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Are Your Credit Card Loyalty Programs Hitting The Right Notes?

February 11, 2016 at 9:14 AM

How does a credit card company differentiate itself in a market saturated with special offers, low interest rates, and convoluted rewards programs?

With consumer fatigue exacerbated by constant brand messaging, mostly interpreted as marketing noise, captivating an already weary market requires you to go a step further than dusting off the old loyalty bible.  The one-size-fits-all approach has long since lost efficacy, and credit card companies know that the gig is up. But, thankfully, there is light at the end of the tunnel. Data analytics is shining a new light on how we can more effectively engage our customers and offer loyalty and rewards incentives that hit the right notes.

Nevermind the value, customers want to see value upfront

Flexibility and ease of use are essential attributes for next-generation reward schemes, since consumers dislike jumping through hoops for meagre gains. MasterCard’s Bob Grothe remarks on the findings of a recent study that, 67% of consumers surveyed would use their payment card more if they had the ability to use points for purchases. Additionally, 44% indicated they would switch banks or card companies to sign up for a program that allowed points to be used for purchases. What this means is that customers expect value at the point of purchase as opposed to going through laborious point-collecting routines to earn relatively small rewards. MasterCard has been aware of the importance of true value perception for some time now. This 2006 press release interestingly illuminates the credit card giant’s drive to create “relationship” programs that speak to the varied interests and preferences of their customers.” Call it instant gratification if you will, but once value is perceived as a goal on some distant horizon, customers will happily opt for a competing scheme that rewards loyalty and adds value on the spot.

Engagement drives loyalty and keeps your brand top of mind

Top of mind is top of wallet. Engagement via contemporary channels is an effective way to stay relevant in the mind of the consumer - and technology has spoiled credit card companies for choice. With social media, mobility, branded apps and pervasive internet availability part of the consumer’s everyday life, there’s simply no excuse to revert to old habits when it comes to loyalty schemes. In an interview, Nanden Mer, Head of Global Consumer Credit for MasterCard, asserts that, “Consumers also now have the convenience of loading all of their loyalty cards into their mobile wallets. This way they can use the offers more readily when a relevant offer is presented to them via a mobile app when they are near a participating retailer. Data analytics and its ability to understand the consumers' shopping behaviors is helping to engage customers in more transactions.” Technology will continue to play a central role in garnering increased loyalty from customers as we forge ahead into the age of interconnectedness.

Loyalty needs to be earned- and customers expect you to know that

As the age of the customer continues to redefine previously held truisms about the consumer/business dynamic, companies will face increasing pressure to re-align their strategies to be more customer-centric. Flexibility and convenience are no longer the privilege of a few high stakes consumers, but the birth-right of each and every customer that engages your company. And this is also true for loyalty programs that are essentially built to retain customers won in the acquisition battle.

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Post originally published on the 31st October 2015.

Julian Diaz
Julian Diaz
Julian Diaz was Head of Marketing for Principa until 2017, after which he became Head of Marketing for Honeybee CRM. American born and raised, Julian has worked in the IT industry for over 20 years. Having begun his career at a major software company in Germany, Julian made the move to South Africa in 1998 when he joined Dimension Data and later MWEB (leading South African ISP). Since then, Julian has helped launch various South African technology brands into international markets, including Principa.

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