Banks and credit unions are likely overlooking critical opportunities to drive customer loyalty and solve for some of their greatest challenges with their cardholder customers. Regular cardholder engagement is vital to consistent and increased dollar value spending via top-of-wallet position (for both physical and digital wallets).
For sure, it’s never been easier for consumers to shop around and switch banking institutions to derive greater value from their top choice card or account. And now is not the time to take existing customers for granted; in many cases, there is much more that banks and credit unions can and should be doing to engender loyalty. This includes everything from a strong digital presence with an ever-evolving roadmap for improvements (think smooth, more robust app experiences) to better personalized offers and experiences for different customers (e.g., people with different spending habits and budgets).
A one-stop shop that builds loyalty
Banks in general need to consider extending their cross-holdings to move away from prioritizing a single financial product. Doing so will better satisfy consumer demand and drive higher revenue, customer value and longer-lasting relationships. Additional financial products and services can help banks create customer-centric one-stop-shops, provide better rates, offer attractive add-ons and increase accessibility.
A key area lies with robust customer loyalty programs—helping financial institutions drive brand affinity, boost the value of cardholder spending and create new marketing opportunities. It’s all about offering the right options to the right customers at the right time.
To get inside the minds of their card and account holders and solidify top-of-wallet status, financial institutions should better understand individual customers. This means knowing which incentives, rewards and offers resonate with each customer, as well as how they use their card (e.g., what is the primary instance of payment?). A blanket one-size-fits all marketing approach simply isn’t enough.
Knowing customer-specific answers to these types of questions not only helps banks anticipate when certain transactions will occur, but marketers can leverage that data to surprise cardholders with relevant offers for transactions with brands and categories that will resonate and deliver value to them. Recent research from Marqeta confirms this assertion, as nearly a third of credit cardholder respondents consider personalized rewards a “need-to-have” from their card programs. (This figure doesn’t even include the number of respondents that also consider these types of rewards a “nice-to-have.”)
Merchant partnerships and relevant offerings
In general, too many banks seem reticent to adopt a retail marketing approach with their customers. But partnering with merchants on card- and cardholder-specific offers can be a fruitful, forward-thinking strategy. As a result of interchange restrictions, very few cards are offering customers points or cashback for every transaction—driving the need for banks to offer (and proactively promote) relevant merchant-specific rewards for which merchants contribute to the costs in return for more effective marketing. The most forward-thinking banks and payment providers have already recognized this opportunity, and the fact that they can make their digital offerings work harder.
Banks have access to incredibly insightful customer data sets, and by leveraging advertising and marketing technology alongside retail partners, they can better serve their customers, drive card primacy, reward loyalty and incentivise cross-product objectives.
By showing their target user group that they value customer relationships, banks and credit unions can proactively bridge the loyalty gap—consider these applications:
- Provide offers from brands you know your customers like to shop with. Rather than only sharing offers from brands that are looking to change peoples’ normal spending behavior, pursue a more customer-centric approach and give customers the offers they will find most meaningful.
- Repeat purchase offers. If you know (based on cardholder behavior) a customer regularly makes certain purchases on their card or account, provide offers that remind them of why that card is preferred for those specific transactions. This could be as simple as an in-app message that prompts customers to select a relevant offer prior to making that repeat purchase in order to maximize their spend and save them money.
- Offer retroactive account credits for missed offers. Banks can optimize customer experience by monitoring to see if cardholders used merchant offers available to them for certain purchases. If customers missed an opportunity to save, banks could issue a one-time retroactive credit to the customer as an act of goodwill.
- Get out in front with dynamic offers. Many banks “set and forget” cardholder offers on a difficult-to-find webpage, and don’t actively drive cardholders to it—leaving the site static and ineffective. A better approach would be to ask customers to opt in and consent to receiving savings-related communications. This approach helps banks and credit unions proactively tell cardholders when relevant offers are available to them based on their spending habits, preferred brands and location. Customers would of course be able to dial communications up or down based on their personal preferences to avoid feeling “spammed” and ensure communications were meaningful.
There are tremendous long-term benefits to having engaged customers via cross-product selling, and financial institutions need to be looking for ways to truly delight their customers.
This long-term mindset would require financial institutions to move outside of their comfort zones but ultimately would provide better service that drives customer satisfaction, creates lasting loyalty and boosts the bottom line.
Mark Jackson is Managing Director at Valuedynamx.
