Increase Your Card Revenue with an Automated Marketing Program

U.S. consumers are awash in credit and debit cards. Sixty-one percent of U.S. adults own at least one general purpose credit card – about the same percent as in pre-recession times – and now cardholders are charging purchases at record levels. Debit card usage also continues to rise as it displaces paper for everyday transactions.

Card programs make significant contributions to financial institutions’ revenues 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 and smaller credit unions, however, card marketing programs often take a backseat to other priorities as the resources required to create and execute effective campaigns are constrained. Lacking effective marketing programs, smaller financial institutions lose the benefit of creating stickier, more loyal cardholders through card programs, as well as the revenue associated with card usage. How can these institutions successfully compete?

Timing and targeting count

Timing is not quite everything. A successful market campaign is well-timed but also precisely targeted to motivate specific groups of consumers to take action, such as activate their cards. Credit union clients have identified two common challenges in marketing their card programs:

• Lack of personnel to create marketing campaigns to promote activation and usage among no- and low-usage members.
• Lack of expertise in optimizing data from core processing systems to improve targeting and appropriately time campaigns to significantly boost response rates.

Automated marketing engines drive effective card programs

Automated marketing engines for financial institutions such as PaymentsEdge can conquer the marketing challenges and enable financial institutions to earn previously untapped revenue. These full-service marketing engines develop cost-efficient and effective campaigns to generate brand awareness and promote card activation and usage. Examples with proven success include:

• Balance transfer campaigns. Our experience shows the average response rate to these campaigns of 2.8 percent yields an average transfer of $2,402 and a 6.25 percent increase in average balances.
• Debit activation and usage promotions have resulted in double-digit growth (averaging 10.5 percent) in year-over-year transactions.
• Credit card activation campaigns have produced 4 percent growth in active accounts.

Such programs also build cardholder loyalty as measured by lift and retention over time and can extend the brand’s reach to new cardholders.

What you should look for

Questions to ask in evaluating automated marketing programs that increase activation and usage among cardholders include:

• Does this program provide an end-to-end solution that includes design, execution and fulfillment of campaigns?
• Is it easy to manage campaigns and customize collateral? What tools are provided to the financial institution to monitor campaigns?
• How has the program performed for financial institutions with similar characteristics? Are there credible testimonials?
• Can the supplier demonstrate proven results – specifically, what are the metrics on:
• Activation and usage by key segments – e.g., dormant cardholders, cardholders who have activated their cards but haven’t used them, cardholders who use their cards infrequently
• Retention of cardholders, post campaign
• Sustainable lift over time
• Return on investment in campaigns
• Comparisons with industry averages