We live in a world that tolerates, if not celebrates, grandiose celebration. Just read the last few press releases to hit your inbox and you’ll encounter a slew of exaggerated adjectives and hyperbole. “World’s best”, “Global Leader”, “robust and scalable” are just a few examples.

So when I saw the advertisement from Discover Card touting that “We are proud to have America’s #1 cash rewards program”, I decided to pause. The fine print below the ad supported the claim as follows “More U.S. households have a Discover card than any other cash rewards card”, this based on 2009 TNS Consumer Card Strategies Research.

Discover card’s brand is more closely associated with cash back rewards than any other and by their tenure in the market, I’m not disputing the claim. My question is whether banging the drum hard for cash back as the most popular and “best” form of card rewards program is compatible with a broader portfolio of rewards cards.

One of the early loyalty marketing firms had a slogan “We do one thing and we do it well”. It was printed on coffee cups and conference room doors as a reminder to staff and customers of the firm’s focus on loyalty marketing. It’s important to focus and there are many examples of businesses which fail as they cannot say “no” to a client request, commit themselves to projects outside of their core competency, and do not deliver to meet client expectations.

Being a “Jack of all trades” and master to none is a risk facing most business people in this frenetic information filled world. We are tempted to move in many directions and we have to decide where to focus our talents, resources, and available cash to get the best results for our own companies and our clients.

Discover card has focused on cash back, but looking deeper, you realize that their value proposition today goes well beyond cash back and includes travel, gift cards, merchandise, and charitable donation options.  In reality, when consumers sign up for a Discover card, are they seeking cash back or does the broader set of reward choices sweeten the pot?

I wrote a few months back about Bank of America’s promotional messaging in conjunction with the launch of its Cash Back card product. The bank described it as “Refreshingly simple. Rewards with no hoops to jump through”, reassuring customers that there are “No Hassle, no tricks, I know what I get, not like those other card reward programs”.

That message will ring true with Discover card cash back loyalists and I’m sure it drove acquisition of new cards at a time when consumers are weary of high interest rate cards and seeking to avoid revolving balances. It’s also a message that implicitly denies the value of other travel and rewards cards offered by Bank of America – unless of course BofA holds itself above the fray as all of its cards avoid “hoops, hassles, and tricks”.

My point is this: Cash back serves a specific market of consumers and is a great solution for many people. When issuers tout cash back to the detriment of the balance of their card portfolio, or really have a cash back card that’s lots more than “just cash back”, they send a mixed message to the market.

Cash back should be marketed as a “good” offer, not the “best”. In reality cash back offers are truly rewards, not loyalty programs as they are the ultimate example of earning a deferred discount on spending, nothing more, nothing less.

Maybe it is better to “do one thing and do it well”.

I saw a TV commercial for the Discover credit card the other day and they made a claim that caught my eye. It was one of those “we’re #1” declarations, in this case: We’re “#1 in customer loyalty”.

The claim was not explained during the commercial and it got me wondering: to a consumer, what does being #1 in customer loyalty really mean? Is there a benefit, implied or otherwise?

Now I’ve worked in loyalty marketing for several years, and don’t think of myself as jaded—but my initial reaction to the claim was, “who cares?” It actually got me wondering if Discover was #1 in loyalty because they had retained a lot of long-time cardholders with monstrous balances who couldn’t switch cards during these tight financial times.

So I did a little research on the Discover corporate Web site and found some substance behind the #1 claim. There it said that: “Discover Card ranked #1 in customer loyalty among leading credit card brands according to the 2010 Brand Keys Customer Loyalty Engagement Index Report.”

Okay, as a loyalty insider I know a little about Brand Keys. But what does this mean to a consumer? I did a little more digging on the Brand Keys site and read they measured loyalty over several categories with a “combination of proprietary psychological assessments and higher-level statistical analyses, allowing us to statistically fuse the “emotional” values with the “rational” attributes that identify the bond that exists between brand and consumer.”

Hmmm, I was still scratching my head. It didn’t appear to be anything that could remotely be translated into consumer-friendly language. Which got me questioning why the claim was made in the first place.

Customer loyalty is an end result, a desired outcome of the great product and service you offer. So rather than tell me your customers are loyal, tell me why they’re loyal—amazing customer service, lower fees, a unique add-on benefit—and how this will benefit me.

Sure, being #1 in customer loyalty sounds nice, and we do know that Discover puts a happy face on lots of consumers, but these days most people don’t want to hear corporate chest bumping, they want to see the brand promise lived out transaction by transaction.

Will MyTeamUSA  (U-S-A! U-S-A!) attract loyal Olympics fans?

Does anyone remember the launch of the Discover Card? When introduced in 1985 as “the card that pays you back”, it really felt different from Visa and MasterCard. Forget the card’s super high interest rate—I was getting cash back on every purchase!

Times change and now the cash back bonus doesn’t feel quite so special, but an outfit called My Fan Rewards is putting a fresh spin on it. They’ve teamed with the U.S. Olympic Committee to launch a program called MyTeamUSA Rewards.

The program works like this: When you shop through MyTeamUSARewards.com, using any credit card, you not only earn cash back from the retailer—a like amount is given to support U.S. Olympic athletes. For example, shop at the Nike Store and you’ll earn 4% cash back, while 4% of your purchase is matched and handed over to the USA Olympic team.

The program is free and feels like a good way to tap into the emotions surrounding the country’s Olympics love fest. But the real test is coming: keeping fans interested in the MyTeamUSA program now that the Olympic torch at the Vancouver Winter games has been put out.

My take: a solid, targeted emotion-based communications program could do the trick. The key will be in getting program participants juiced not about the Olympics that just passed, but for the next Olympic games to come. (2012 in London, in case you were wondering.)

On a side note, My Fan Rewards is rumored to be expanding into the pro sports market next. It’s not a bad idea, as professional sports teams showing fans a little return love could help ease the grumbling about ever-increasing ticket prices.  (Of course, let’s hope the cash rebates will be a one-way affair, and go straight into the pocket of the consumer!)

Tom Rapsas is a 20 year direct and loyalty marketing veteran and heads up Creative Services at Hanifin Loyalty. He can be reached on Twitter @tomrapsas

I’ve posted a new case study about Discover Card and it’s brand dominance in the cash-back credit card rewards field. It is available for download from the White Papers section of the Hanifin Loyalty LLC web site and I hope you will read, enjoy and send me feedback by entering comments to this post.  Please download here.

To whet your appetite, here’s an excerpt:

“Every industry that has been around for 25 plus years has its share of fiefdoms, dogma, and biases. Loyalty Marketing is no different. As a young man, I remember my grandfather instructing me that “Cash is King”. With our current economic meltdown well underway, we are again hearing from financial pundits everywhere that “Cash is King”.

It seems that only in Loyalty Marketing do we disagree.

The most fundamental best practices call for value propositions that are motivating for the customer, but maybe just a little tough to dissect. Prying open the gap between perceived value and actual reward cost is good for all parties involved, sponsor, customer, and solutions provider. For that reason, punch cards that reward “the 10th one free” and cash back discounts are treated as solutions that are only chosen when the strategy team has a loyalty planning version of writer’s block.

In the face of the criticism and cash-back snobbery, I increasingly admire Discover Card. In case you don’t keep track, Discover is the sixth largest card issuer in the US with over $49 Billion in receivable and is the largest revenue producer within the Discover corporate umbrella. In the January 30, 2009 Discover Financial Services Financial Community Briefing, Harit Talwar – EVP, Card Programs & Chief Marketing Officer – reinforced the importance of their cash-back strategy, stating “Clearly, rewards leadership is the core of Discover”.

When you think of cash-back for using your credit card, you think Discover. The company has carved out its niche and stuck to its knitting. The question that begs for an answer is: how long can they remain one of the leading US card issuers with this one-trick-pony approach?