Growing a successful card portfolio
From implementing additional perks, incentives, and rewards to eliminating price protection, sign-up bonuses, and first-year interest waivers, credit card rewards programs are constantly changing. But are issuers jumping the gun a little too quickly when making changes to the programs they offer their cardholders?
There’s no question that the types of consumers issuers are most interested in are those with high incomes, high spending habits, and strong credit scores. So naturally, issuers want to attract more of these individuals by offering outstanding perks.
However, when the perks diminish and a new annual fee is introduced, it can leave cardholders feeling shell-shocked and lead to higher attrition. Fees can be intimidating and make cardholders second-guess their decision to stay with their issuer.
Instead, when deciding whether a decrease in account revenue warrants a change in the card offer, the Mercator Advisory Group recommends that issuers take a wait and see approach. If a revenue decrease continues, then it may be time to make a change in the structure.
Another suggestion is to follow in the footsteps of the Barclays Arrival Premier World Elite Mastercard. This card features an annual customer bonus triggered by card spending. This strategy can help with cardholder retention issues without stripping away as many program incentives.
Issuers must also be cognizant of a competitor on the rise: retailers. More and more retailers are testing rewards programs for non-credit card holders who are enrolled in their loyalty programs. These types of offerings could potentially decrease the value proposition or at least minimize the benefits of signing up with a private label credit card.
With this being said, issuers need to be ready to pivot to meet the changing demands of their cardholders. Rewards and perks are important and consumers will choose the payment card that offers the most bang for their buck and makes them feel valued over a longer period of time.