5 ways to drive credit card usage — that actually work

The average American cardholder has 3.7 credit cards. With cardholders constantly chasing the latest and greatest rewards program, enticing a new customer to apply for a credit card is only half the battle — issuers also have to make sure their card is the one customers reach for at checkout. 

Competition for share of wallet is only intensifying in the digital age. It’s not enough to offer great benefits and a low introductory APR — cardholders demand seamless online and mobile experiences. Luckily, there are a few ways banks can step up to meet and exceed customer expectations.

  1. Streamline and personalize onboarding.

Spending too much time and energy on administrative tasks continues to be a major pain point for cardholders, according to a 2017 Visa report. To earn and keep trust from square one, banks can make application and onboarding as quick and easy as possible. For example, if a bank already has a relationship with the cardholder, it can pre-fill parts of the application to avoid asking cardholders the same questions twice. 

Banks can also work to ensure cardholders understand how to make the most of their new cards. Automated emails spread out over the first few months of the relationship can explain any reward redemption processes and nudge the cardholder to enable additional functions such as automatic payments. To make sure cardholders get the message, banks may also want to reach out through other channels such as mobile app notifications or direct mail. Getting cardholders to use their card frequently in the early months helps ensure they will continue to do so in the future.

Personalizing all of these messages increases the likelihood that cardholders will pay attention to them. Emails and other messages can be tailored based on demographics, information collected at account opening, or behavioral data collected online. Contextual data from their devices and other sources creates even deeper personalization. A cardholder who purchased flights and hotel rooms on their card might be more receptive to a message focused on travel rewards or discounts.

  1. Guide cardholders to take advantage of card benefits.

It’s in banks’ best interest to make using benefits easy. The Visa report shows that when cardholders use their credit card benefits, not only does their satisfaction increase 21%, but their spending also jumps by 40%. Unfortunately, cardholders often don’t understand how benefits work or how to redeem them.

Educating cardholders during onboarding is only the first step. Banks should also regularly remind cardholders to use their benefits and instruct them on how to do so. Hyper-personalized communications can help. For example, after a cardholder makes a qualifying purchase, the card issuer can send a text prompting them to redeem their rewards. 

Messages can also reinforce when cardholders receive a card benefit — for example, they may see a notification that a purchase yielded extra cash back or rewards points. The key is to make benefits feel like a seamless part of the cardholder experience rather than a cumbersome add-on or afterthought.

  1. Invest in frictionless online customer support.

Great customer support requires more than a well-run call center. Sixty-nine percent of millennials feel good about a company when they can solve problems on their own, without reaching out to customer service. 

Banks can help cardholders self-serve by making it as easy as possible to manage their accounts through a mobile app or browser. Cardholders should be able to perform a variety of simple tasks online, like temporarily freezing their card or notifying the issuer of upcoming travel. Providing documentation via an online FAQ or help portal also enables cardholders to troubleshoot issues on their own. 

Even when cardholders reach out for help, many can find what they need with the help of a chatbot. According to the Visa report, digital bank and insurer USAA sees 800,000 of its members engage with its mobile app virtual assistant each month, and 70% of members never escalate to a human representative. 

The key for banks is to meet customers where they’re at, whether that’s inside a mobile app or on social media platforms — where bots or human customer service representatives can also be ready to answer calls for help.

  1. Harness the power of surprise and delight.

In a crowded field, simply having a streamlined customer experience may not be enough for an issuer to stand out. Banks must go above and beyond to show they care. By distributing unexpected gifts and perks, they can surprise and delight cardholders, and win their long-term loyalty. 

TD Bank’s #TDThanksYou campaign is a great example of a bank exceeding expectations for customers. To thank customers for their patronage, TD installed “automated thanking machines” at four Canadian branches that dispensed gifts instead of cash. Each present was tailored to the particular customer — for example, a mother got two piggy banks for her kids. On the same day, TD also distributed a green envelope with a $20 bill to every customer who came into one of its 1,100 branches and deposited $20 into the bank accounts of thousands of other customers who used its phone or online services. 

Surprises don’t have to be as complex, but when possible they should be as personalized as possible. For example, a loyal customer who’s a fan of particular sports team might appreciate an upgrade to VIP seating the next time they buy tickets. Banks can also leverage contextual intelligence to send customers personalized offers at the perfect time. A customer who eats breakfast at the same coffee shop each morning could get a message from their bank that “Your eggs and toast are on us today,” for example. Just as with a personal gift, it’s the thought that counts — and keeps customers coming back to spend more.

  1. Reward customers.

While traditional points, cash back and catalog redemptions continue to work as incentives for card use, technology now gives card issuers the opportunity to think outside of the box. Hyper-personalization is an important tool here, too. For example, an issuer could offer a cardholder double points on purchases at their favorite clothing store when they happen to be driving nearby. Or, if a cardholder frequents a travel rewards page, the issuer could host a “flash sale” where points count double when used for travel. Additional context-specific incentives like this keep an issuer’s card top of mind for customers and may increase cardholders’ usage over time.

Digital-savvy cardholders are highly valuable to issuers but also fickle; 71% of the most digitally engaged consumers surveyed by Visa are likely to switch their main credit card in the next 12 months. Adding to the challenge, banks must compete for their business not only with other issuers but with new credit products like point-of-sale lending. However, these challenges are also opportunities. By carefully optimizing digital experiences and aiming not just to meet, but to exceed cardholder expectations, card issuers can win a strong place in this competitive market.

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