Community banks that issue consumer credit cards are faced with some common challenges: how to match their card options (rewards vs. non-rewards) with the best promotions to produce a positive return on investment (ROI), and how to keep their cardholders engaged.
Many banks only market rewards to cardholders with a rewards card, while limiting special annual percentage rate (APR) promotional pricing to their non-rewards cardholders based on their product construct for credit cards. But adding a mix of marketing campaigns to both categories of consumer credit products can drive engagement that strengthens the credit portfolio and boosts revenue.
Incentivizing Card Usage
Community banks can successfully motivate their non-rewards cardholders to increase their spend – even if they already have a low APR card – via spend-and-get campaigns. Running multiple campaigns annually can provide incentives to increase spend behaviors by targeting low-transaction users.
Promoting campaigns with this type of structure is also key to driving cardholder satisfaction and engagement and to helping banks derive incremental interchange revenue. In October 2020, issuers who marketed spend-and-get campaigns with FIS’ PaymentsEdge program saw an aggregate ROI of 607 percent for the inactive segment and a 708 percent ROI for the low-user segment.
Community banks can also leverage promotional rate offers for their rewards cardholders who may or may not have a low APR, but who need to revolve a larger purchase. This segment can sometimes be overlooked by issuers who consider a rewards card to have sufficient incentives built into the product, which can result in cardholders seeking alternative offers to satisfy their purchasing needs.
Banks can avoid this potential pitfall with a promotional pricing offer and drive interchange revenue due to the lift in spend, while re-engaging cardholders. Plus, banks can continue supplementing their portfolio with additional interest income from cardholders when the promotional pricing ends. PaymentsEdge banks that participated in such usage and retention campaigns in 2020 had an aggregate ROI of 671 percent.
Community banks should regularly review their credit card marketing opportunities to ensure the long-term success of the portfolio. Ongoing marketing campaigns that resonate with cardholders throughout their lifecycle will drive engagement and loyalty, and increase revenue.
Visa issuers at FIS may be eligible for ICBA Bancard provided marketing resources through PaymentsEdge. Learn more about this incredible, free resource.
Christine Decker is product marketing director for FIS PaymentsEdge Marketing & Advisory Services.