Using Rewards to Drive Increased Credit Card Spend

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.

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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.

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Improving ‘Engagement’ with Tenured Business Banking Customers

Data from J.D. Power’s 2013 Small Business Banking Satisfaction Study finds that Product Offerings satisfaction declines significantly as a customer’s tenure with the bank increases. Customer perception of product-related communication (or lack thereof) is a key driver of the satisfaction differences noted across different customer segments.

Analysis of customer verbatim comments may indicate that banks are more focused on communicating with newer business customers, in an attempt to ensure satisfaction and ultimately increase loyalty and cross-sell potential. Conversely, longer-tenured customers may feel ‘forgotten’ as the level (or quality) of communication received from their bank decreases over time.

US SBB Account Initiation, PO & Credit services_Final_11.6

It is important for financial institutions to stay in-touch with their business customers, particularly those with longer tenures, as those customers appear to be more critical of their bank’s attempts to communicate with them. And it is especially important to focus on engaging tenured business banking customers that DO NOT have an assigned account/relationship manager.

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Maximizing the ROI of Credit Card Communications

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.

For Blog Post week of 2_17

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‘Big Banks’ more attractive to Gen Y customers?

Data from J.D. Power’s retail banking study finds that 34% of Big Bank customers are within the Generation Y age segment, which is significantly higher than the percentage of Generation Y customers at Regional/Midsize/Community Banks.

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And while the Generation Y segment is currently less-affluent than other segments, they do present potential bottom-line growth as their income levels increase and they enter the market for mortgages, education plans for children, loans, etc.

The ability of Big Banks to provide functional ‘digital banking technology’ (website, mobile, advanced ATMs) is attractive to tech-savvy younger customers, and smaller institutions need to be competitive in this space in order to ‘steal’ younger customers from Big Banks.

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Your Bank Hasn’t Earned the Right to be on LinkedIn

By Mark Zmarzly, SVP of Financial Services at ACTON Marketing

A few weeks back I decided it was time to write a blog post on “How Banks Can Best Use LinkedIn.” But then Jeffry Pilcher at TheFinancialBrand.com wrote this great post: 12 Steps Financial Marketers Can Take To Get The Most From Their LinkedIn Page.

Like most things at TheFinancialBrand.com, it was very comprehensive and informative. So there went my post. I guess I’ll just write about Grumpy Cat again.

But then I thought, do banks belong on LinkedIn? I don’t mean that from a simplistic point of view, I meant that from a philosophical stance. Have they earned the right to be involved in social selling? The answer is no…not yet.

As I have more and more conversations with bankers, investment peeps, realtors, and others in consultative sales, I’m convinced that bankers don’t understand the power of LinkedIn. I don’t believe they know what it means to have a holistic brand that is consistent online and offline and that is centered on delivering focused, relevant, buyer-centered content and assistance. That’s what social selling is about. That’s what LinkedIn is about!  

Forgive me if my soapbox is too high, but I’ve been involved with the selling and marketing of banking products for eight years – holy crap? Is that right? I’m not that old!!!! – and it seems as if many, many, many bankers out there like to believe that the Internet was never invented. They seem to think of themselves as keepers and disseminators of information. And by this I mean they tell people about their products and hand out brochures.

They say they “get mobile” but most think of these channels as new methods to disseminate info, not as part of a revolutionary shift in the balance of sales power and processes.

If you want to better understand how much the sales process and environment has changed in the last decade, please read To Sell is Human by Daniel Pink. One of Pink’s main points is the value of content curation within the new sales environment.

If you don’t understand curation, you don’t know the true value of LinkedIn.  And if you don’t curate, you’re missing out on an unmet need in today’s financial customer. Quite frankly, most of you are missing this.   

Your bank must embrace the role of curating financial information in the lives of its customers and prospects before you can fully realize the power of LinkedIn. Until then, you will only be able to establish a presence but never a meaningful impact.

I’ll talk more about this in a future post and upcoming webinar. If you have specific questions (or gripes) please connect with me before then.

About Mark Zmarzly:
Mark Zmarzly is SVP of Financial Services at ACTON Marketing, and an accomplished marketing, business development, banking, and creative professional with demonstrated success solving customer acquisition, marketing, and profitability problems. He has worked with financial institutions from 1 branch up to 1,700+ branches in the areas of marketing, copywriting, account management, consulting, teaching, social media, and business development.
You can find his insights on issues facing the financial industry at http://ihelpbanks.com/ and on Twitter @BankMarketing. You can also connect with him on LinkedIn at http://www.linkedin.com/in/markzmarzly.
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Will You Bank On Us?

Best Banking Blogs of 2012

The Financial Brand, the premier online publication for bank and credit union marketers is conducting the second most important election this week; Best Banking Blog “2012 Readers’ Choice” awards.

Our J.D. Power and Associates Banking Blog, as part of having received the prestigious “Editor’s Choice” award,  is now nominated for the “Reader’s Choice” award  for Best Banking Blog of 2012.   Your vote counts, and we would be grateful for your support!

VOTE HERE

To be recognized alongside our friends and distinguished bank bloggers Jim Marous, Ron Shevlin, Brett King, Bradley Leimer, Matt Wilcox, JJ Hornblass, Liz Lum, Chris Skinner, Serge Milman, Christophe Langois, Jim Bruene, Randy Smith and Jim Van Dyke is an honor in itself.

Congratulations to all of our fellow nominees for your continued dedication and delivery of superb insights to our banking community.

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A Few Post Halloween Banking Tips &Treats

In case you missed a few of our recent online events and complementary research reports, we’re including them for you here.  We promise, just like the day after 1/2 price Halloween candy, it’s not a trick. Just a heartfelt way for us to treat you, our loyal banking fiends and fans for your continued supportEnjoy!

What Do Small Business Owners Expect From Their Bank?

This exclusive webcast provides an inside look into the results of our J.D. Power and Associates 2012 US and Canadian Small Business Banking Satisfaction Study that will be released next week.  Below are only some of the many issues discussed during the webcast:

  • How customers’ perceptions have changed since 2011
  • The latest trends emerging in the small business banking industry
  • Which factors are having the biggest impact on customer satisfaction

Download the full webcast

The Dividends of Improving Best Practices for Social Media Research

In this whitepaper, we’ll show you that without well-established and proven guidelines on query construction and data extraction, very different results and conclusions can be obtained by different analysts attempting the same social media data search.

In extreme cases, analysts can create such highly divergent queries that the associated data leads to different answers to even simple questions, such as:

  • Which brand is my main competitor?
  • Is Product1 more of my brand’s conversation this month centered around product?
  • Is the sentiment expressed toward my brand this month more or less positive than the sentiment expressed toward my brand last month?

Download the full whitepaper

Using Voice of the Customer Information to Improve Business Performance: 5 Keys to Success

This presentation explores how clients use J.D. Power and Associates and other Voice of the Customer data with ROI or other business metrics to analyze under-performance to drive improvement.

Download the full presentation Continue reading ›

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What Real Customers Are Saying About Banks

By Jason Falls, CEO of Social Media Explorer

If you asked the average American if they felt positively or negatively about their bank, how do you think they would answer? Now consider the same question while keeping in mind the country is currently clawing its way out of a recession, the mortgage crisis is still affecting millions of Americans and their bottom lines and the Occupy Wall Street movement hasn’t exactly disappeared?

Would it shock you to know that most Americans would answer that they feel positively about their bank? That’s what my company’s recent research into online conversations about banks revealed. In fact, looking at conversations that feature the top 25 banks according to assets as ranked by the FDIC, only two have less than 60% positive marks. Even major banks, like Citi and PNC, were above 70% positive in online conversations.

Granted, Bank of America, which in many ways instigated the Occupy Wall Street movement with its September 2011 rate hike (quickly rescinded but not before the public conversation could go awry) dominated online conversations in 2011 among the banks and it was one of the two under that 60% positive threshold. But even with BOA’s miserable year in the public eye, its positive to negative ratio was 1:1. Half of the people talking about Bank of America last year were speaking of the company in positive light.

Anecdotal assumptions like, “no one likes their bank,” or “no one likes Bank of America,” can be more easily overturned today thanks to online monitoring and listening platforms. That’s why we spent the last few months researching what consumers were saying about banks and bank products. Among some of the other surprises we found include:

Customers Are Fickle

Several banks we reviewed got high marks for customer service. But, they also got low marks for it. This tells bank marketers that no matter how good you are, someone will always think you’re bad. Having processes and policies to deal with negative feedback is an imperative.

You Don’t Have To Be Big To Make An Impact

After finding the major products and themes consumers of the top 25 banks discussed, we removed any brand bias and searched the web for conversations about the topics. While analyzing conversations about Automated Teller Machines, First Fidelity Bank (Oklahoma) appeared multiple times. Its ATM fee policy thrilled fans enough to elicit online responses. And ones that were found by a national research focus. The insight for marketers here is that thrilling your customers creates buzz and not many of your competitors are doing that.

Advertising Works

The single biggest online conversation impact we found among the larger banks was the amount of positive conversation that focused on the advertising campaigns for Capital One and HSBC. Capital One’s “What’s In Your Wallet” vikings and Jimmy Fallon ads accounted for over 60% of the positive online conversation around the brand. But it’s not just funny TV spots that emerged as effective in driving online buzz. HSBC’s advertising campaign focuses on posters and billboards primarily placed around airports. The “Different Points of View” campaign accounted for 23% of its positive online buzz. Apparently, good ads are worth the investment.

Certainly, looking at online conversations comes with its own limitations and biases. We were not able to ask direct questions of consumers as with traditional market research made of focus groups and surveys. But with our approach comes certain bias elimination, too. Finding online conversations means the consumer isn’t biased to answer one way or another because they know they’re being monitored or interviewed. We mined raw conversations of people speaking freely on their respective social networking site, forum or blog.

This in-the-wild conversational analysis isn’t necessarily better than other forms of consumer insight. But it sure is different and as revealing. It shows us that our assumptions are often wrong, consumers will always surprise you and there are plenty of opportunities to be had for brands in the online space.

Jason Falls is the CEO of Social Media Explorer and author of The Conversation Report: What Consumers Are Saying About Banking, a new market research report from his company. You can find Jason on Twitter @JasonFalls, Facebook or connect with him on his blog, Social Media Explorer.

 

 

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How are Banks and Credit Unions Using YouTube?

In a recent New York Times special report titled  Banks Slow to Embrace Social Media, the author Sonia Kolesnikov-Jessop notes that “while many consumer goods companies have embraced social media sites like Facebook, Twitter and YouTube as new avenues to reach customers, financial institutions, and especially private banks, have been reluctant.”

While the article’s main point may not be too far off from reality, Jeffry Pilcher of The Financial Brand has detailed a dozen examples of noteworthy YouTube videos uploaded by financial institutions in his latest post titled, Best Of Bank Marketing On YouTube.  We were intrigued by the many creative uses of this social media channel, and thought you would be too!  Below are his top pics including overviews and commentary:

Boys choir sings options for automated phone tree

DNB recruited Norway’s most famous choir, the Norwegian Broadcasting Boys Choir, to sing all of the messages for its automated, touch-tone telebank. For the entire Christmas season, every word on DNB’s phone banking system was sung by angelic voices. The concept is brilliant, the execution is beautiful.

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Deutsche Bank guerilla experiment mocks ridiculous fees

This gutsy guerilla stunt from Deutsche Bank aims right at consumers’ pain points: fees and charges specifically in the financial industry that many people feel are absurd. In one experiment, a small boutique bakery introduces a one euro “entry fee” — just for walking in the door. Those who pay are surprised to learn there is also a one euro “exit fee.” Deutsche filmed a second experiment at a supermarket, where patrons were charged for things like using the conveyor belt in the checkout line and printing a receipt. It’s over the top, but it makes the point. Spot 1 (Bakery) | Spot 2 (Supermarket)

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Mom gets massage and makeover from bank

This two-minute video from Sainsbury Bank starts out like a documentary about the life of a busy mother. She’s a hardworking woman, but clearly worn out from her dedication to her three young children. Sainsbury ambushes her with their Makeover Mobile, a spa on wheels. She’s a lovely person, so you feel really good for her at the end when she steps out looking beautiful. Her expressions of appreciation are subtle, but incredibly powerful; it’s very engaging. It’s rare to see banks capture such emotion in their marketing.

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It’s Time to Change Your Social Media Story – Part 2

By Mark Zmarzly, VP of Financial Services at ACTON Marketing

In the previous post It’s Time to Change Your Social Media Story – Part 1 , I made a brilliant argument for the end of the Internet.  Actually, I wrote about how Facebook’s timeline changes should give all financial institutions reason to reconsider their social media strategies, but I think you could read between the lines.  The time for reinvention is here, as is the road map below.

If you have the guts (and resources) to reinvent your narrative, here are the things to think about as you redesign and redefine your story:

  • You are not the main character in your story…
  • Your story (updates, cover photos, apps, etc) needs to reflect your customers, not your bank
  • People identify with those like them (more accurately: with people slightly better than themselves), not with their bank

Who are the main characters in the stories below?  Which story would you rather read?

Your voice needs to be authentic

Every time I see a scripted wall post that’s repeated over and over “Thank you for bringing this to our attention. Please contact us at customerservice@anybank.com so we can look into your issue and work with you to resolve it.” I want to jump right into my laptop screen onto the Information Super Highway and drive down to a town I like to call Shoot Myself. Yes, discussions about personal account level data need to be taken offline but this voice is your narrator and he/she is inauthentic and not engaging. Amber Farley from Financial Marketing Solutions adds, “Not only does the voice of the bank need to be authentic and relevant, but it needs to be reflective of the bank’s overall brand. Banks shouldn’t jump into social media pretending to be something they aren’t.”

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