The effectiveness of loyalty programmes raises questions for both: banks and customers
A loyal customer is a reliable source of income. To maintain the customer base, companies around the world actively use special bonus programmes, which are also called loyalty programmes. It is proved that customers who are participants in a loyalty programme for a particular brand are 90% more likely to buy its products and spend 2-3 times more money than external customers.
Changes in the financial industry could not but affect credit card loyalty programmes. Leading banks consider the loyalty programme as a strategic direction. In fact, almost every bank has credit card loyalty programmes which are not much different from each other.
Is there any benefit in credit card loyalty programmes?
The payback period of loyalty programmes is more than 1.5 years. Their effectiveness raises questions, both among banks and customers, whose financial literacy is gradually growing.
In Great Britain, people participate in an average of 10-15 loyalty programmes, but customer involvement in such programmes does not exceed 50%. This is mostly due to the fact that bonuses are difficult to calculate or customers simply forget about a card when making a purchase.
Nevertheless, banks are actively looking for ways to customer loyalty. Special programmes made the way from fairly primitive discounts to bonus points, a kind of a loyalty currency, from flight miles to cashback.
Three main trends and development directions of credit card loyalty programmes
- Bonuses as a universal currency
Any self-respecting retailer or bank has its own programme where you can get bonuses or discounts. The more programmes appear on the market, the less their total value. A similar situation gave rise to the emergence of a new cluster model of a loyalty programme.
Customers using such programmes can transfer bonuses between partner loyalty programmes using a single account. For example, if a client received bonuses for the purchase of food products, then in the future he can use them to pay his phone bill.
As a result, all participants benefit. Clients enjoy unprecedented flexibility in managing their bonus accounts. The value of bonuses increases many times.
- From fragmentary stimulation to a single ecosystem
Most of the programmes on the market are valid only for anchor products, debit or credit cards. At the same time, mortgages and consumer loans, as well as other products and services remain “overboard” the loyalty programme.
According to the new approach, a bank should create an ecosystem to meet the full range of financial needs of customers. It should be profitable and convenient for a client to entrust all his financial transactions to only one bank.
With such a Credit Card Loyalty Programme, customers get points for almost every day-to-day operation, for example, a credit card use, funds storage on deposit, loan raising, etc. The accumulated bonuses can be spent at the bank (for example, to pay for a mortgage) or from numerous partners.
- Deliberate multichanneling
According to studies, the outflow among customers using various channels of interaction with the bank (mobile and Internet banking, telephone, visits to bank branches) is lower than the average statistics.
Moreover, such customers consume 1.3 times more services than customers who are limited only to visits to the bank branch. And it is important to note that “multi-channel” customers are cheaper to maintain.
The loyalty programme can help educate and familiarize customers with the regular use of remote banking and new channels of communication with a bank.
If you don’t see the sense in credit card loyalty programmes
If you do not see the point in participating in the bank loyalty programmes, then you should not get hung up on them. The easiest way to borrow money is to use the services of a good loan company. The main advantage of such companies is that in order to get necessary sum of money, it is not necessary to collect a lot of documents, draw up a pledge, or provide a guarantor. Most of these organisations work online. You need only a passport and a few minutes of free time. Using loan company services is quick and easy!