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Card programs make significant contributions to banks’ revenue through interchange fees, interest charges on credit card balances, and balance transfer fees. Large financial institutions with deep pockets bombard consumers with card marketing campaigns to garner adoption and ideally gain top-of-wallet status.
At community banks, however, card marketing programs often take a backseat to other priorities, and resources to create and execute effective campaigns can be limited. Without continuous marketing investment, community banks lose the benefit of creating stickier, more loyal cardholders, as well as the revenue associated with card usage. How can community banks successfully compete?
Timing counts, but a successful marketing campaign must also be precisely targeted to motivate specific groups of consumers to take action, such as activating a card or increasing a revolving balance. Community banks have identified two common challenges in marketing their card programs:
Lack of personnel to create and execute continuous marketing campaigns that promote activation, balance growth and usage among inactive, low and high-usage customers.
Lack of expertise in optimizing data from core processing systems to cost effectively improve targeting, and time campaigns appropriately, for optimal response rates.
Comprehensive marketing programs, such as FIS PaymentsEdge, can help community banks overcome these marketing challenges and earn previously untapped revenue. Designed by full-service marketing agencies, these efficient and effective campaigns can help generate brand awareness and promote card activation, balance growth, and spend. Here are a few notable examples:
Balance transfer campaigns. In 2021, participating FIS banks saw an average response rate of 1.6 percent, yielding an average transfer of $3,472.
Credit card activation campaigns drove on average 10.3 percent of dormant cardholders to start spending and 8.2 percent of low users to make additional purchases.
Credit line increase campaigns averaged a 31 percent growth in sales and an average 6 percent increase in balances.
These programs also build cardholder loyalty as measured by lift and retention over time and extend the brand’s reach to new cardholders. PaymentsEdge data shows clients who ran marketing programs in 2021 achieved greater growth on four key metrics and reduced year-over-year balance declines faster than non-clients.
Increasing revenue through product line extensions and rewards
Beyond executing marketing campaigns to attract and engage customers, include growth strategies like implementing line extensions and reward programs to increase revenue per active account and optimize portfolio performance. When deciding on a course of action, remember:
Reward programs drive cardholder engagement and merchant promotions increase account penetration and usage frequency in higher interchange merchant categories.
Launching premium products, like Visa Signature and Mastercard World, increases spend per account and delivers higher interchange revenue versus Classic, Gold, and Platinum cards.
Small business cards capture an average of 2.20 to 2.25 percent higher interchange per transaction. Consider targeting business cards to small business owners, self-employed individuals, and small companies with less than $10 million in sales as a strategic interchange revenue growth strategy.
For more information on card marketing programs call ICBA Bancard at 800.242.4770 or email [email protected]
Tracie Benner is director and business unit manager at FIS PaymentsEdge Marketing. Lori Bremer is director, credit card advisory services, PaymentsEdge Advisory.