Next-Generation Rewards: Changing the Customer Engagement Paradigm Stuart Cook

Loyalty evolution in financial services Amex Membership miles Amex points for gift cards 1990 2005 1985 1995 Diners club rewards Citibank Rewards 24 months redeemable Redemption options and customer experience have shown little innovation over the last 30 years.

Increasing Competition 25% of CFIs have vanished since 2008 In 1995, megabanks with more than $100 billion in assets controlled 17% of all banking assets. By 2005, their share reached 41%. 2015 it was 59%. The six largest issuers represent 2/3 of the credit card market spending over $22 billion on rewards programs. Attracting consumers with a big incentive, and then keeping them with strong ongoing value propositions across their product portfolio.

Consumer Trends Indicate a strong preference for local banking and rewards. Financial institutions and their reward programs aren’t differentiating themselves. There is real opportunity for CFIs to utilize highly effective rewards and incentives to truly differentiate the service, reinforce customer relationships, and foster genuine loyalty. 65% are willing to increase their wallet share with a financial institution that rewards account holders 78% of consumers believe it’s important to bank locally 88% say rewards for basic banking activities is a top priority in choosing where to bank 1 in 3 millennials are open to switching from their megabank

best customer experience anywhere? What’s my best customer experience anywhere?

CFI’s advantage is that you know your consumers and market in ways that national players never can. Your consumers crave a real banking relationship, a trusted partner, and a genuine community connection.  Keys to Success: Build your strategy on being relational, not transactional. Utilize platform and technology solutions that create compelling engagement and drive stronger relationships with each interaction. Don’t write in slide but say that these can be infinitely combined​ CFIs are uniquely positioned to beat National Banks at their own game and exploit their weakness.

You must create value for your customers, yourself and your community Customer Engagement Smart technology keeps customers engaged. Offer instant access via “in-the-moment” engagement. Interact with your customers in their channel of choice - mobile, web, and soon, messaging. Provide valuable customer incentives to drive profitable behavior.

You must create value for your customers, yourself and your community Revenue Enhancement Drive profitable cardholder behavior and activate dormant accounts. Increase card usage and spending averages by awarding points for each transaction. Use points as currency to differentiate banking products and capitalize on cross-sell opportunities. Discover potential target audiences via program analytics for incentive-based campaigns that enhance interest income.

You must create value for your customers, yourself and your community Community Impact Incentivize and reward shopping locally by providing double points at local businesses and awarding increased point values for local business redemptions. Provide a differentiator to allow your CFI to stand apart from local and national competition. Build relationships with local businesses and create opportunities for small business account services. Cultivate your brand by including local charities as a redemption option.

The point of departure for addressing this new customer service expectation is technology

Commoditized, Traditional Services Can be dated and ridged Lack integrated marking support Fail to deliver on ROI promises Not designed for millennials High training and support costs Fail to engage consumers Commoditized, Traditional Services

The new generation of technology services Context and Relevance Immediacy Instant Access to benefits of being a consumer Increased revenue and profitability The new generation of technology services

Let’s look at how these apply specifically to CFIs.

Contextual and relevant

Immediacy – you’re right where they are

to the benefits of being a customer Instant access to the benefits of being a customer

Increased revenue and profitability

How do you begin? Work from your customer back as a guide to innovation

Let’s Reframe The question isn’t “How can I create a loyal customers?” It’s “Am I loyal to my customers?”

It’s not just about your bottom line, it’s about helping your customers make their money go further.

One size fits all loyalty is long gone – relevant rewards

Leveraging data analysis for customized experiences

Real-Time Engagement with in-the-moment messaging

Real-Time Rewards Revenue Rewards Return on investment The power to redeem rewards instantly in-store, without the hassle of vouchers, print-outs or QR codes. Buzz Points creates a seamless redemption experience for consumers and merchants alike with Real-Time Rewards.  ​ Revenue Rewards Return on investment Boost interchange revenue by incentivizing consumers to make your card top of wallet. Give consumers the rewards they crave—cash back when they make qualifying purchases at merchants. Forrester TEI study illustrated an ROI of 139% over three years, with payback in under 6 months.

Case Study Transaction Campaign Case Study: Using Gamification to Incentivize Profitable Behavior Goal: Drive increased transactions and change habitual behavior. Strategy: Use gamification to create a fun challenge for cardholders to increase card usage in a specific time period. Result:  Both “winners” of the points, and those that didn’t “win” increased usage during the allotted time period. Transaction lift sustained, even after 3 months. Incentive-driven campaign results in changed behavior and moves Buzz Points enrolled cards to top of wallet.

Technology innovations for loyalty programs include Frictionless reward redemption, with cash back to consumers Real-Time Rewards at the moment of truth In-the-moment service across channels: message, mobile, social Technology innovations for loyalty programs include

Innovative loyalty programs for CFIs also Incentivize desired behavior Differentiate from mega-banks Gamify experiences Have an impact on every aspect of the Customer Lifecycle Prevent commoditization

Any Questions?