Amidst the challenges facing U.S. financial institutions (FIs) following the collapse of two major banks, FIs have been compelled to demonstrate their reliability to retain customers. But trust alone isn’t enough. To stand apart from the competition, banks must persistently seek methods to stay pertinent in the lives of their customers.
Irrespective of income level, a prevalent theme among consumers is the desire to maximize the value of their money, especially in today’s uncertain economic environment. Customer engagement and rewards programs are proven business investments, which can help banks thrive, even as consumers pull back on their spending.
Compelling evidence showcases the benefits of customer loyalty. Studies reveal that loyal customers are 50% more inclined to explore new products and tend to spend an average of 31% more compared to new customers. FIs, too, can stay top of mind and build brand loyalty with the right customer engagement tactics.
Consider these three reasons why today’s FIs should prioritize a customer engagement program to remain relevant.
Differentiate yourself from the competition
In an environment where disposable incomes are increasingly constrained, the competition for a limited share of consumer spending becomes more intense. As people tend to use their cards less frequently, FIs face the challenge of encouraging ongoing engagement with their customers. Even though individuals may be reducing their purchases, it is crucial for banks to ensure that their cards remain at the front of customers’ wallets and are utilized for transactions when they do decide to make a purchase. How can banks achieve this goal of sustained customer engagement?
Customer engagement programs go beyond merely acquiring new customers. These programs can continuously encourage customers to choose their spending card by providing rewards, cashback and other enticing offers with each purchase. When these programs feature rewards from a wide network of retailers and travel companies, banks can offer customers deals from their favorite brands. This not only influences customers to select one card over another, but also leaves them grateful for the exceptional service they receive from their bank.
Moreover, during tight financial times, these programs allow customers the opportunity to earn rewards or receive cashback, thereby accessing savings on things they may have been purchasing anyway. And offering cashback pays off with cardholders saying they prefer to use their go-to bank card because of its cashback features.
Build buying power with timely offers
Amidst strained economic conditions, presenting customers with timely offers can significantly influence their purchasing decisions. This becomes particularly crucial when customers are undecided or rethinking a purchase due to perceived high costs. In fact, a significant majority (85%) of consumers indicate that they tend to spend more with a brand if it allows them to maximize the benefits of their loyalty program. This inclination is likely to be even stronger when customers need to make prudent choices in the months ahead.
By participating in engagement programs, customers can accumulate loyalty points, miles and cashback whenever they make purchases with partner merchants. A strategically timed message containing personalized offers or rewards, particularly those tailored to the brands and services that align with consumers’ interests, can influence their purchasing decisions. This becomes especially crucial when customers are feeling the financial strain. In such cases, including a bonus reward can be the determining factor that motivates them to proceed with the purchase.
Become a relevant brand in consumers’ everyday lives
One of the notable advantages of a customer engagement program is its ability to maintain customer engagement with your FI. In addition to providing offers, these programs serve as a means for banks to stay connected with customers, even during periods when they are not actively making purchases. These interactions foster a positive relationship and ensure that your card remains at the forefront of customers’ minds when they do decide to start spending again.
As banks compete for a smaller portion of consumers’ wallets, it is crucial to have differentiating factors that set one FI apart from another. A customer engagement program can demonstrate your understanding and willingness to assist your customers, which has been proven to cultivate stronger customer loyalty and repeat business. By demonstrating a genuine desire to help customers maximize their financial resources, banks can establish themselves as trusted partners in their customers’ financial journeys.
An effective customer engagement program encompasses multiple components, including payments, card-linked offers, affiliate marketing and expertise in earning and redemption. A robust engagement program can serve as a powerful motivator to drive customer spending, even in times of uncertainty. For instance, travel loyalty programs successfully were adapted during the pandemic with relevant offers tied to customers’ cards, even when travel was not possible. This same model can be applied by FIs to ensure they remain relevant to customers.
By providing compelling and tailored offers, banks can maintain customer engagement and encourage continued spending, fostering a strong and enduring relationship that extends beyond everyday money management.