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Credit Data, Consumer Finance Marketing

Summer Spending Shows Lifestyle Credit Card Rewards Are On the Rise

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It's finally summer, which to most people, signifies it's time to treat themselves: with seasonal shopping sprees, adventurous activities, and of course, vacation. Three in four people plan to put travel expenses and their vacations on a credit card - which means this is the right time to hit the market with branded offers, promote travel rewards, and usage campaigns. Here's what offers are working and what audiences are responding.

 Cash Rewards vs. Travel Rewards

 65% of Americans use a rewards credit card, and of those 60% offer only cash rewards; 8% offer only travel rewards; and 17% offer both cash back and travel points. However, co-branded retail cards and entertainment rewards are rising in popularity, with a third of millennials carrying a co-branded travel card. Traditional usage campaigns that involve bonus points and miles, are continuing to thrive - however, tangible incentive offers are also increasing in popularity, with offers like two free nights at branded hotels, or buy one get one free airline tickets with a travel card.  

 

There's also a rise in more flexible travel and lifestyle rewards - garnering the most attention from millennials. Rewards that include sign-up bonuses, premium travel rewards and bonus rewards for dining out, and VIP experiences are drawing the loyalty of the younger, harder to reach, market. 

 

Summer Trends

Travel is the first major summer expense that comes to mind when you think of gearing up financial planning for the warmer season, but don't forget the other experiences that have people reaching for their credit cards. 

 

Travel Rewards

While two thirds of Americans plan to use a credit card to purchase their summer travel,an estimated 80% of US airline loyalty programs are considered inactive, according to the travel publication Skift. In order to increase engagement with airline rewards cards, it's important to leverage big data and create deeper personalization. Offers that are working include those that target consumer's use of benefits and personalized suggestions and strategic reminders to encourage consumers to get more out of their loyalty program. Get your card to the top of your members' wallets by reminding how easy it is to earn and redeem their rewards. 

 

Meanwhile, hotel loyalty programs are seeing the best results when they allow members to redeem rewards for dining, product purchase, and special events. By increasing the flexibility of rewards, hotel loyalty programs stay relevant and boost customer loyalty. J.D. Power's Hotel Loyalty study found that frequent travelers want more than just hotel stays - satisfaction increases by up to 138 points when rewards include special events, car rentals, and dining. By boosting program loyalty with high satisfaction rates, companies will also see a boost in brand loyalty - with 47% hotel stays in the past year being booked with a brand affiliated with the member's loyalty program. 

 

Dining Rewards

Over half of Americans dine out at least once a week- with 45% using a credit card for their restaurant purchases. This tends to increase in the summer, as people travel, seek new experiences, and dine out more regularly. Consumer spending on food services has been steadily increasing. This is another area where credit cards can capture the loyalty of the millennial generation, with the younger generation dining out more frequently than any other age group. 

 

There's been an emphasis on earning rewards with points garnered from dining and groceries, and there's been success with cash back rewards on all dining and groceries. 

 

Reaching the Right Audience at the Right Time

Travel cards tend to increase brand loyalty - increasing share of wallet by two to three times more for airline cards and up to seven times more for hotel cards. With an as yet unsaturated market, now is the time to market to younger, affluent prospects, as well as focusing on meaningful segmentation and impact of timing. Early June, July and August are great times to emphasize your lifestyle rewards, while August remains the time to reach out to prospective parents with back to school rewards messages, as they plan to gear up for another semester. 

 

Understand and appeal to your audience segments

Audience segmentation is an important part of marketing, whether direct or digital. By understanding who your audience is, what they care about, and what increases response, you can ensure that your offers and messaging is targeted, accurate and effective. 

 

1. Segment by usage

For example, cardholders with infrequent usage and low ticket spending may respond better to campaigns that emphasize bill pay campaigns or spend-and-get offers. However, for frequent spenders, encouraging digital wallet usage and increasing credit lines may increase their spending and brand loyalty. 

 

2. Segment by life stages

It also helps to understand your audience and prospects' life stage profile. If you're marketing for the summer, segment by age, and provide co-branded offers with larger bonuses and emphasize tangible rewards for the younger generation. Millennials also expect payment capabilities to be integrated with digital and rank these features higher than other groups - so be sure to highlight digital ease of control.If there's a child present in the household, you may want to switch up your summer marketing to emphasize the impact of family experiences and offer extra practical rewards, such as the ease and convenience of bill pay or back to school campaigns in August. 

 

Increase Card Loyalty 

Cardholders respond best to rewards that are highly personalized, emphasize experience rewards, or are perceived as luxury or exclusive, especially for higher spend card users.Many cards have increased the focus on member perks - such as offering free doughnuts to cardholders, or early access to concerts. 

 

Another strategy to increase loyalty is to diversify your communications to your card holders by promoting varied card benefits or offers such as balance transfers, credit line increases, small ticket messaging, holiday and seasonal offers and sweepstakes. By offering a variety of reminders about how the many benefits and advantages of high usage, you'll quickly find that you're reaching the top of wallet faster. 

 

Continuously analyze your reward program redemption rates to see who is redeeming, what the points are being used for, and when the points are being used. This will help not only in fine-tuning your offers to make them more accessible and visible, it will also help you segment your cardholder base even further to make more valuable offers and propositions based on your data. If the data shows a certain portion of disengaged cardholders, that's a sign that your rewards may be too hard to earn or use, or that it's time to engage with this group to help them understand what the benefit of your card is. 

 

Summary

All in all, summer time is the best time to market travel, branded cards, and lifestyle rewards, ad more and more people reach for plastic over paper while they're travelling. By accurate customer segmentation, studying your client data for trending usage, and personalizing your offers, you can provide even more value through the next few months of travel, back to school, and summer planning. Using multi-sourced, tri-bureau, and accurate data is key to achieving high response rates and high acquisition rates in the coming months, as credit scores fluctuate based on big purchases and life events throughout the season. 

 

 

 

 

 

Tags: Credit Data, Consumer Finance Marketing

Author


Nora Dillon

Written by Nora Dillon

Nora is an Account Manager at Altair who specializes in finding the best audiences for your marketing needs.

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