U.S. credit card issuers are struggling to generate revenue growth, which has been hit by both the decline in outstandings and the impact of the CARD Act and Durbin Amendment on noninterest income. At the same time, issuers are reluctant to invest in aggressive new cardholder acquisition campaigns, as they want to avoid the free-for-all that occurred in the mid 2000’s which led directly to the spike in charge-offs when the financial crisis hit in 2008. As a result, issuers are increasing their focus on optimizing relationships with existing cardholders.
The following are 10 tips for credit card issuers to get the most from relationships with existing credit cardholders:
- Build a comprehensive communications strategy: Identify all opportunities for the cardholder to engage with the issuer, and build integrated communications and offers around these “moments of truth.” These include:
- Predictable events (such as monthly statements or card expiration dates)
- Cardholder use of issuer channels (such as visits to bank branches or use of the issuers’s website and/social media platforms)
- Key life events (such as an upcoming marriage or a child about to go to college)
- Create an onboarding program: The first 90 days is crucial to the credit card relationships, so issuers should establish a set series of communications during this period to welcome the new cardholder, highlight key card benefits and handle any problems the cardholder may have.
- Provide targeted activation incentives: Rather than offer a bonus following the cardholder’s first purchase, require rewards cardholders to meet a minimum spend threshold within a certain period in order to build habitual use.
- Recognize anniversaries: Some issuers offer anniversary bonuses, but there should also be a plan in place to communicate with cardholders in advance of the anniversaries. The communications should center on:
- Thanking the cardholder for their business
- Highlighting card benefits
- Making special offers (usage, cross-sell and upsell)
- Providing a forum for cardholders to surface issues
- Reward relationships: Incentivize and reward multiple product ownership by cardholders with points, special offers and discounts, preferred pricing, and priority customer service.
- Analyze data: Issuers are belatedly recognizing the value in analyzing cardholder spending patterns. The intelligence gleaned from this analysis in turn informs decisioning on both offer and messaging development.
- Develop multi-channel customer service functionality: Issuers should reflect cardholders’ diverse channel usage patterns in providing customer service.
- Social media: create a dedicated Twitter card handle(s) and/or incorporate card service into the bank-wide customer service Twitter handle (it is also notable that some leading banks now have dedicated social media customer service reps).
- Issuer website: create FAQs, online forms, and click-to-chat functionality
- Phone: differentiate live customer service for different customer segments
- Survey cardholders: Rather than waiting for cardholders to provide feedback on needs/concerns and then reacting, anticipate upcoming trends in these areas by conducting regular customer surveys, and then applying the learnings from these surveys into marketing strategies and programs.
- Provide financial management resources: Issuers should publish information and develop resources to enable cardholder to better track and control their spending patterns. This also has the effect of positioning the issuers as a financial partner.
- Establish a winback program: An effective winback campaign should focus time and resources on cardholders who are worth winning back, and should involve a combination of direct mail/email and outbound calling. The call center agents or branch staff tasked with making the winback calls should also be trained on how to identify the reasons the cardholder left, and receive systems support on the most appropriate winback offer to make.