Bank rewards programs are a great way to give customers perks that build brand appreciation and loyalty. From discounts to cash back on everyday purchases, a great rewards program gives customers a reason to keep your bank’s card at the top of their wallet.
Or at least, that’s the goal.
In theory, a rewards program should boost customer engagement, card spend, and profitability. In practice, however, this is often not the case. According to a recent study, most banks report low overall satisfaction with their rewards program.A bank rewards program should boost customer engagement, card spend, and profitability. Does yours? Click To Tweet
Why is there such a huge gap between rewards program goals and results?
We’ve identified three major problems with today’s bank rewards programs:
1. Rewards offers aren’t relevant to each customer
Generalized discounts and cash back rewards are common in bank loyalty programs. Deals are determined by banks and their partner merchants and offered to every customer, regardless of their individual buying preferences.
Many banks offer one-size-fits-all rewards that some customers will simply never redeem. For example, say Jane receives an offer for 10% off every coffee purchase she makes this week. But there’s just one problem: Jane doesn’t drink coffee. Jane doesn’t want this product, so she can’t take advantage of the reward offer. This leads to frustration for her and a missed opportunity for the bank to process one of her purchases.
Offers that aren’t tailored to each customer’s unique desires and needs fail to build engagement and loyalty because they don’t provide meaningful value.
2. Customers don’t know what offers are available
Relevant rewards are great, but they don’t amount to much if the customer doesn’t know they’re available. For a rewards program to be successful, customers need to be informed of their rewards offers and empowered to act on them.
Many banks list rewards offerings on their website or app, and customers have to actively seek them out to know they’re available. Without notifying customers through their preferred channel and device, it’s too difficult for customers to take advantage of their available offers, resulting in low member engagement and retention.
3. Rewards offers are poorly timed
Many loyalty programs offer rewards that don’t take the customer’s buying schedule into consideration.
For example, say Jane goes grocery shopping on Sunday. Three days after buying groceries, she receives an offer for 5% cash back at her local supermarket. She would have loved to take advantage of this offer, but it wasn’t available when she was ready to make her purchase.
When reward offers arrive too early or too late, customers can’t take advantage of them, resulting in low engagement rates.
Technology has come a long way since the first rewards program was introduced. These days, technology enables banks to tailor rewards offers to each customer’s buying preferences, location, and lifestyle to provide a truly rewarding experience.
Here are two ways to build a rewards program your customers love:
1. Offer rewards your customers really want
Gone are the days of “one-size-fits-all” rewards offers that ignore individual customer preferences. Today’s customers expect personalized products and services that give them real value for their money.
How do you know you’re offering rewards your customers actually want to buy?
Use predictive analytics. Intelligent machine learning algorithms can analyze each customer’s purchase history and predict what and when they’re most likely to buy next. This enables you to target personalized rewards to each customer.
When your rewards offers match your customers’ preferences and buying habits, they’re more likely to take advantage of available offers.
2. Notify customers of available offers to encourage engagement
It may seem obvious, but customers can’t act on offers they don’t know about.
The solution? Better communication.
Don’t assume customers are aware of their rewards offers. Send timely, contextual messages about available rewards to the customer’s preferred device and channel. Does your customer use text banking more often that they log into your app? Send them text notifications letting them know how to take advantage of their latest personalized offer.
When you integrate your loyalty program into your customer’s daily routine, it’s easier for them to stay engaged.Build a rewards program customers love: 1) Personalize rewards, 2) Send real-time notifications. Click To Tweet
The arrival of retail giants like Amazon has forever changed customer expectations for the products and services they buy. These days, people are accustomed to high levels of personalization and frequent reminders to take advantage of the special offers they care about.
For banks to get the most out of their rewards programs, it’s crucial that they start playing Amazon’s game. By targeting personalized, contextual, and timely offers to each customer, banks can increase rewards program engagement and profitability.