If the blog-o-sphere is any indicator, big banks may be thinking about downsizing the quality and scope of their rewards programs in response to a flagging economy and restrictions on interchange income in the wake of the Durbin Amendment. We’re not so sure. Considering how invested consumers are in loyalty programs, now is hardly the time to cut back. In fact, if you aren’t already offering a robust rewards program, this is a great time to consider doing so. “Quite simply, rewards programs have become a staple in virtually every business that deals with consumers,” says Steven VanFleet, President and CEO of RewardsNOW, a Dover, N.H., provider of loyalty programs for financial institutions. “Financial services is one of the last bastions where loyalty programs are not being used routinely. But to get and keep customer loyalty, you need all the ammunition you can get.” Why consider a rewards program when your card revenue is at risk?
- Loyalty programs encourage usage. Weak participation isn’t going to strengthen your card program – or drive up revenue. The reason rewards programs are so pervasive is that they work.
- Collecting points equals engagement. And the impact goes beyond cards. You can use rewards points to incentivize referrals, new accounts and switching to paperless statements. “Pick five or six behaviors that you want to drive,” says VanFleet. “Rewards help you get there, and the results are trackable.”
- Reward benefits fit the membership model.
- A well-designed program can also promote your brand. Rewards aren’t limited to free travel or retail items. Consider adding a charity option: Your members can donate to Children’s Miracle Network or any cause that’s near and dear to your community.