10th November, 2020
“Keep talking, keep innovating” – this is what Kate Morgan, Head of International Partnerships, Auriemma Group recommended to those who are managing co-brand and loyalty initiatives, stressing on the significance of maintaining the existing credit card customer base in today’s environment.
“Good news from our research – existing customers are still spending across verticals,” said Kate during Ai’s Co-brand & Travel Reward Cards Virtual Conference 2020.
Ref. to UK Finance’s recent figures, Kate shared that debit card spending in the UK reached a record high of £59.1 billion in July. Credit card spending has recovered slightly but continues to be impacted by ongoing economic uncertainty.
As for why consumers haven’t been using credit cards over the past month or so, Auriemma Group’s consumer research indicated that 69% prefer using debit cards and 46% mentioned that credit card is for “emergencies”.
“Very little behavior seems to be driven by the financial aspects of the credit card (for instance, interest rates, credit limit etc.),” said Kate. Outstanding balances on credit card accounts have contracted by 13% over 12 months to July, as a result of repayments outstripping new borrowing in the year.
Even as managing of co-brand and loyalty initiatives has become challenging, the focus must be on maintaining the existing customer base.
Also, referring to Auriemma’s recent research on cobrand spending patterns in the U. S., she said 54% of consumers used co-branded credit card for purchases outside the associated brand.
“Loyalty is a long-term play,” said Kate. She emphasized that airline and hotel redemptions are typically large-ticket items, which take time to accrue. Companies must evaluate:
Kate referred to certain offers/ initiatives resulting in more frequent use of cards. The list included discount delivery on food orders, increased cashback rewards in certain category, extended sign-up bonuses etc. are examples of the same.
Kate also referred to few noticeable developments. American Express has chosen to extend the period by additional three months (doubled it) to allow one to make eligible purchases to earn welcome bonus for certain cards issued earlier this year. In India, Amazon Pay and ICICI Bank have just shared that their credit card has become the fastest in the country to cross the milestone of one million, in less than 20 months of its launch. Highlights include issuance of reward points directly into Amazon Pay balance and contactless feature embedded in all cards.
By Ritesh Gupta