Optimize Your Return on Customer Loyalty

Payments Leader

Posted on September 19, 2017

 

Four out of five consumers state that they are more likely to do business with brands that offer loyalty programs. But poor communications leave many programs falling short, according to a study of U.S. and Canadian consumers by Bond Brand Loyalty.

Consistency Builds Stickiness

Strong loyalty programs build stickiness with customers, but they require consistent and coordinated communications to maximize usage and drive redemption. The problem many financial institutions have is that the silos within them prevent the execution of actionable communications. The more siloed an institution, the less motivated bankers are to cross-market products and services outside of their purviews.

Bankers Must Cross Market to Optimize Loyalty

Bankers must embrace a broad, strategic vision in order to grow their business. Tactically, this means promoting the loyalty program alongside other products. For example, when consumers receive approval for car loans, they should be informed about the benefits of the institution’s card loyalty program and how it ties into the product they are purchasing – e.g., earn points for signing up for a loan and earn even more points for making your loan payments through your bank card.

Improving Redemption Improves Retention

The Bond Brand Loyalty report points out that non-redeemers are 2.3 times more likely to defect from a loyalty program than recent redeemers. Points are important but redemption represents a key component of retention. To minimize defection, financial institutions must remind cardholders of the redemption options available to them.

One way to consistently remind consumers is through credit card loyalty programs that offer real-time redemption while consumers are in the process of using their cards. Real-time redemption directly connects the benefits of redemption with card usage. The vast majority of consumers – seven out of 10 – find the real-time redemption option appealing, according to the Bond report.

A case study of one financial institution participating in FIS’ Premium Payback program, which offers real-time rewards at participating gas stations, enjoyed a 6.5 percent increase in transaction volume and a seven percent growth in active accounts. In addition, 88 percent of its customers said they intended to continue to redeem points for gas discounts.

The Fine Line Between Communicating and Pestering

Here’s the conundrum of today’s communications: Consumers are bombarded daily with emails from multiple brands. On one hand, the financial institution needs to send out regular communications to habituate usage and drive redemption. On the other hand, consumers who receive too many messages – especially ones not tailored to their interests – ignore them or, worse, unsubscribe.
Given the level of messaging clutter today, how can one communicate to consumers without pestering them? For starters:

• Begin slowly and monitor key metrics: delivery/bounce rates, open rates, click through rates, conversion (to redemption) rates, unsubscribe rates.
• Observe what happens when the frequency of communications increases.
• Give consumers options in terms of how and how often they may be contacted.
• Continuously refine messages and observe results to determine what content produces the most desired behaviors.
• Employ multiple channels – email, phone, in person, website, print and social media – and align messages across channels.

Increasing Engagement with Loyalty Program Management

Regardless of institution size, whoever owns the loyalty program must align loyalty with marketing communications to ensure consistency across channels and the internal silos of the financial institution.

Alternately, financial institutions can hire out loyalty program management to experts. FIS Services Group, one such expert, provides pre- and post-implementation training as well as consulting services, content creation and program execution.

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Payments Leader

Payments Leader from FIS provides insights on credit, loyalty, fraud and emerging payments strategies through blog posts from our industry experienced authors.