HSBC applies artificial intelligence to loyalty to keep customers on board
HSBC’s U.S. operation caters to a heavily international audience and its credit card perks have many nuances, so the bank is using artificial intelligence to nudge customers toward more effective use of their rewards.
As elite credit card competition ratchets up, HSBC realized a more scientific marketing approach is needed to make sure customers are properly engaged with their cards so they don’t drift off to a rival rewards card program, according to Marcos Meneguzzi, HSBC’s head of cards and unsecured lending.
“Customers who are actively engaged and satisfied with the rewards they’re redeeming aren’t likely to stray, but we need to use bigger data to make that happen,” Meneguzzi said.
HSBC worked with Maritz marketing to tap AI to predict which categories of rewards—travel, merchandise, gift cards or dining—consumers were most likely to use, factoring in their seasonal tendencies and past behavior, Meneguzzi said.
An AI-powered approach for a recent email marketing campaign gave specific customer segments suggestions on how they could next redeem their credit card rewards points, and it got results that were 70% higher than the previous year’s campaign based on lower-tech marketing models, he said.
“We saw a significant lift in reward redemptions, proving that AI can play a key role in predicting when consumers might be getting bored with their rewards so we can offset that with marketing reminders and keep them engaged,” Meneguzzi said.
HSBC plans to deploy AI in other credit card marketing efforts this year following the refreshment of its credit card portfolio last fall, which brought the bank to a total of six different cards targeting its customer segments with various features and rewards.
One reason HSBC retooled its credit card lineup was to suit its somewhat unique structure, with a network of 228 U.S. branches concentrated on the coasts that reaches thousands of international workers and students, he explained.
“HSBC captures about 70% of international professionals moving to the U.S., and because they tend to spend heavily and travel a lot, making sure they have the right credit card is key to keeping their business over the long haul,” Meneguzzi said.
The top card the bank offers is its Premier World Elite Mastercard, introduced in October 2017, which provides about $1,000 in total redeemed travel rewards for a $395 fee. The card is available only to customers with at least $100,000 on deposit in combined HSBC accounts.
Five other credit cards offer different combinations of benefits based on interest rate structures, annual fees, rewards points and cash back, at levels cascading down to its most basic product, the HSBC Gold Mastercard, that has no annual fee and no rewards.
Most of HSBC’s credit card customers have an account with the bank, but HSBC also markets its credit cards to nonbank customers via strategic digital and direct marketing, Meneguzzi said.
HSBC is still in a testing phase with AI for its credit cards, but the bank plans to lean more heavily on it over the next year, in combination with other technology, to pinpoint marketing opportunities.
“We’re exploring using AI in different areas of marketing credit cards, hoping to refine the way we reach customers with different propositions, because just using general marketing science isn’t as effective,” Meneguzzi said.