Data from three fielding waves of the 2014 J.D. Power Credit Card Satisfaction StudySM finds that the percentage of credit card customers ‘switching’ their primary card has increased significantly over the past year. More specifically, there is a significant increase in the percentage of customers opening a new credit card account (46% vs. 41% in 2013).
The increase is driven by ‘revolvers’ (customers that typically pay less than their total monthly balance), who cite ‘rewards’ and ‘lower interest rates’ as their primary reasons for switching.
With the competition for capturing ‘share-of-spend’ increasing, it is important for credit card issuers to improve the customer experience in an effort to improve loyalty. One key focus area is ‘rewards’, which have become a key driver of both acquisition and spending habits. In response, issuers must provide attractive offerings, market them effectively and ensure that their customers are aligned into the appropriate programs and card products. Additionally, the creation and marketing of successful rewards programs may also improve acquisition metrics by enticing competitor customers to switch their primary card.
The full 2014 J.D. Power Credit Card Satisfaction StudySM, including data from all four fielding waves, releases in August, 2014.
Data from waves 1-3 of the 2014 U.S. Credit Card Satisfaction Study finds that industry satisfaction (776 on a 1,000-point scale) has increased significantly since the 2013 study was published last August (767).
This continues a trend seen in other 2014 Financial Services studies conducted by J.D. Power – the Retail Banking, Full-Service Investor and Self-Directed Investor studies all saw significant improvements in customer satisfaction.
The complete Credit Card Satisfaction Study, including all four waves of data collection, publishes on August 26, 2014.
Early 2014 performance indicators are encouraging for credit card issuers, as customer satisfaction is on track to reach its highest level since the inception of the J.D. Power Credit Card Satisfaction StudySM in 2007. And while the Target data breach may have impacted consumer willingness to make electronic purchases, data finds that issuers can use ‘attractive’ rewards offerings to drive higher levels of personal credit card spend.
As expected, customer perceptions of reward attractiveness vary based on their preferences, which are driven by customer demographics and psychographics. For example, comparing two airline co-branded credit cards may show significantly different demographic profiles. One of the cards may frequently attract customers that are younger, less affluent, and less educated, while the other tends to attract older customers that have multiple children living in their household.
Understanding these segmentation differences (i.e., life style, life stage, hobbies/interests, spending habits, etc.) can help issuers design more appealing reward programs. If an issuer determines that a specific airline credit card attracts customers who frequently travel internationally, the issuer could add rewards associated with foreign travel or potentially partner with a hotel chain to allow additional earning opportunities. Another example is a bank-branded card that attracts sports enthusiasts, in which case a credit card issuer could add access to sporting events as a redemption option or partner with leading online ticket retailers to allow customers to pay for tickets using rewards.
Lastly, educating customers on the details of rewards programs is critical in order to maximize the impact on spend. And while it is important to inform customers about all program terms (as indicated in the chart below), lack of awareness regarding the types of rewards available has the greatest individual impact.
Credit card issuers need to ensure that proactive outreach campaigns directed at current customers fit the evolving ‘digital world’. Failure to do so may not yield a positive return on the resource expenditures associated with customer communications.
Data from the 2013 Credit Card Satisfaction Study finds that nearly half (46%) of credit card customers did not read/use the most recent proactive communication they received from their issuer, thereby pointing to a potential ‘waste’ of resources spent by card issuers.
However, study findings show that the method used to deliver communications may have a positive impact on whether customers choose to read/use the information. For example, customers are most likely to read/use information provided electronically (emails and text messages), and are least likely to read/use information delivered by standard mail.
Issuers should consider revisions to their communication strategies, focusing on digital delivery of messages. This may also require issuers to rethink the content of their messaging and focus on delivering information in a more concise manner.
Problem prevention should be a focus area for all credit card issuers. Analysis of data from the 2013 Credit Card Satisfaction Study finds that when customers experience a problem, overall satisfaction and customer retention metrics decline significantly.
Preventing the occurrence of problems may also help reduce operational costs. For every 1-percentage-point reduction in problem incidence, issuers may be able to save nearly $230,000 for every 1 million cardholders.
Issuers should consider the implementation of a problem tracking or problem management systems. Problem tracking provides continual analysis of problem-related customer contacts, potentially helping issuers identify and prioritize processes that can minimize the occurrence of problems. Problem management may include multiple inputs, such as problem contact data, survey data and employee feedback, and is designed to guide issuers on the development of systems to both prevent problems from occurring, and to maximize the effectiveness of resolving problems that do occur.
Although credit card satisfaction continues to improve, a large percentage of customers indicate they do not fully understand their card’s terms, benefits and rewards program, according to our J.D. Power 2013 U.S. Credit Card Satisfaction StudySM released today.
Satisfaction in each factor has increased, as have ratings for Brand Image. However, it is important to note that opportunities for further improvements remain. Recommendations for additional focus areas for credit card issuers include:
Deepening customer awareness and understanding of terms, benefits, and rewards, potentially through proactive communication campaigns. Issuers should use consistent messages via all available channels to deepen understanding and awareness of offerings.
Continuing to invest in functionality of self-service interaction channels. Given the continued shift toward digital interaction channels, customers areconsistently looking for advancements in technology. Therefore, websites need to be maintained and upgraded as necessary to ensure easy navigation and availability of clear and concise information. Mobile apps are becoming more widely used; thus, the focus on improving functionality will become increasingly important going forward. Finally, clear processes for handling customer questions/requests submitted via email or online chat must be developed. Issuers must provide the same level of service courtesy and knowledge that is delivered through personal channels, such as the branch and call center.
Maintaining focus on delivering a high level of service during every interaction, given the importance of call center. Although customer contact via this channel is infrequent, every interaction carries a larger weight in overall satisfaction compared to the other interaction methods. Issuers must implement a customer experience framework that addresses customers’ needs and expectations by focusing on employee recruitment, training, coaching, and recognition in order to achieve the desired experience levels.
Preventing problems, as well as eliminating barriers for resolution. Analysis of problem data and determination of problem root causes may help banks adjust policies and procedures.
The 2013 Credit Card Satisfaction Study includes responses from more than 14,000 credit card customers and was fielded from May through June 2013
From our J.D. Power and Associates 2012 Credit Card Website Evaulation Study, the following viewing account history best practices highlight some of the exceptional techniques utilized by credit card issuer websites.
1. Recent Activity Link
Chase and Discover Card offer a link to recent activity from the website’s landing page
2. Offer Multiple Formats for Statements
Discover Card allows customers to download statements in multiple formats. Citi Cards offers customers navigation links from the log in field on the home page
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