Loyalty programs can move your card to top of wallet
Cardholder loyalty rewards have evolved dramatically from the static programs that gave consumers points and updates every 30 days. Today, loyalty is far more dynamic: consumers have myriad payment options, so card issuers must stay focused on maintaining engagement, evolving with the market and meeting consumer expectations.
Cardholders expect a superior, 24/7 digital experience from issuers, but also want the personalized approach of a small-town banker who knows everyone who walks through the door. Loyalty today is often based on how well issuers strike the balance between treating cardholders as real people and as digital citizens.
Loyalty programs can enhance the connection between issuers and cardholders. But having a cardholder in a program doesn't necessarily equal success.
Expectations & Experiences Consumer Trends Research from Fiserv: AI, Payments Innovation and the Shifting Financial Ecosystem, October 2023
The challenge for issuers is determining how to craft a rewards program that drives engagement and stands out in a crowded market. How will you get consumers to participate? How do you achieve top-of-wallet status?
Here are three foundational elements for building a successful loyalty program.
1. Be proactive
I love earning airline miles through one of my cards, and regularly redeem the points for travel. But when inflation started to rise, my issuer sent me an email saying I could switch to double points for fuel for a month.
The issuer was immediately responsive to how the market was changing.
Many loyalty systems are still based on statement cycles, so program updates are visible only in the next statement. That timing doesn't keep pace with a world that can change so quickly.
For many issuers, the first loyalty program change at the start of the inflationary spike was a focus on fuel. But maintaining top-of-wallet status didn't end there. When retail prices also rose, nimble loyalty programs pivoted to offering rewards for groceries.
It's about being responsive to everything that's changing. The world is constantly evolving. Strong loyalty programs match that evolution.
2. Know your consumers
Traditional rewards programs give consumers a point for every dollar they spend with their card. It's strictly a transactional view of the customer.
More sophisticated rewards programs look beyond the transaction to a more holistic view of the cardholder. For example, if someone gets an auto loan with a financial institution, an issuer could give the cardholder double points on gas purchases for the next 30 days.
Issuers also can reward cardholders on their birthdays or for being a member or customer for a certain number of years. Or they can offer points when cardholders engage with the financial institution through social media.
The opportunities to reward cardholders are plentiful, but the goal remains the same: making consumers feel like you know them. The point of a rewards program is to drive engagement. Whenever financial institutions can reward and encourage that engagement, they're building a holistic view of cardholders.