Lifestyle credit cards to lead the way forward?
The president and CEO of loyalty software provider, Catuity, predicts that as smart cards are used more in the US, lifestyle cards will become more prevalent.
According to Michael Howe, Catuity's president and CEO, lifestyle credit and debit cards could become the credit cards of the future. He sees them as a way for card issuers to establish closer and more valuable relationships between themselves, merchants and cardholders.
Pre-loaded loyalty programmes Howe says that credit cards are currently marketed on a mass basis, using mainly interest rates as a point of differentiation. "This has become an increasingly costly and ineffective way to capture a small number of potential customers in today's economic environment. We believe that with the advent of software systems such as Catuity's, card issuers can provide targeted cards with loyalty and incentive programmes pre-loaded on the cards geared specifically for a high value customer. For example, a lifestyle card can be issued to a first-time homebuyer by the bank with whom that buyer has his or her mortgage. The card issuer, upon targeting the new homeowner market, can then go to merchants who wish to also serve this attractive segment of the market because of the life stage they are entering as well as the buying power they represent, and work with those merchants to provide certain incentives and/or rewards for the user of that card."
More prevalent Howe predicts that as the use of smart cards increases in the US, this type of marketing will become more prevalent. He says: "Consumers will like it because instead of carrying five to ten loyalty cards for different merchants in their wallets, these same programmes can be stored on one card for ease of use. These integrated programmes, using software such as Catuity's, can improve customer retention rates, increase average spend, increase frequency of visit and secure new customers via referral."
Howe was speaking to participants at the Gridley & Company CRM/Needham Company Growth Conference, held at the Palace Hotel in New York this month. Click on the link to hear his actual presentation.