Big rewards in banking?
If regulatory issues weren’t enough to deal with, banks are facing more pressure to offer the best benefits to customers as well, and rightly so. With growing customer dissatisfaction and dwindling trust, banks have no choice but to raise their game.
Most banks, especially in Europe, have realized they can’t rest on their laurels. In a bid to attract more customers, new loyalty schemes are launched or revamped every so often, and most don’t appear to be offering anything new or exciting.
Typically, customers get some cash back on card purchases, and maybe some additional points or discounts on purchases made at some retailers – but most of the time, the discounts aren’t big enough to motivate customers. And there’s nothing new worth talking about.
Bigger isn’t always better. When it comes to rewarding customers, especially for customer acquisitions, there’s usually a loss-leading product offer that does the job of attracting the customer, and following that, most loyalty retention schemes are much the same.
What if a bank offered discounts at a premium collection of popular retailers, at much higher levels than the competition, say 20% or even 30%, instead of between 2 and 5%? Customers would be queuing around the block to sign up, and they’d be telling their friends too.
Besides offering something more attractive and original than other banks, large rewards can be aligned with a bank’s strategy – rewarding customers for behavior the bank wants to encourage, not given out haphazardly.
Some banks are slowly taking note and have started to implement new, bigger reward schemes with great success, bringing value to customers and the bank alike. And it can be done without the bank having to heavily subsidize the rewards. Who said banks have to do more with less? The rewards are there for the taking.
What are your thoughts on loyalty schemes and rewards in the banking sector? Please add your comments below.