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Marketing programs are critical to portfolio health and expansion. The key to success is simple: get started and take action! The steps below should help you start your journey.
Ultimately, banks may struggle to understand and prioritize the effectiveness of card marketing. Using a highly segmented promotional strategy is much more profitable than many other forms of financial institution marketing, with higher return on investment. To start a new program at your bank, you may first have to lobby for funding. Identifying underperforming segments and creating projections resulting from a consistent marketing program will be very beneficial, and lead to a solid business case to help you obtain the budget necessary to execute.
Once funding is available, begin mapping out your annual marketing drive calendar.
A strong analytics group will be necessary to segment your portfolio, identify targets, craft and carry the baseline and work with marketing to execute your campaigns.
The starting point for credit card marketing is to analyze credit lines to make sure headroom allows for the growth of transactions and balances. Activation/usage marketing using incentives for inactive or less active cards and layering in rate-based promotions provides growth for existing cardholders to keep your card top of wallet.
Regular acquisition campaigns using both rate promos and monetary offers will maximize card base size. Round out the calendar with timely balance transfer promotions featuring attractive rates and run campaigns during peak retail spending months. (Tax refunds, back to school, holiday etc.)
Once your campaign is complete, use the data available to measure the campaign results and calculate revenue earned during the promotional period and extrapolate your first annual revenue increase, as well as campaign return on investment.
ICBA Bancard client case study: Illustrating the value of card marketing.
One of ICBA Bancard’s credit card clients has recently seen big returns on their marketing efforts. In 2022, MidWestOne Bank utilized the FIS PaymentsEdge marketing and advisory services and generated $1,196,964 in spend lift from 1,521 accounts and added 14,404 incremental transactions.
They executed Inactive, Low Usage, and Mid-Tier Incentive campaigns, as well as Credit Line Increase and Usage & Retention campaigns to increase transactions, spending and balances. MidWestOne Bank has experienced the following year over year growth as a result of their 2021 and 2022 campaigns:
14% growth in credit card sales volume
13% growth in balances
15% growth in interchange
27% growth in interest income
MidWestOne’s Renee Smith-LaBarge, First VP Credit Card Services Manager, said, “We consider PaymentsEdge Advisory and Marketing a strategic partner in optimizing performance and revenue growth for our credit card portfolio. Through consulting and analytics, the Advisory service allows us to tactically identify opportunities within our portfolio while the Marketing service delivers a cost-effective, turnkey customer outreach approach. Since the inception of PaymentsEdge Advisory and Marketing, we have experienced consistent year-over-year portfolio growth.”
Creating a robust marketing program focused on card base, balance, and transactional/spend growth through regular, well-timed campaigns is well worth the effort.