Engaging Cardholders: How to Drive Loyalty and Spend

Credit cards remain the most popular form of electronic payment for consumers today – even with all the changes impacting our industry.

However, just offering members a credit card is not enough to keep them engaged and transacting. Your members have expectations of your credit card program, and the competition in this marketplace is fierce. To drive loyalty and usage, your card product must deliver a superior consumer experience by every measure.

Security Is a Matter of Trust

Consumers today are concerned about card fraud, and rightly so. Breaches are common and widely publicized, leaving your member cardholders feeling vulnerable.

As their issuer, members are trusting you to protect their data – and they want to know that security is your top priority.

Inform them of the systems you have in place to detect and prevent fraud, and keep pace with technology advancements in this area. New, emerging artificial intelligence and machine learning technologies are proving highly effective in the fight against fraud. Partnering with the right provider can help you leverage these tools in service to members.

Cardholder education is also important, so teach members how to transact safely. Instruct them to use their EMV chip card at the point of sale, to check statements and balances frequently, and to only transact with reputable merchants and sites. Set them up with digital tools that protect card data, such as Apple, Samsung and Android Pay, VISA Checkout and Masterpass.

Empower members with a mobile app for card controls and alerts as well. These apps allow cardholders to specify exactly where, when and how their cards can be used right from a smartphone. They also allow cardholders to turn cards on for transactions, and off again when not in use for the ultimate barrier to card fraud.

Striking the Right Value Proposition

While fraud protection is essential, it is just one pillar of a successful card program. In fact, studies point to four primary factors that consumers look for in a credit card – avoiding unnecessary fees (such as an annual fee), rewards, a competitive APR and a good credit line.

Of these, perhaps the most important aspect of your program – and the trickiest to manage – is establishing the right line of credit. This should be a dynamic process as the needs and creditworthiness of cardholders can fluctuate over time. Setting a credit limit too low can drive a cardholder into the arms of another issuer as many consumers are keenly aware that surpassing 50% spend on a card will damage their credit score. To keep cardholders spending – while mitigating your risks – monitor credit lines frequently and adjust them accordingly.

Reliability is important to cardholders as well. Your members need to know that when they offer your card at the point of sale the transaction will successfully process. Consumers get very concerned – and customer satisfaction goes way down – with even one unnecessary decline. That experience can damage cardholder confidence to the point where the member stops using your card altogether. Have tools and policies in place to minimize false positives.

Loyalty Is Earned Personally

A strong rewards program is also a must as consumers simply expect this from credit cards today. In fact, the competition for top-of-wallet is continually trending toward rewards. According to Accenture, 48% of consumers will switch their primary rewards card to get more value.

To drive engagement and card usage your program has to enhance the overall member experience you provide. And, that requires you to understand who your members are.

This is where data analytics come into play. Cardholder transactions provide deep insights into the behaviors and preferences of members. Leaders in data-driven engagement are three times more likely than stragglers to say they have achieved competitive advantage in customer engagement/loyalty (74% versus 24%), according to a Forbes Insights and Turn Study.

The more your loyalty program meets a member’s unique needs, the more truly rewarding it is.

While cash back is broadly considered an essential option, consider also rewarding card usage in experiential ways. For example, if a member buys NASCAR tickets with your card, reward them with an upgrade at the event such as special seating or swag. Give members something of value that is meaningful to them, and they will remember your card for it.

To accomplish this, you need to establish a flexible rewards program, one that can be customized with a breadth of redemption options, including offers from the local businesses your members like to support.

Think beyond the card, too. Present offers on loans and other products that may appeal to cardholders. Building a dimensional relationship with members is key to establishing long-term loyalty.

Presentation Counts

Don’t forget about the physical card, either. Presentation matters, so brand your cards with a quality design that gives the cardholder status when the card is used.

And, take every measure to ensure that your cardholders always have a card in hand. Instant issuance is vitally important – and not only for new cardholders, but also when cards are lost or stolen. As the industry continues to explore digital issuance, make sure this is part of your offering as well. Top of phone is rapidly becoming top of wallet.

Give 24/7 Omnichannel Service

As with any product you offer, service your credit card program well. Offer self-service options for travel settings, making payments, and accessing benefits and rewards. Remember also that cardholders want to interact with issuers using the channel of their choice, whether in a branch, via the internet or through a chatbot like Siri. Give them a variety of service options.

The bottom line is, today’s consumers are accustomed to getting exactly what they want, when and how they want it. The more responsive your program is to individual cardholder needs, the more successful you will be.

Yvonne Stelpflug is Vice President, Credit and Ancillary Products, SmartGrowth Advisory Services for CO-OP Financial Services. She can be reached at yvonne.stelpflug@coop.org.