Bank loyalty and rewards are better when personalized

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There’s this old statement attributed to American retail magnate John Wanamaker, which perfectly sums up the challenge of card-level promotions, especially in the digital age:

“Half of my marketing dollars are wasted – trouble is, I don’t know which half.”

Kris CarreraVice President, Business Line Manager, Credit Payments at FIStold Karen Webster of PYMNTS that personalized offers and experiences offered through banking channels, such as a mobile app, can enhance the cardholder experience, cementing loyalty along the way.

Using apps to deliver deals and rewards isn’t necessarily a new thing, but it’s often a off topic thing because the offers are not personalized or relevant. Making the offer to the wrong audience simply results in wasted marketing dollars.

There is a real danger, she said, in a digital world where promotions fly fast and furiously but are somewhat covered by the banks’ approach.

“Consumers become desensitized to offers – and they won’t want to read them,” she said. After all, not everyone who wants or needs a home equity line of credit can be turned off by being offered an offer, thinking the bank doesn’t really know them at all.

But as Carrera said, these offers can be made relevant, in real time, across all channels, and primarily because of one fundamental principle: data is king.

Many financial institutions (FIs), she said, don’t even know what they have, in terms of information assets that can help them engage more fully with consumers.

To that end, she said the FIS was working with the banks – “doing a lot of education, to show them that the data is so rich”.

This data, she said — including performance data, cardholder data and transaction-level data — can help issuers design and launch logical product offerings close to home, where context and timing matter.

Digging a little deeper, she said looking at banking, verification, and DDA-level activities can give financial institutes a holistic view of a consumer’s spending habits. There is also a wealth of merchant-level information that can be used to further refine these offers (for example, knowing that someone tends to favor Walmart as a go-to shopping destination can help the retailer and issuer work together on new promotions).

Regardless of the channel, there are also a number of key considerations that contribute to the success of an offer.

FIs, Carrera said, also need to think about how consumers will redeem their offers, whether through statement credit or real-time discount. It shouldn’t be up to the consumer to sort out the details – the details should be clearly communicated and appealing enough to entice customers to click the buy button.

It’s perhaps unsurprising that some of the most forward-thinking deals are coming to the pumps, where $5+ per gallon of gas is hitting household budgets hard. FIS, she said, offers a product that allows consumers to redeem loyalty points when they fill up their tanks, which helps lower the price per gallon.

“That card, she told Webster, “will be at the top of the wallet every time they go gas shopping — we’ve seen that in the performance data.”

Carrera also said there has been a growth in behavior-based rewards programs, all centered on card spending. In this case, five monthly credit card payments on time can reduce an APR or result in a higher credit limit.

These promotions lend themselves well to digital applications, she said, because they allow banks to communicate the benefits of timely payments as the consumer prepares to transact. Positive reinforcement greatly helps consumers adopt financially healthy behaviors.

A long-standing, mutually beneficial relationship between the bank and the consumer can lead to a situation where a card that has exceeded its limit could be “topped up” by the bank with, say, $50 just to make sure the card works. (and that Netflix account is not deactivated because the card has expired).

Looking ahead, the continued formation of the connected economy has made at least some banking offerings “table stakes” for issuers, Carrera said. A banking app, at its core, should give the consumer – as well as the small business customer – an overview of current balances, a few months worth of transactions, and real-time visibility into payments made and received.

“Banks that haven’t made it into the digital space yet are losing out,” she said, “and bringing the logical product and message is a science with a lot of testing and learning that is required. to do things right.”

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NEW PYMNTS DATA: THE CUSTOM PURCHASING EXPERIENCE STUDY – MAY 2022

About: PYMNTS’ survey of 2,094 consumers for The Tailored Shopping Experience report, a collaboration with Elastic Path, shows where merchants are succeeding and where they need to up their game to deliver a personalized shopping experience.


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