The Current Global Perspective to Promote Customer Loyalty Through Personalization
Credit card benefits remain the leading global choice for Financial Institutions (FI) to promote customer loyalty. Traditionally, the credit card loyalty paradigm has been to reward customers with points for card spend. These points typically result in redemption offers centered around products or cash value: air miles, gift cards, and membership benefits are just some examples.
The more personalized a credit card benefit, the better the Return on Investment (ROI). Most banks understand the value of personalization but struggle with how to define and scale it. Only a few outliers seem to have found a niche that has allowed them to carve out unique and personalized journeys for their customers: USAA in the US, BVAA in Spain, as well as Westpac and Combank in Australia.
Most banks are unable to create individualized loyalty offerings due to competing priorities, system incompatibility, regulatory situations and/or general capacity. Instead, these banks add new programs onto the overly abundant pile of existing credit card programs. The dilemma of choice creates major headaches for potential customers. Every customer has to weigh increased annual fees against better benefits to determine which card is a fit. Thus, any credit card program offering a personalized benefit is at an advantage.
A new frontier is on the horizon that may dramatically help banks earn customer loyalty more easily: rather than utilizing the traditional reward catalog of offerings that exist today, emerging technologies may allow banks to offer real-time redemption at any POS system. This immediate gratification will provide customers with tangible moments that allow them to emotionally connect to their chosen credit card.
Until real-time redemption options are a reality, a good strategy to gain loyalty through personalization is to find what customers emotionally expect from a credit card program on a region by region basis.
Emotional Consumer Loyalty Research
A recent global loyalty program study conducted by Aimia, a full-service loyalty solutions company,
sought to determine what engages consumers (rational) and what consumers expect (emotional). Looking at consumer needs and wants on a global scale helps to uncover opportunities for programs to improve and areas where brands can truly differentiate.
In terms of emotional expectation, the US (+49%) and Asia-Pacific countries (+54%) emphasized the importance of Preferred Treatment, UK and Dubai consumers expect Customer Data & Service (+36% and +55%, respectively) and Australia expects Ease & Participation (+33%) when choosing a credit card program.
In terms of rational engagement, the US (+33%), UK (37%), and Australia (+32%) emphasized the importance of Ease and Participation, Dubai (34%) and Asia-Pacific countries (36%) were driven by Rewards.
Conclusion: Find Your Distinction
Due to the oversaturation of generic loyalty offerings, there is opportunity for financial institutions to deviate from the norm in various regions and earn loyalty. Across all regions, FIs should differentiate themselves by identifying key customer segments, improving ease of use and proactively rewarding their customers.
Customer-centricity is the key to differentiate among a crowded loyalty landscape. Reflecting a personalized customer experience will exceed expectations in making customers feel valued and truly rewarded.
