The 21st Annual Card Forum and Expo has recently been held in Florida and, while the banking and card markets in the US might be reeling, the quality of presentations and attendees was superb.
Bill Hanifin, Managing Director of Hanifin Loyalty, reports that according to Bruce Kerr of Loyalty One USA and Laurence Booth of Amex Bank of Canada, the loyalty market in Canada is "holistically engaged", with some nine in ten Canadian households actively engaged in a loyalty programme (the US figure is one in three). In order to break through the clutter, Amex has worked with Air Miles Canada to revamp and relaunch its Platinum Credit Card in 2008, breaking through the traditional co-brand model, with gratifying results.
According to Jim McCarthy, Head of North American Financial Institution Sales, Visa, payment cards are making inroads into cash and cheque payments which, in the US, have seen their share of annual Personal Consumption Expenditure fall from 61% to 47% over a few years. Consumers increasingly shop on value, are in control of their commercial relationships, and are tending toward more judicious use of credit cards.
According to McCarthy, the debit card will be the key product going forward for most issuers. He reaffirmed that rewards and loyalty programmes are here to stay and that providing value and control while encouraging responsible choices will contribute to overall card loyalty.
McCarthy quoted a Wells Fargo study among university students which revealed that, as the result of a financial literacy campaign, late fees in the test group dropped 42%, overdraft charges were down 40%, and past due accounts declined 55%, while card volume spend increased by 22%. The results clearly indicate that banks offering solid financial guidance can separate themselves from the competition.
A panel of 'Retail Loyalty Leaders' including Best Buy, Macy's and Saks Fifth Avenue, moderated by Colloquy's Rick Ferguson, focused on the importance of loyal customers in a downturn, Aubyn Thomas of Macy's said that loyal customers continued to shop during the downturn and fellow panellists agreed that it was their most loyal clients who saved the day when the economy worsened.
As a result, none of the retailers were willing to reduce investment in their frequent shopping programmes. Instead, they recommended that better use of transactional and customer data would drive efficiency in communications and reduce programme operating costs. Saks has encouraged associates to work harder at building relationships with clients and to use the CRM tools already deployed.
At the best of times, there are challenges in predicting customer behaviour in any market, but the stakes are raised to do so accurately in a down market. According to Lightspeed Research's Joel Stanton, to successfully understand and predict customer behaviour, a robust, holistic view of the customer is required and that simply focusing on one relationship or one product is not enough.