Credit Card Marketing – Getting the basics right

There’s rarely a Bank without a  Credit Cards portfolio. But how does one use Marketing to sell cards, drive usage and make money? That is the question…

In the world of Credit Card Marketing, Banks target 2 sets of individuals:

  1. Those who have your Credit CardExisting Base
  2. Those who don’t have your Credit CardNew to Bank (NTB) Base

Both of these groups are extremely important to Credit Card marketers and require very diverse marketing strategies.

Different Credit Card Segments and Marketing Strategies

Existing Customer Base

This group can be further divided in to 2 sections:

Revolvers – Those who never pay the full amount due on their Credit Card. They either pay the minimum amount due or a bit more and revolve their credit. This benefits the Bank because it allows the Bank to charge interest on delayed payments.

Transactors – Those who pay the full amount at the end of each billing cycle. They are less beneficial to the Bank when compared to Revolvers.

Marketing to a Revolver

Marketing to Revolvers is most important. This is where a Bank stands to make maximum revenue on its credit card portfolio. Interest on the outstanding amount, late payment fees all add up to revenue for the Bank.  A good marketing plan for revolvers includes:

  1. Interest Holiday Communication – Create Direct Mailers or Emailers communicating that the revolver can avoid paying interest for a 3 – month period on outstanding and new purchases during a period. Consumer behavior indicates that the revolver is likely to purchase even more on credit thinking that the next 3 months will be interest-free.
  2. Consumer offers – Consumer Offers (Discounts, Buy One Get One Free – BOGO) entice Revolvers to go ahead and sped more on their cards, thus increasing their credit.
  3. Reward Points – Promoting extra reward pints on certain tie-ups, or double reward at certain times during the day or even on particular days all help in bringing about greater card spends.
  4. Zero – Interest Balance Transfer – helps shift his balances on to a single card. The Bank gains because all credit will now be on their card which means higher interest charges.

Marketing to a Transactor

Converting a transactor to a revolver or making money off him is in the Bank’s best interest but tough to do since it involves a behavioral shift. The following marketing plans can help:

  1. EMI option on the card – Educating transactors that paying on EMI will leave them with more cash to do more during the month is a possibility. They must be educated that interest on EMI is less than the monthly credit card interest rate. EMI interest will act as another source of income to the Bank.
  2. Concentrating marketing efforts on upselling paid cards with annual and joining fees to transactors. In this case, the benefits of a paid credit card must be communicated intensely.
  3. Marketing of Card Protection Plans to transactors – another income line for the Bank.
  4. Consumer Offers – Consumer Offers (Discounts, Buy One Get One Free – BOGO) entice Transactors to go ahead and spend more on their cards. It might lead them to spend more than their means.
  5. Reward Points – Promoting extra reward pints on certain tie-ups, or double reward at certain times during the day or even on particular days all help in bringing about greater card spends.

 Marketing to those who do not have your credit card

Credit Card Marketing must be focused. The target audience must be specific; the offering should cater to the target audience’s needs. Enough and more Credit Card varieties have been created with specific tie-ups. Credit Cards could be attached to a:

  1. Departmental store
  2. Charity
  3. Airline
  4. Multiplex Chain
  5. Restaurant
  6. Club or provide Lounge Access
  7. Gas Station

Marketers need to market the unique selling proposition of a Credit Card to all customer touch-points (the outlet, on email, through SMS, mall promotions, ATL, statements, online, social media etc.).

Can Credit Card Marketing Communication be different?

 

Some educative communication messages which could be marketed to help influence buyer behavior towards getting a card are:

  1. Spreading awareness regarding the benefit of having a 45 to 50 days payment window before your amount is due, thus giving the user time to get his funds in place or utilize them elsewhere.
  2. Informing non-users on how a Credit Card can save you during an emergency when you are short on cash.
  3. Educating on how using a Credit Card helps you track your spends effectively and helps you segment your overall spends.
  4. Creating communication on how convenient it is to carry a card in your wallet as compared to a bundle of cash.
  5. Educating on the technology and safety of using Credit Cards

When marketed wisely, Credit Cards can be a very profitable portfolio to a Bank.

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