What makes customers switch payment methods?
In a purchasing environment where consumer loyalty continues to be elusive, there is a way in which financial services marketers can capture those consumers who may be willing to make a switch in their primary payment method, according to the 'Consumer Dynamics' study from Acxiom.
The study, entitled 'Cashing in on Changing Payment Preferences', provides a number of recommendations about how to attract and retain customers through personalised marketing. Based on nearly 3,000 consumers' main payment choices - whether credit cards, debit cards, paper cheques or cash - the report revealed the main factors that drive consumers' willingness to switch payment methods, and how demographics, life stage and other personal circumstances affect those decisions.
Key findings Looking specifically at those consumers who are willing to switch payment methods:
- 25% of respondents, who represent a potential of US$700 billion in annual transactions, said they would consider switching payment method if benefits such as "help control spending" or "ease of record keeping" are highlighted in the marketing messaging they receive;
- The age of the target audience is also important, as most potential switchers are in the 18-44 age group;
- Travel purchasers represent one of the biggest opportunities, with 26% of switchers whose primary payment method is a debit card saying they use a credit card for travel, and 19% use a credit card when making a big-ticket electronics purchase.
Understanding specific influences, such as rewards or lower fees, allows marketers to create a more relevant and personalised offer tailored to the potential switcher and ideally suited to be made through addressable digital channels. It is therefore crucial to identify and aim for potential switchers at the moments when they might be inclined to use something other than their primary payment method.
"The choice of how to pay for a purchase is personal, and is based on a combination of rational and sometimes irrational decision-making. But most financial product marketing fails to connect to individual needs and interests," concluded John Albrecht, managing director for Acxiom's Banking and Payment Services Group.