1. LOYALTY PROGRAMS INCREASE REVENUE: A successful loyalty program will increase revenues through an estimated 10% in improved product penetration and 30% increase in usage (1). While simultaneously decreasing costs through customer satisfaction, efficient processes and effective targeted marketing. Loyalty programs motivate consumers to widen the scope of their relationship with their bank instead of considering banking competitors. Especially when close to achieving greater rewards, consumers spend more than they would have without a loyalty program.
  2. LOYALTY PROGRAMS RETAIN EXISTING CUSTOMERS: It costs 10 times less to retain current customers than to acquire new ones. In addition to providing customers with an incentive to increase spending, loyalty programs provide banks with information to better cater to customers’ varying needs effectively and efficiently. Redeeming valuable rewards creates enthusiasm that helps retain customers by an expected 22%. The loyalty program at U.S Bank helped in exceeding its retention rate goal by more than 50% and its email penetration rate by 46%.
  3. LOYALTY PROGRAMS ATTRACT NEW CUSTOMERS: 63% of consumers are influenced by rewards offered when choosing a new bank and credit card (4). All else equal, potential customers will opt for the bank with a more attractive loyalty program. The revolutionary Bank Audi cobranded MEA Cedar Miles card attracted customers and shifted behavior resulting in a drastic increase in credit card spend. The quality of new customers can be improved by clever use of data obtained from the loyalty program.
  4. LOYALTY PROGRAMS BUILD VALUABLE CUSTOMER INSIGHTS: 76% of customers view loyalty programs as part of their relationship with their bank (5). Loyalty programs can facilitate customer interaction and rewarding based on their value to the bank. Rewards inspire customers to continue purchasing and build worthy customer relationships. Using a variety of channels to communicate with customers such as mobile, online, point of purchase and more, loyalty programs will remain at the customer’s fingertips and significantly increase customer engagement. Important customer information can be extracted from several data sources such as spending behavior, online traffic, social media channels, mobile device data, and personal lifestyle information.
  5. LOYALTY PROGRAMS REDUCE COSTS AND PROVIDE VITAL MARKET RESEARCH: 44% of consumers state that their customer experience has improved as a result of increased use of their personal data by their banks (6). Loyalty programs decrease costs by improving targeting of BTL marketing and increasing conversion rates. Successful targeting of potential clients is possible by making use of existing profitable and loyal customers’ data. Data collected allows banks to determine which customers to focus market resources on, improve the efficiency and effectiveness of marketing efforts, and reduce marketing costs overall.