ~$1,125 toward the $6K business class fare when combined with an existing balance of ThankYou points and redeemed for this itinerary.
Now that we know the value of the US to Europe business class redemption, let’s compare it to the 1-800-FLOWERS.COM Pay with Points option established previously:
Paying for the flowers using 11,249 ThankYou Points instead of paying with cash gives Miles Wife “free” flowers. ThankYou Points are worth exactly $90 (or 4/5th of a cent per mile) when redeeming for flowers on 1-800-FLOWERS.COM
So is Citi offering a deal, or no deal? Let’s find out by comparing the final respective dollar values:
- Value of points when redeeming 11,249 ThankYou Rewards for flowers at 1800-Flowers= $90
- Value of points when redeeming 11,249 ThankYou Rewards toward business class airfare to US to Europe = $1,125
Redeeming ThankYou Rewards for flowers at 1-800-FLOWERS.COM under this promotion is no deal.
Kudos to the Citi ThankYou Rewards program’s team for offering alternatives in addition to transferring Rewards to airlines to redeem them for travel. Citi offering such a low-value promotion is perhaps preferred to being offered no promotions at all. Not every Citi Pay with Points promotion will generate such a low value. Informed cardholders targeted with promotions should analyze the total costs and benefits contained before jumping on the offer, especially promotions designed to benefit the company, shareholders and partners to a greater degree than the customer.
Have you scored any deals by redeeming Citi ThankYou Rewards for merchandise using its partners?