By Ray Birch
TAMPA, Fla.—What will really drive card loyalty in the not-too-distant future? The experience, and not so much the offer, sources are predicting.
Pricing and perks have long been up front in the window display when it comes to plastic cards, but payments analysts are saying a new competitive differentiator is emerging when it comes to loyalty: the level of service and the digital experience for the cardholder.
Indeed, as CUToday.info reported, a new Mastercard study reveals loyalty programs today need to be more than just points and miles.
The report posits exceptional customer service, digital access, and ease of use have displaced economic traditional points and rewards as the most important components for building loyalty.
The study states issuers are increasingly moving to seamless, digital experiences and creating personal connections that last far longer than a points bank.
The Real Loyalty
Lou Grilli, AVP of product development and thought leadership at Trellance, agrees, saying that points and rewards drive card usage, but they don’t drive loyalty.
“Card reward programs, commonly referred to as loyalty programs, do not engender loyalty. They drive top-of-wallet position, temporarily, until the next better card offer comes along,” Grilli said.
Rewards for loyalty can come in many forms—cash back, reduced loan rates, or higher savings rates are common types of rewards. Giving loyal members shorter wait times when they call—like airlines have done for ages—or having a separate teller line—like hotels do for their most loyal guests—are non-monetary examples of how to effectively drive loyalty today, said Grilli.
Grilli gave examples of what savvy FIs are moving to.
“I think it is important that issuers make consumers’ digital lives easier, such as giving them the ability to see on their mobile app what cards are being used for recurring subscription services so they don't get blindsided by a charge,” explained Grilli. “Let them know what each recurring charge is for and give them an easy way to cancel the charge.”
The Awkward Pause
Grilli also said chat services should be streamlined.
“The member service rep on the other end should be able to see what I am typing before I hit send. That eliminates that slow, awkward pause between the member and the MSR. And the MSR can formulate a better response. These are the type of things that will drive loyalty,” said Grilli.
Lou Grilli
Grill further emphasized data analytics must be effectively deployed by the credit union to understand who the member is and what their needs are.
“Financial institutions should recognize people for who they are as soon as they walk into the branch, make a call, or use a digital channel,” said Grilli. “Credit unions should have a most valuable member program and treat those members accordingly—I get placed into the short queue when I call. I go to a short line when I visit the branch. When I talk with an MSR they know who I am before pulling up my data sheet.”
The Apple Experience
As CUToday.info reported, CUNA CEO Jim Nussle recently told credit union leaders at the California Nevada Leagues’ REACH meeting they should be addressing the high-quality service delivered by those outside traditional financial services.
Nussle said it isn’t banks that should worry credit unions as much as it is a simple credit card application experience. For example, he said he recently applied for the Apple Card and found the experience simple and and the approval quick.
“What scares me is it changes the experience so the expectations are changed,” said Nussle. “It takes three minutes. If at your credit union it takes a half hour and a lot of paper, that’s what we’re competing against. Let’s wring out the bad friction.”
Grilli, too, was very “impressed” with the onboarding experience when he opened an Apple Card. “And I love the Titanium card.”
Two Objectives
But good loyalty programs, insisted Grilli, rely on digital, multi-channel, and predictive analytics.
“A good loyalty program should take into account the total relationship between the customer and the business, or in our case, between the member and their credit union,” he said. “It needs to accomplish two things: identify and reward members who qualify as loyal, and encourage other members or prospective members to change their behavior to qualify as loyal members.”