3 Levers Card Issuers Can Use to Boost Use and Profitability
Rethinking operational efficiency, marketing productivity and consumer loyalty can make card programs – whether credit, gift or prepaid – more effective for both program operators and consumers.
By Render Dahiya
There are constant pressures on the profitability of loyalty and rewards programs tied to credit, gift and prepaid card use. Consumers have more resources than ever that let them compare prices, perks and rewards, which means brands must constantly pivot to compete and find the most appealing and profitable combination of offers.
Card program managers can’t control the competition or the markets, but they can control key aspects of their card portfolios, including operational efficiency, marketing productivity and consumer loyalty. By managing these three key profit levers, card portfolio managers can maximize success and maintain flexibility as market and regulatory circumstances demand.
Operational Efficiency: Target and speed are what you need
For decades, card issuers have had to plan loyalty campaigns months in advance, commit to huge, long-term demand forecasts, and sit on expensive inventory and eventually destroy it if the program didn’t perform – or if the disclosures changed or the cards went unused or expired. EMV cards make this proposition even more inefficient and expensive. So stop guessing at program demand and ordering cards you don’t need, and start to design and fulfill your marketing programs and offers as demand arises. With a good production partnership in place, program managers can even run small trials or custom programs with a few hundred cards to see what sticks, or take advantage of a hyper-local trend.
Leverage design flexibility. Don’t lock yourself into a card production model that makes you dust off the same old card design for every marketing campaign or face cost-prohibitive setup fees for each new design. Leverage on-demand card production to create multiple card campaigns that truly target cardholders. Increased design flexibility delivers personalized cards that stay at the top of cardholders’ wallets and get used.
Get cards into cardholders’ hands more quickly. Traditional card production models have program setup and manufacturing lead times as long as 10 weeks. Now, think like a customer: That’s nine weeks too late, equating to significant revenue loss for providers. Programs that leverage an on-demand card production model can issue cards only as needed, spreading the cost of the EMV transition over time and saving on hefty storage and inventory costs. On-demand card production also eliminates the risk of card spoilage and destruction cost. To top it off, once issuers integrate the on-demand model they can easily delivers cards to cardholders in just two to seven days. Now, think like a consumer again: That’s just in time.
Marketing Productivity: Personalize through targeted resources
To make the most of your marketing efforts, you must maximize output from the most targeted resources possible.
Personalization is a must. By 2018, Gartner predicts organizations that excel in personalization will outsell companies that don’t by 20%. Delivering rewards programs that target the masses can be perceived as impersonal and may not be sustainable. Each consumer wants something that works just for him – not everyone – and issuers need to minimize acquisition costs. Issuers already have access to loads of customer and prospect data, but few use it to customize their card marketing programs.
By integrating variable data with on-demand card production, card issuers can finally capitalize on these existing assets – aka “big data” – to dynamically incorporate a customer’s preferences, credit history, geography or spending habits into individual cards, carriers and offers. The good news? It creates true targeted, personalized campaigns that connect with customers at a one-to-one level. In the process, marketing spend becomes streamlined and focused, and success rates go up.
Find co-branded card opportunities. Leveraging co-branded, partnered affinity programs give brands a chance to deepen relationships with both account holders and businesses. Card use and loyalty increase when cardholders customize their card with something they hold a deep affinity for, such as their favorite sports team or the university they attended. Co-branded programs can also be more cost-effective if brands share program costs.
Consumer Loyalty: It’s in the cards
In a highly competitive marketplace, issuers must stay relevant to attract and retain cardholders. Take advantage of existing card lifecycle events to keep cardholders engaged with your card.
Reissue cards with a custom marketing message. When a card is lost or stolen, don’t just reissue the same card and generic carrier with no added incentive to leverage card benefits. Look at it as an opportunity: By replacing the card quickly and taking the opportunity to create a custom marketing message, you can both drive cardholder loyalty and derive benefit from the sunk cost of reissuing an EMV card.
Revitalize inactive cards. Inactive cards are about as profitable as the hefty inventory costs required by traditional production models. Increase card productivity by considering custom promotions for cards that have been inactive for several months. This can include an incentive for using the card, or providing the cardholder with personalized card options if they’ve misplaced the original card.
Summing up: Flexibility allows for market adaptability
Market demand paired with regulatory changes will always pose a potential threat to the profitability of card programs. Issuers need as much flexibility and control as possible to navigate whatever changes come their way. Implementing strategies that increase control, reduce risk and improve customer response will bolster the bottom line. Targeted rewards programs, co-branded affinity programs and choosing the right card production model are all strategies card issuers can implement – and implement today – to increase brand loyalty and drive more revenue.
Render Dahiya is CEO of Arroweye Solutions, which has a 100 percent on-demand card production and personalization platform that eliminates the cost and risk associated with forecasting, purchasing and storing card inventory.