US card issuers using soft rewards to boost customer retention
An increasing number of US card issuers are creating rewards that have “soft” benefits that make it easier to use the card, such as payment reminders or cash back for good credit management.
That is one of the findings in a new report from Research and Markets called “Credit Cards: Loyalty And Retention In The United States”.
The report focuses on the challenge of customer retention in the credit card industry in the light of the saturation of the credit card market, together with the increasing costs of customer acquisition.
This saturation is leading credit card issuers to concentrate more on existing customers. These efforts reduce “churn rates” (the number of customers that stop using their cards), and increase the profitability of existing customers.
The research found that card companies are using other methods in addition to soft rewards to accomplish retention goals: ?- Making it easier for customers to earn rewards, either by lowering the number of points or miles needed or by offering more opportunities to earn points or miles ?- Cross-selling products and allowing customers to earn points or miles by participating in or purchasing other products ?- Increasing focus on relationship banking, making the credit card one of several products tying a customer to a particular financial institution.
Research and Markets says that retention depends on creating messages and rewards attractive to individual segments, and identifies divergent behaviour among various segments, showing the most potential in teens, students, Hispanics, small businesses, and the “unbanked.”