Credit Card Issuers Revamp Rewards to Attract and Retain Customers
A recent study from Colloquy and Swift Exchange reports that the financial services sector provides $18 billion worth of rewards per year – more than any other sector – but one-third of these rewards go unredeemed. Recognizing the potential value of loyalty programs to long-term customer relationships, new offers are emerging that lure consumers away from competitors and tap the consumer bases of major retailers.
As banks begin to lend again and as credit card offers trend upward, card issuers are focusing their efforts on high-spenders with good credit scores. These sometimes reluctant customers are being courted with offers that are more enticing than usual if they join or switch cards. Once they sign up, they are pampered with revamped rewards programs – an effort to drive spending, encourage redemption and consequently maintain loyalty.
An example of one of these offers is the recent Capital One Venture “Match My Miles” promotion. The promotion offered up to 100,000 bonus points by matching previously-accumulated credit card rewards from other airline credit cards as an incentive to switch. The promotion was so successful that Capital One hit the one billion mile program limit more than a month early.
Another way card issuers are revamping their rewards programs is by partnering with retailers. Kohl’s and Chase Card Services recently announced an exclusive retail marketing partnership aimed at bringing increased rewards to Chase card members within the Ultimate Rewards program when they shop at Kohl’s. The benefits include enhanced gift card promotions and expanded bonus point programs for Kohl’s purchases. Discover is also partnering with retailers to increase the value of their rewards programs for cardholders: points have greater value when they are redeemed for participating retailer gift cards.
It appears that the uptick in credit card offers will continue as the year progresses, and I’ll be interested to see how card offers, rewards programs, and the way they are marketed continue to evolve and compete.
